Image source: Shutterstock

Highlights

  • Financial sub-index jumps up to 6.4%, marking its significant one-day rise since May 2020.

  • U.S. tariff pause drives optimism, fueling gains in banking stocks.

  • Year-to-date losses narrowed as major lenders post robust intraday gains.

Australian financial stocks staged a sharp rally on Thursday, with the S&P/ASX 200 Financials sub-index (.AXFJ) climbing as much as 6.4% — its most significant intraday gain in nearly five years. The surge mirrored a broader rebound in global markets, spurred by positive news from the United States on trade policy.

The turnaround came after U.S. President Donald Trump announced a temporary 90-day halt on certain reciprocal tariffs, easing investor concerns about escalating trade tensions and their potential impact on global economic growth. The pause, seen as a strategic move to de-escalate trade disputes, was welcomed by markets across the Asia-Pacific region, including Australia.

Investors responded with renewed confidence in financial stocks, which had been under pressure due to macroeconomic uncertainty and market volatility. The positive sentiment was most evident among the country’s major banks, which posted substantial gains throughout the session.

Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank (ASX: NAB), two of the largest financial institutions in the country, rose 4% and 6%, respectively. ANZ Group Holdings (ASX: ANZ) climbed 4.8%, while Westpac Banking Corporation (ASX: WBC) advanced 5.5%. The rally helped lift the sub-index to a late-session gain of 5.1%, trimming its year-to-date decline to 4.2%.

The financial sector, which plays a crucial role in Australia’s economy, has faced headwinds in recent months, including concerns over interest rate policy, loan growth, and global market stability. Thursday’s gains, however, offered a moment of relief and signaled potential for a turnaround if macroeconomic risks continue to recede.

Analysts suggest the U.S. administration’s decision to delay tariffs was a pivotal factor in the day’s gains, offering hope that further easing of trade measures could be on the horizon.