Australian equity markets witnessed modest gains in a subdued trading session on Tuesday, the final trading day of the year. The benchmark index managed to close in positive territory, buoyed by strength in the financial sector, even as resource stocks faced headwinds.
Benchmark Index Posts Modest Gain
The S&P/ASX 200 index advanced by 0.2% to settle at 8,740.9 points. This marginal uptick followed a 0.4% decline in the previous session on Monday. Despite the day's thin trading volumes, the broader market is poised to finish the calendar year with a solid gain of over 7%. This performance marks the third consecutive year of positive returns for the Australian benchmark, underscoring a period of sustained growth for investors.
Sectoral Performance: Financials Shine, Miners Drag
The session was characterised by a clear divergence in sectoral performance. The heavyweight financials sector emerged as the primary driver of the index's gains, climbing 0.9% higher. Leading the charge was the Commonwealth Bank of Australia (CBA), which saw its shares jump as much as 1.6% to reach their highest level in nearly two months.
However, these gains were partially offset by significant weakness in the materials sector. The miners sub-index fell by 1.4%, retreating further from the record high of 7,460.40 points it had achieved just a day earlier. This decline occurred despite positive movements in iron ore and copper prices during the prior session. The mining index is now set for its second straight session of losses, following a strong rally last week where it gained nearly 4% over three trading days. For the year, the sector remains a standout, having surged almost 38% so far. Major players like BHP slipped 0.6%, while Rio Tinto's share price remained largely unchanged.
Gold Stocks Tumble on Profit Booking
Gold miners faced even steeper losses, with the sub-index plunging 4%. This sharp correction was triggered by a pullback in bullion prices from recent record highs, prompting investors to lock in profits after a significant rally. Leading gold producers felt the brunt of the sell-off; Evolution Mining plummeted 4.8% and Northern Star Resources dropped 3.6%. The precious metal had scaled a historic peak on Friday, driven by expectations of impending interest rate cuts by the U.S. Federal Reserve and ongoing geopolitical tensions.
Central Bank Policies in Focus
Market participants globally are keenly awaiting the release of the minutes from the U.S. Federal Reserve's December policy meeting, scheduled for later in the day. Investors are scrutinising every clue to gauge the likely trajectory of monetary policy in 2024, with widespread anticipation of rate cuts. Domestically, the Reserve Bank of Australia (RBA) held its cash rate steady at its December meeting. The central bank has indicated that the period of policy easing is over and has signalled that its next move could potentially be a rate hike, striking a more hawkish tone than some other major economies.
In neighbouring New Zealand, the S&P/NZX 50 index also moved higher, gaining 0.3% to close at 13,565.59 points, reflecting a broadly positive sentiment across the Australasian region in the final trading sessions of the year.
