Strong inflation and employment data reduced expectations for any near term rate cuts, while index heavyweight banks slumped on worries of exorbitant valuations as Australian equities concluded their worst November in over ten years on Friday.
On Friday, the benchmark S&P/ASX 200 index closed at 8,614.10, down 0.04%. It experienced its largest decline in eight months and its worst November performance since 2014, down 3% this month.
After reaching a low point in April, the benchmark had been steadily rising, primarily as a result of increases in heavyweight miners.
Luke Winchester, a portfolio manager at Merewether Capital, stated, "The market has had a difficult month; valuations were stretched after a strong run since April."
Banks saw their largest monthly decline since June 2022 on Friday, falling 0.7% and losing 7.4% for November. The nation's leading lenders' profits were capped by rising expenses and ongoing competition, as evidenced by the softer earnings earlier this month.
Furthermore, the Reserve Bank of Australia's current policy easing cycle may have reached its limit due to rising employment and hotter inflation.
One of the priciest banks in the world, Commonwealth Bank of Australia, saw a decline of over 11% in November. The losses for the other three "Big Four" banks ranged from 3% to 8.1%.
Merewether Capital's Winchester anticipates that financials will struggle until inflation moderates or economic data turns out to be lower than anticipated. He predicts a persistent shift into commodities companies, which is a common local tendency.
On Friday, miners saw a 0.5% increase and recorded their fifth straight monthly gain. November saw a 9.9% increase in gold linked stocks as speculations on a December U.S. interest rate cut put bullion prices on track for a fourth consecutive monthly rise.
Due to volatility around AI driven deals, technology stocks, which follow the tech heavy Nasdaq, saw their worst monthly decline since February while rising 0.9%.
The benchmark S&P/NZX 50 index for New Zealand closed at 13,489.15, up 0.4%. It saw its first monthly decline in seven years. This week, the central bank lowered interest rates by 25 basis points, but it stated that easing is already complete.
