Key Highlights
- 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%.
