The Australian equity market concluded Friday's trading with a minor retreat, though the benchmark index secured a solid weekly advance, hovering within striking distance of its all-time peak. The S&P/ASX 200 index dipped 4.8 points, or 0.05%, to settle at 9,081.4. Despite the subdued daily finish, the index recorded a robust weekly gain of 1.8%, closing just below the record high of 9,118.3 set the previous session.
Sector Performance Diverges
Performance across sectors was mixed. The financial sector provided crucial support, climbing 0.7% during the session and notching an impressive 2.8% gain over the five-day period. This strength countered a 0.7% decline in the materials sector, which was dragged lower by heavyweight Rio Tinto. Analysts noted that the major banks have largely reported results that exceeded consensus estimates, challenging the prevailing narrative that the sector lacks earnings momentum.
Philip Pepe, a senior equities analyst at Shaw and Partners, commented on the banking sector's performance, countering the 'ex-growth' label often applied by critics. The current market rally appears concentrated, relying heavily on a select few large-cap names, with earnings season outcomes triggering swift price movements in either direction.
Earnings Drive Individual Stock Moves
Rio Tinto became a focal point for the materials slump, its shares tumbling 3.1% after the mining giant reported full-year earnings that fell short of market expectations. The company announced annual earnings of $10.87 billion for the period ending December 31, missing the Visible Alpha consensus estimate of $11.03 billion. The board declared a final dividend of 254 U.S. cents per share. Andy Forster of Argo Investments described it as a "good result," though perhaps not as impressive as sector peer BHP, noting Rio's strategic focus on generating cash from existing assets.
In contrast, the insurance sector witnessed a standout performance from QBE. The insurer reported a statutory net profit after tax of US$2,157 million for the full year 2025, a significant jump. Its combined operating ratio improved to 91.9%; a reading below 100% indicates underwriting profitability. Group CEO Andrew Horton stated the company delivered a strong performance in 2025, exceeding its financial plan for the year.
Defence and Consumer Stocks in Focus
Defence contractor Austal saw its shares surge 5.5% after securing a substantial government contract valued at approximately A$4 billion. The agreement involves building eight heavy landing craft vessels, with construction commencing this year and final delivery scheduled for 2038. CEO Paddy Gregg highlighted this as a record order book for the company, securing a long-term pipeline of work. Austal is viewed as a unique player among listed local defence entities.
On the downside, fast-food chain Guzman y Gomez plunged nearly 14% to A$17.53, weighing on the consumer discretionary sector. The decline came despite the company reporting half-year profits that topped expectations, as it cautioned about weaker sales trends in its key U.S. market. Some investors dismissed the earnings beat as noise, arguing that the stock's valuation hinges critically on its successful expansion in the United States.
Commodities and Macro Context
Oil prices commanded attention heading into the weekend, with Brent crude trading near $71.58 per barrel and U.S. West Texas Intermediate around $66.44. Both benchmarks registered weekly gains of approximately 5.3%, supported by geopolitical tensions involving the U.S. and Iran and potential supply disruptions near the critical Strait of Hormuz. Ole Hansen, head of commodity strategy at Saxo Bank, noted that the market is exhibiting signs of nervousness.
The ASX's proximity to record highs introduces an element of caution, as the market's elevated position can be sensitive to disappointments from major index constituents or shifts in global risk sentiment. With banking and mining stocks carrying significant weight, their performance remains pivotal for the broader index direction.
Looking Ahead: A Packed Earnings Calendar
The Australian earnings season accelerates next week with several blue-chip companies scheduled to report. Woodside Energy is set to release its full-year 2025 results on Tuesday, February 24. Woolworths Group follows with its first-half figures for fiscal 2026 on Wednesday, February 25. Qantas will provide its half-year update on Thursday, February 26, and Coles Group rounds out the week by announcing its HY26 results on Friday, February 27. Investors will scrutinize these reports for insights into consumer health, energy sector profitability, and overall corporate resilience.
