Image source: Shutterstock

Highlights

  • S&P/ASX 200 rose 0.3% to 8,370.4, marking its second consecutive weekly gain.

  • Bank and energy stocks led the charge, boosted by RBA’s second rate cut since 2020.

  • Miners and gold stocks fell, with BHP, Rio Tinto, and Fortescue closing lower despite higher bullion prices.

Australian shares inched higher on Friday, capping a week of modest gains as strength in financials and energy stocks offset losses among miners and gold producers. The S&P/ASX 200 index advanced 0.3% to close at 8,370.4, lifting the benchmark to its second consecutive week of gains, also up 0.3% for the week.

The market’s upward move was underpinned by positive sentiment following the Reserve Bank of Australia's (RBA) second interest rate cut since 2020, which came earlier this week. The central bank reduced the cash rate by 25 basis points to 3.85%, signalling a shift in monetary policy after a prolonged period of tightening.

Banking stocks were the top contributors to the day’s gains. The financials sub-index climbed 0.8%, with strong performances from the Big Four banks: National Australia Bank (+0.8%), Commonwealth Bank (+0.5%), Westpac (+0.6%), and ANZ (+0.7%). Investors responded positively to the potential for improved margins and loan demand amid the lower rate environment.

The energy sector also added 0.6%, buoyed by news that former U.S. President Donald Trump is poised to sign executive orders aimed at revitalising the American nuclear industry, which could benefit uranium demand globally. Australian uranium stocks with U.S. operations surged, with Boss Energy climbing 11.7%, Paladin Energy 9.2%, and Deep Yellow 7.8%, ranking among the top performers on the ASX 200.

However, the mining sector dragged on the index, with the materials sub-index falling 0.4% amid muted iron ore prices. BHP slipped 0.2%, Rio Tinto lost 0.9%, and Fortescue declined 1.6%.

Gold stocks dipped 0.7%, even as bullion prices edged higher. The retreat reflected investor caution over inflation trends and currency moves, with the Australian dollar slightly weaker at A$0.64 against the U.S. dollar.

Meanwhile, New Zealand’s S&P/NZX 50 index fell 0.2%, with market participants eyeing the upcoming Reserve Bank of New Zealand policy decision on May 28, where guidance on interest rates will be closely watched.