Australia shares tumble as robust jobs data shatters rate cut hopes

Australian shares fell to their lowest in three months on Thursday after robust monthly employment data dimmed hopes of near-term interest rate cuts, sending major banks’ shares sharply lower.

The S&P/ASX 200 benchmark index fell 1.1% to 8,705.40 points by 0206 GMT, its weakest since August 5 and posting its steepest drop in seven weeks.

The index was trading marginally lower before the data.

Employment surged in October as firms went on a hiring spree, pulling the jobless rate down from a four-year high and reinforcing a growing view that the current easing cycle may have come to an end.

Swaps indicate the probability for a May 2026 cut has now collapsed to 25%, down from nearly 70% before the data.

“The market will need to think about removing the last remnants of rate cut expectations and start to think about the Reserve Bank of Australia maintaining the cash rate at 3.60% for an extended period,” Citi analysts wrote in a note.

Financials were the major drag on the index with their 1.3% decline.

Top business lender National Australia Bank fell 1.6% while Westpac tumbled over 2%. ANZ Group, which ended Wednesday at a record high, slumped more than 5% in its worst one-day drop since early April.

Commonwealth Bank of Australia, which has lost around 11% over the past four sessions on warnings of margin pressure, was trading slightly higher in the afternoon trade.

Energy stocks were down 2.5% and on track to snap a five-session rally.

The sub-index fell as much as 2.7% due to declining global oil prices.

Woodside Energy and Santos lost around 2% each.

Technology stocks extended their decline, losing 1.4%.

Accounting software giant Xero lost 4.6%.

Bucking the trend, miners gained as much as 1.6%, hitting their highest since October 22 and heading for their fourth consecutive session of gains.

Meanwhile, New Zealand’s benchmark S&P/NZX 50 index was down 0.3% at 13,635.85 points.