Sydney, Jan 18, 2026, 17:31 AEDT — Market closed.
Shares in Westpac Banking Corp (WBC.AX) climbed 1.8% to A$39.19 on Friday, pushing the big banks higher as the S&P/ASX 200 finished up 0.48% at 8,903.9. Financials rose 0.99%, helping the benchmark close out the week with a 2.1% gain, just shy of October’s record range near 9,110-9,120, according to MarketIndex data. 1
That’s crucial heading into Monday’s open, given that banks remain the market’s steering wheel. When they shift, the index typically follows suit.
Rates are caught squarely in the middle. Banks profit from the spread between loan interest and deposit costs, so changes in inflation or central bank outlooks can swiftly impact their valuations.
Overnight signals showed a mixed picture. U.S. stocks closed almost unchanged on Friday before the long weekend. Anthony Saglimbene, chief market strategist at Ameriprise Financial, described the markets as “flat-lining” with earnings season kicking off. Bruce Zaro of Granite Wealth Management cautioned that mid-January usually brings “pretty choppy” trading. 2
Westpac now faces a key test: will Friday’s rally hold up when fresh data arrives, or was it merely end-of-week maneuvering in a quiet January market?
Mortgage competition remains intense. Lenders pushing for market share may trim profits on new loans, even as credit demand holds steady.
Funding markets can swing the other way. While higher yields boost lending returns, they also push up wholesale funding costs and dampen demand in rate-sensitive sectors of the economy.
The risk remains that the bank rally could quickly unravel if inflation surprises on the upside, pushing a steeper reset in interest rates. A shift in global risk appetite could trigger the same. When that happens, big banks usually take the first hit, given their liquidity and heavy ownership.
Traders are keeping an eye on whether banks continue driving the index higher. If that momentum fades, sustaining the rally will become more challenging.
The next inflation checkpoint arrives Jan. 28, as the Australian Bureau of Statistics rolls out the December 2025 consumer price index at 11:30 a.m. AEDT. The Reserve Bank of Australia convenes Feb. 2-3, with its policy decision and the accompanying Statement on Monetary Policy scheduled for release Feb. 3 at 2:30 p.m. AEDT. 3
