Sydney, January 6, 2026, 17:46 AEDT — After-hours
Westpac Banking Corporation shares fell 2.2% to close at A$38.19 on Tuesday, extending a pullback across Australia’s big banks as investors positioned for an inflation reading due on Wednesday. The stock traded between A$37.90 and A$39.02, and about 4.0 million shares changed hands. 1
The slide matters because banks are among the most interest-rate sensitive stocks on the ASX: their earnings lean on the spread between what they charge borrowers and what they pay depositors and wholesale markets. That spread is often described as net interest margin, the gap between interest earned and interest paid.
A key risk for the sector is that a hotter inflation print forces markets to push rate expectations higher, weighing on bank valuations and loan demand. A softer outcome would ease pressure, but the trade has become increasingly binary as investors look for a clear signal on policy.
Westpac’s fall mirrored losses in peers including Commonwealth Bank of Australia, ANZ and National Australia Bank, after the S&P/ASX 200 slid 0.5% and the financials sub-index dropped 1.8%. Money markets were pricing about a 33% chance of a February rate hike, a Reuters market report showed, after a recent pickup in inflation led the central bank to push back against further rate-cut expectations.
Miners rose on stronger commodity prices and a takeover bid drove a sharp jump in BlueScope Steel, but bank losses dominated the index’s direction. Investors have begun to rotate into other parts of the market after a strong multi-year run in banks supported by higher interest rates, the report said.
“If the market starts pricing in rate increases, the ASX is likely to see more differentiated performance across sectors rather than a broad rally,” said Marc Jocum, senior product and investment strategist at Global X ETFs Australia. He said higher-rate expectations could cap gains in banks and pressure earnings if credit growth slows while costs stay elevated.
Technically, traders were watching whether Westpac holds above Tuesday’s A$37.90 low; a break would put December lows back on charts, while A$39.23 marks a nearby ceiling after Monday’s peak. 1
For Westpac-specific catalysts, investors have the bank’s first-quarter results announcement pencilled in for February 13, with interim results and a dividend decision scheduled for May 5, according to its financial calendar. Attention will be on net interest margin and loan-loss trends as mortgage competition bites. 2
