Bank rally helps Australia shares weather global equities selloff
- The S&P/ASX 200 index fell 0.1% to 8,719.70 points
Australian shares ended slightly lower but recovered as weak jobs data tempered rate hike bets, boosting bank stocks, despite global equity selloffs impacting miners and tech.
- Impact of weaker Australian jobs data on rate hike bets
- Rally of Australian bank stocks and underlying reasons
- Global equity selloff's effect on local miners and tech
Australian shares ended slightly lower on Thursday but recovered from intraday lows as bank stocks rallied after weaker-than-expected jobs data tempered rate hike bets, helping offset pressure from a global equity selloff.
The S&P/ASX 200 index fell 0.1% to 8,719.70 points.
The benchmark fell 0.6% on Wednesday.
Australian employment unexpectedly fell in September, data showed on Thursday, and the jobless rate held at a five-year high of 4.7%, prompting investors to scale back bets on the central bank hiking rates beyond a 15-year high.
Markets reacted by trimming the perceived chance of a November rate hike to about 17% from 32% before the data, while the odds of a December increase fell to 23% from 56%.
Australian three-year bond yields, sensitive to interest rate expectations, fell to a more than one-month low of 4.800%.
Bank stocks rallied, lifting the financials sub-index 2.2% to its highest close since mid-August. Sector heavyweight Commonwealth Bank of Australia surged 3.3%.
“The banks have rallied strongly as a rate pause should be positive for the housing market as the pressure reduces in terms of the ability to service loans and in turn they may be a pickup in loan applications and hence earnings growth,” said Craig Sidney, senior investment adviser at Shaw and Partners.
Global risk appetite weakened after a faster-than-expected rise in US consumer inflation fuelled expectations of Federal Reserve rate action later this year, triggering a selloff in Asian technology stocks.
South Korea’s KOSPI plunged 8%, while Japan’s Nikkei tumbled nearly 5%.
Locally, the mining sub-index slid more than 4.3% as copper prices fell in the global selloff.
Technology stocks plunged 3.4% to their lowest close since April, with data centre operators NEXTDC and Macquarie Technology falling 7.4% and 8.9%, respectively.
Data centre landlord Goodman Group tumbled 3.9%, dragging the real estate index down 0.7%.
New Zealand’s benchmark S&P/NZX 50 index ended up 0.5% at 13,832.80 points.