Australian Shares Recover as Bond Yields Ease, Ending Losing Streak

Australian shares rebounded from a sharp drop as bond yields eased, providing some relief to investors. The S&P/ASX 200 closed 0.8% higher at 8,682.10 points, ending a four-week losing streak with a 0.2% weekly gain. The market initially held steady after the Reserve Bank of Australia's interest rate hike and softer inflation data, but later faced pressure from global bond sell-offs and rising oil prices, which stoked inflation concerns.

The decline in Australian bond yields helped the market recover, as investors scaled back expectations for further RBA rate hikes. The 10-year yield had spiked to around 5.36% before easing, but caution persisted ahead of US employment data, which could signal the Federal Reserve’s next moves. Mining stocks rose 1.1% on Friday, with BHP up 1.6% and Rio Tinto gaining 1.2%, though the sector still posted its fifth straight weekly decline.

Financial stocks advanced 1%, with major banks rising between 0.5% and 1.6%, despite the sector’s fourth consecutive weekly drop. Technology stocks surged 4.5% to their highest level in over three weeks, supported by gains in US tech shares. However, the real estate sector remained under pressure, falling 1.65% on Friday, highlighting its sensitivity to bond yields and financing costs.

Analysts noted that higher bond yields increase borrowing costs and push up capitalisation rates, pressuring property valuations. David Tuckwell of ETF Shares explained that mining stocks are influenced by global financial conditions, the US dollar, and commodity demand. The broader market remains sensitive to long-term borrowing costs, with the ASX down 3.1% in September. Meanwhile, New Zealand’s S&P/NZX 50 fell 0.9%, marking its weakest week since early September.