SYDNEY: Australian shares ended a subdued week slightly lower on Friday, as early gains in miners faded and a sharp fall in Rio Tinto offset rotation into banks.
The S&P/ASX 200 fell 3 points to close at 8,717.80. The benchmark ended flat in its first full trading week of the year. Rio Tinto confirmed it was in early talks
to buy Glencore, a deal that would create the world’s largest mining company with a combined market value of about USD207 billion.
The confirmation sent Rio’s Sydney-listed shares down more than 6 percent, its steepest one-day fall since July 2022.
Analysts struck a cautious tone on the potential deal, pointing to its complexity and what appears to be a shift in strategy under the miner’s new chief executive.
“A couple of months ago, the CEO was claiming he was going to keep things very simple, and now he’s just reversed track with a complex acquisition which the market does not like,” Hugh Dive, chief investment officer at Atlas Funds Management, said.
Jefferies analysts said the structure of a potential merger remains unclear and would likely be complex, but added there is scope for meaningful value creation for both companies.
Rio Tinto was the biggest drag on the benchmark and the mining index, which slipped 0.3 percent. Losses were partly offset by a 0.8 percent rise in BHP Group, Rio’s largest rival.
Gold miners also helped cushion the impact, with Northern Star Resources and Evolution Mining gaining about 0.5 percent and 0.6 percent respectively. Financials fell 0.2 percent on the day, with the four largest banks down between 0.1 percent and 0.6 percent.