Australia shares dip as rate-hike fears hit banks; NEXTDC powers tech rally

Australian shares edged lower on Friday and were set to end the week on a downbeat note, as expectations of tighter monetary policy weighed on financials, while gains in technology stocks kept the benchmark index afloat.

The S&P/ASX 200 index was down 0.2% at 8,598.90, as of 2325 GMT.

The benchmark ended 0.3% higher on Thursday.

The Australian benchmark has slipped 0.1% so far this week, as investors pared exposure to expensive banking stocks amid upbeat economic data, including strong GDP growth, which has reinforced expectations of an interest rate hike next year.

A high interest rate environment, though historically supportive of banks, often curbs borrowers’ appetite for mortgages.

Swaps imply that the Reserve Bank of Australia (RBA) will likely keep cash rates on hold early next year, with a split possibility of a hike as soon as May 2026.

Market participants are now widely expecting the RBA to hold its cash rate at its monetary policy meeting on Tuesday, a Reuters poll showed.

Financials dropped 0.5%, set to end the week 0.1% lower, with Commonwealth Bank of Australia declining 0.7%.

The country’s top lender is set to log its fourth consecutive weekly decline as it remains under investor radar for premium valuations and expectations of tepid earnings.

Rate-sensitive consumer discretionary stocks also declined 0.7%, with index leaders Wesfarmers and JB Hi-Fi down 0.9% and 1.1%, respectively.

Technology stocks were an outlier with a 1.3% surge, with NEXTDC topping gains in the broader benchmark index after the data centre operator inked a collaboration with ChatGPT maker OpenAI to jointly develop a hyperscale AI campus and GPU cluster at its S7 site in Sydney.

NEXTDC’s stock rose as much as 10.9% to hit its highest level since early November.

Real estate stocks slipped 0.4% while the industrials sub-index fell 0.5%.

New Zealand’s benchmark S&P/NZX 50 index declined 0.5% to 13,449.57, and was set to end lower for the week.