Australian shares flat as housing-tax changes, global risks cap volatile week

Australian shares ended little changed on Friday, capping a volatile week as housing-tax proposals clouded the mortgage outlook, while U.S.-China talks and Middle East tensions kept investors focused on growth and inflation risks.

The S&P/ASX 200 slipped 0.1% to 8,630.8. The benchmark lost 1.2% for the week, its weakest performance in over three weeks.

Australia’s federal budget on Tuesday proposed curbing negative gearing to encourage investment in new housing, raising concerns about slower mortgage demand.

Financials extended gains to finish up 1% after early-week losses. The subindex notched a 4.3% drop this week, their weakest run in over six months.

Top lender Commonwealth Bank of Australia, which suffered its steepest weekly drop earlier in the week, rebounded with a 1.9% gain on the day.

The rebound is tactical rather than conviction-led, with bargain hunters stepping in after a sharp selloff, said Marc Jocum, Senior Product and Investment Strategist at GlobalXETFs.com.au, while flagging a “murky” outlook for banks.

Budget-linked changes to housing and investor lending have clouded the mortgage-growth outlook, while rising provisions and arrears suggest banks’ easy-profit cycle may be fading, making August earnings the sector’s next key test, Jocum added.

Real estate stocks extended gains, rising 0.4% on optimism that first-home buyer support could channel demand. The subindex closed 1.5% higher.

Meanwhile, market attention has shifted to a meeting between the country’s key trading partners U.S.–China, with any warming up of ties likely to lift the resource-heavy bourse.

Miners retreated 3.1% on softer iron ore and copper prices, though the index still clinched a 1.7% gain for the week.

Heavyweights BHP and Rio Tinto slipped 2.6% and 3.2%, respectively, easing back from record highs struck in the previous sessions.

Attention now turns to next week’s employment data for fresh signals on the central bank’s interest-rate outlook.

New Zealand’s S&P/NZX 50 edged down 0.5% to 12,965.01, extending losses to a fourth straight session. This has left the benchmark down 1.6% for the week.