THE BANKS HIT AUSTRALIAN STOCKS: What you need to know

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Australian stocks closed marginally lower.

Here’s the scoreboard for today:

  • S&P ASX 200: 5,243.00 -9.22 -0.18%
  • All Ordinaries: 5,312.00 -4.00 -0.08%
  • AUD/USD: 0.7607 +0.0005 +0.07%

The ASX 200 dropped below the 5200 point mark earlier in the session as banks were sold down on fears of more bad loans provisions.

At one stage, the market was down 1.3% before recovering lost ground and regaining the 5200 level on the ASX 200.

Westpac, whose half year result was weaker than expected because of bad loan provisions, closed down 3.5% to $29.95.

The rest of the banks followed, with the ANZ down 2.2% to $23.73, the Commonwealth 2.1% to $72.34 and the NAB 2% to $26.63.

The miners were stronger on the back of better iron ore prices. BHP closed 1.1% higher at $20.92 and Woodside petroleum was up 1.24% to $28.74.

The top stories Monday:

1. Bad loans. Westpac’s half year results, a 3% rise in first half cash profit to $3.904 billion, were weaker than expected because of provisions for loan impairments. Also read: These are the companies whose bad loans are dragging Westpac down.

2. Setting the tone. Australia’s financial sector stocks haven’t had a positive return in May since 2007.

3. Election drag. Virgin Australia is cutting its seat capacity by 5.1% in response to weak demand as the nation heads to a federal election. Virgin shares dropped 5.7% to $0.33.

4. A capital return. Telstra plans to give back at least $1.5 billion to shareholders from its windfall of $US1.6 billion ($A2.1 billion) from selling down its stake in the China car site Autohome. Telstra added 2.8% to $5.51.

5. A deal with lenders. Law firm Slater & Gordon has struck a deal to avoid bankruptcy. Its shares doubled to $0.59.

6. Sydney home prices are back. Australian capital city house prices surged last month.

7. Iron ore blues. Iron ore rips higher as China’s steel industry roars back to life.

8. What inflation? It’s not only the Australian Bureau of Statistics’ consumer price inflation report that suggests disinflationary forces in Australia are building.

9. Telstra holes. Australia’s biggest telco will spend $50 million to guard against mobile and internet outages.

10.Food alert. The world’s best Thai chef, David Thompson, is reopening in Sydney.

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