Australia Shares Start 2026 on a Positive Note as Banks Lead the Rally

Australian shares had a good start to the New Year 2026, as they ended the four-day losing streak with the day’s trading and got the market up to a one-week closing high. The major cause of the increase was the return of the investors to banking stocks, but at the same time, there was a decline in the mining sector, which kept the gains from getting higher during the very low-volume holiday trading.

The S&P/ASX 200 index went up by 0.2% and finished at 8,727.8 points, which was the highest closing level since December 24. Thus, the trading volume was only around 40% of the average for the last 30 days, which suggests that the New Year holiday has not fully ended for many investors.

The benchmark index managed to add 6.8% in 2025, thus increasing the duration of the winning period for a third consecutive year, even though it was left behind by the major global markets like Japan’s Nikkei and Hong Kong’s Hang Seng.

Banks Rebound After Recent Losses

Financial stocks were the day’s top performers, rising 0.4%, their strongest single-session gain in more than a week. Australia’s “Big Four” banks advanced between 0.4% and 0.8%, supported by stabilising interest rate expectations.

Market analysts noted that easing uncertainty typically drives investor flows toward large banks, which are viewed as stable dividend payers with resilient balance sheets, particularly in an environment of prolonged higher interest rates.

Focus on Economic Data Ahead

Following a more hawkish shift in the Reserve Bank of Australia’s rate outlook late last year, markets are pricing in a higher-for-longer interest rate scenario. Investors are now closely watching inflation data due on January 7 and labour market figures later this month, which are expected to influence the RBA’s February policy decision.

Mining Stocks Drag

Gold miners declined 1.5%, weighed down by Northern Star Resources, which cut its annual production forecast, making it the biggest drag on the benchmark index. The broader mining sector ended flat.

On the other hand, Nickel Industries soared to a one-year peak following the acquisition of a 10% stake in its Indonesian project by Sphere Corp.

At the same time, the markets of New Zealand stayed shut down on account of the national holiday. The S&P/NZX 50 index of the country recorded a 3.3% increase for the year 2025, thus marking the third year in a row of positive performance.