For Aussie stocks, the energy sector was a drag on the index along with financials. Index heavyweights financials, remain under pressure as the outlook for the economy weighs but also the outlook for dividends. This morning NAB announced a $1.14 billion hit to first half earnings, reminding investors that the reality of dividend cuts is incoming, as we have previously flagged. APRA have taken a softer approach relative to NZ, UK and EU regulators but have stated they expected ADI’s to “seriously consider” deferring decisions on dividends, rather than stipulating outright deferral. The Aussie banks are heavy weights on the index and a key holding in many retail and retirement portfolios. As the outlook for the banks and their traditionally juicy dividend payments becomes cloudier, the opportunity cost of these holdings grows. And it is not just the near term, digitisation, neobanks, increasing competition is just one structural headwind to earnings growth the big four face. More immediate term, headwinds include rising consumer credit defaults and bad debts across residential mortgage books and higher impairment charges denting profits. The share prices have already corrected significantly, but there is capacity for ongoing pressure particularly as we expect dividends will likely be deferred to 0 for the first half of 2020. The panic deleveraging of Q1 may be past, but dividend cuts remain a prompt for retail selling, particularly for pensioners reliant on dividends for income. Until this uncertainty is resolved when the big 4 (CBA, WBC, ANZ, NAB) update the market in May, it will be hard for Aussie stocks to push much higher from these levels.