Rio records record for Glencore exit, but banks and miners are sapping Australian shares

Australian shares continued to fall on Friday, as an index-wide sale led by banks and miners saw a decline in the market. Rio Tinto reached its highest level to date after abandoning discussions with Glencore about creating what would have been the world's biggest mining company.

S&P/ASX 200 index fell 1.6% by 2320 GMT to 8,748.50, setting the stage for its worst session since November. The benchmark fell by 1.3% during the week and is on track for its biggest loss since mid-November.

The mining stocks continued to decline for a second day in a row, in conjunction with the?persistent drop in precious and base metal prices. The sector dropped 4.5% in the past week, on pace to have its steepest drop since early April 2025.

Rio Tinto, a global miner, was the outlier in?the subindex. It scored an all-time-high after walking away from takeover discussions with London-listed Glencore. This is the second failed round of talks?in less than a year. The global mining company announced, after-market on Thursday, that it was unable to reach a deal with London-listed Glencore that would have provided sufficient value for shareholders.

Investors in London, where both companies are popularly held by many investors, were more interested in the possible deal than those in Australia where Rio was the most popular company.

Separately the top Australian central banker stated that the growth in domestic demand must be 'damped to tame the inflation, after the first rate increase in two years this week.

In an effort to control sticky inflation, the Reserve Bank of Australia raised cash rates on Tuesday by 25 basis points.

Commonwealth Bank of Australia, Australia's largest lender, ended a winning streak of five sessions by reducing its financial stock price by 1.2%. Banks tend to perform better in an environment where interest rates are higher for longer, but higher rates can have a negative impact on the ability of borrowers to pay their mortgages.

The sector, however, is still on track to gain 1.8% for the week. This will be the second consecutive week of gains.

New Zealand's markets were closed due to a public holiday. The benchmark S&P/NZX50 index gained 0.2% over the holiday-shortened week, ending two consecutive weeks of losses. (Reporting and editing by Alan Barona in Bengaluru, Nikita Maria Jio from Bengaluru)

(source: Reuters)