Australian Shares Retreat After Five-Day Rally
Australian shares opened lower on Monday, snapping a five-session winning streak. The benchmark S&P/ASX 200 index fell 0.3% to 8,877.4 points by 0017 GMT. This decline followed a strong performance last week, where the index gained 2.1%, marking its best weekly showing since late November.
Financial Sector Leads Market Decline
The financial sector was the primary drag on the market, slipping 0.6%. Australia's "Big Four" banks all recorded losses, dropping between 0.6% and 0.8%. This pullback came after the financial sub-index posted its best single-day gain in over three weeks on Friday.
Investors are closely watching the upcoming December jobs report, scheduled for release on Thursday. This data is expected to provide important clues about the Reserve Bank of Australia's future interest rate decisions. Current market pricing suggests approximately a 25% chance that the central bank will raise its 3.6% cash rate by a quarter point on February 3.
Geopolitical Tensions and Sector Performance
The weak start to the trading week coincided with declining U.S. stock futures. This movement followed former President Donald Trump's renewed threats to impose additional tariffs on eight European countries. The condition for avoiding these tariffs is the United States being allowed to purchase Greenland, a stance that has reignited geopolitical concerns.
Several other sectors also faced pressure. Technology stocks fell 1.3%, while healthcare and consumer discretionary stocks slipped 0.4% and 0.3%, respectively. Recent upbeat economic data has signaled a "higher-for-longer" interest rate environment. While traditionally beneficial for bank margins, sustained higher rates could potentially reduce lending volumes and increase credit risks.
Gold Stocks Shine Amid Broader Weakness
Gold stocks provided a bright spot in an otherwise subdued market, jumping nearly 2% as bullion prices rose. Major players in the sector, Evolution Mining and Northern Star Resources, both gained more than 2% each. These gains helped the broader mining sub-index rise 0.1%, building on its strongest weekly performance in seven weeks recorded last week. That previous rally was supported by record runs in copper and gold prices.
Investors are also anticipating quarterly production results from mining giants Rio Tinto and BHP this week. In early trading, Rio Tinto edged up 0.1%, while BHP slipped 0.1%.
New Zealand Market Also Declines
Across the Tasman Sea, New Zealand's benchmark S&P/NZX 50 index fell 0.7%, or 101.09 points, to 13,617.01. The decline mirrored the cautious sentiment seen in Australian markets.
