Australian equity markets kicked off the new trading year on a positive note, breaking a four-day downward trend. The benchmark S&P/ASX 200 index closed higher, driven by renewed investor confidence in the heavyweight financial sector, though gains were limited by weakness in the mining space.
Benchmark Rises to One-Week High in Thin Trade
The S&P/ASX 200 index advanced by 0.2% to settle at 8,727.8 points. This marked its highest closing level since December 24. Trading activity remained subdued, with turnover at roughly 40% of the 30-day average, as many participants were yet to return following the New Year holiday. For the calendar year 2025, the benchmark posted a solid gain of 6.8%, recording its third consecutive annual advance. However, this performance trailed behind other major global indices like Japan's Nikkei and Hong Kong's Hang Seng.
Financials Lead the Charge as Miners Weigh
The financial sector was the primary engine for the day's gains, adding 0.4% in its steepest single-day rise in over a week. The nation's 'Big Four' banks all moved higher, with gains ranging between 0.4% and 0.8%. Market analysts noted that banks often attract early flows when market uncertainty recedes.
"When uncertainty eases, even slightly, money tends to flow first into the big banks," observed Greg Boland, a market strategy consultant at Moomoo Securities Australia. "They benefit from stabilising rate expectations, resilient balance sheets, and the fact that investors see them as reliable dividend engines in a world still negotiating what 'normal' really looks like."
The market is currently anticipating a higher-for-longer interest rate environment, following a hawkish shift in the Reserve Bank of Australia's outlook late in 2025. This scenario is generally favourable for bank profitability, though it carries some lingering credit risk concerns. Investors are now focused on upcoming inflation data due on January 7 and labour market figures later in the month to better assess the central bank's potential actions at its February policy meeting.
Mining Sector Presents a Mixed Picture
Performance in the resources sector was divergent. Gold miners fell by 1.5%, heavily pressured by a sharp drop in Northern Star Resources (NST). The mining giant's shares shed 10% after it downgraded its annual production forecast, making it the worst performer on the benchmark index. Consequently, the broader mining gauge, which includes gold miners, ended the session flat.
In contrast, Nickel Industries saw its shares surge to a one-year high. The rally was triggered by news that Sphere Corp acquired a 10% stake in its Indonesia-based project, boosting investor sentiment towards the company.
Across the Tasman Sea, New Zealand's markets were closed for a public holiday. The country's S&P/NZX 50 index had risen 3.3% in 2025, also marking a third straight annual gain. The day's trading activity was reported by Jasmeen Ara Shaikh from Bengaluru, with editorial inputs from Mrigank Dhaniwala.
