Australian shares log decade's worst November as expensive banks slide

Australian shares wrapped up their worst November in more than a decade on Friday, as index heavyweight banks fell on concerns of lofty valuations, while strong inflation and employment data dampened hopes for possible near-term rate cuts.

The benchmark S&P/ASX 200 index ended 0.04% lower at 8,614.10 on Friday. It fell 3% this month, posting its biggest drop in eight months and weakest November performance since 2014.

The benchmark had been on a steady rising trend after hitting a trough on April, mainly due to gains in heavyweight miners.


"It's been a tough month for the market, valuations were stretched after a strong run since April," said Luke Winchester, a portfolio manager at Merewether Capital.

Banks fell 0.7% on Friday, shedding 7.4% for November in their biggest monthly drop since June 2022.

Softer earnings earlier this month highlighted persistent competition pressuring margins and rising costs capping profits for the country's top lenders.

Moreover, hotter inflation and surging employment sealed the case that the Reserve Bank of Australia's current policy easing cycle may have run its course.

Commonwealth Bank of Australia, one of the most expensive banks in the world, tumbled more than 11% in November. The other three "Big Four" banks lost between 3% and 8.1%.

Merewether Capital's Winchester sees a continued rotation into resources stocks - a typical local trend - and expects financials to struggle until inflation moderates or economic data comes in weaker than expected.

Miners rose 0.5% on Friday and logged their fifth consecutive monthly gain.

Gold-linked stocks rose 9.9% in November, as bullion prices were poised for a fourth straight monthly gain on bets of a U.S. interest rate cut in December.

Technology stocks, which track the tech-heavy Nasdaq, rose 0.9%, but recorded their steepest monthly slide since February due to volatility around AI-driven trades.

New Zealand's benchmark S&P/NZX 50 index ended 0.4% higher at 13,489.15. It posted its first monthly fall in seven. The central bank cut interest rates by 25 basis points this week but flagged it is now done easing.