Evening Wrap: ASX 200 shrugs off weak jobs data as banks surge, BHP and Rio Tinto tumble

In a nutshell:

• Banks surged, with CBA up 3.2% to $156.15 and BoQ up 5.8% after its FY26 net interest margin rose 6 bps to 1.70%, ahead of 1.68% estimates

• Materials fell almost 4% to its lowest level since 21 July, with BHP and Rio Tinto down ~4.7% and PLS Group (-6.3%) now down 55% from its June record

• Unemployment rose to 4.7% in September vs 4.6% expected, sending the 3-year yield down 11 bps to 4.81%, its lowest level since 9 September

• Carl is back on Monday!

Let's dive in

• This might go down as one of the most confusing sessions in a while. The ASX 200 was down as much as 86 pts (-0.99%) in early trade before clawing its way back to finish just shy of breakeven

• A soft open was understandable given a weak lead from Wall Street (S&P 500 down 1.1% after a slightly hotter-than-expected CPI print) and a broad-based selloff in commodities, with gold down 1.3% to US$4,105/oz and copper down 1.6% to US$6.67/lb

• Australian unemployment rose to 4.7% in September (vs 4.6% expected), while employment fell by 39,300 vs expectations of a 20,000 gain. The ASX 200 was down around 0.75% right before the jobs print at 11:30 am AEDT, down 0.4% a minute later and back to breakeven by ~12:40pm

• The policy-sensitive 3-year yield is down 11 bps to 4.81%, its lowest level since 9 September, while the 10-year is down 9 bps to 5.23%. As we’ve noted in recent wraps, yields continue to roll over, not because inflation is easing but because growth is weakening. So, mixed feelings here

• Staples surged, with Woolworths and Coles up 4.2% and 2.7% respectively. The index is now up ~18% year-to-date and trading at its highest level since April 2023. This is despite Woolies and Coles trading on adjusted FY26 PEs of around 25x, so perhaps it’s more a case of chasing defensives at any cost

• Banks surged across the board, a surprising magnitude of gains given property market headwinds and still-elevated valuations. CBA rose 3.2% to $156.15, Bank of Queensland rallied 5.8% after its FY26 result, and Westpac, NAB and Bendigo Bank all finished around 3% higher

• BoQ’s full-year result (its financial year ends 31 August) was largely in line with Morgan Stanley’s forecasts, but the all-important net interest margin rose 6 bps to 1.70% vs 1.68% expected, with a 2H26 NIM of 1.73% vs 1.70% expected. As much as I want to put the banks’ bid down to the defensive pivot, my hunch is that BoQ’s margin result drove the broad uplift, both as a better-than-expected outcome and as confirmation of the tailwind from September’s rate hike. Key comments from the BoQ earnings call on margins/mortgages include:

  • On the 2H26 margin: “Lending was a five basis point headwind, with competition remaining elevated... Funding was an 11 basis point benefit, as we transformed our balance sheet and required less funding.”

  • On the 1H27 outlook: “In the first half, subject to market conditions, we expect a modest uplift in margin.”

  • On the drivers of that uplift: “The confidence we have in the modest uplift then comes through as a result of the most recent cash rate change that happened in late September... ongoing tailwinds from our replicating portfolio, and the normalization of liquidity.”

  • On mortgage applications: “We’ve seen strong mortgage application volumes with a 14% increase in the second half, providing momentum into FY27. While acknowledging this uplift is off a low base, it is a positive indicator of the platform’s capacity to scale.”

• Tech went from a two-day 3.0% ‘relief rally’ to falling 7.3% over the last three sessions, and is now trading at its lowest level since mid-April. Not much to say here, as some of these charts look quite deathly (e.g. a brief bounce followed by another leg into the abyss). On the flip side, WiseTech (+2.8%) managed to catch a bid after ASIC wrapped up two investigations without taking action

• Materials copped some absolutely brutal selling. The ASX 200 Materials index fell almost 4% to its lowest level since 21 July and sliced through the key 200-day moving average. It was carnage everywhere. BHP and Rio Tinto both fell around 4.7%, copper majors Sandfire and Capstone fell 5-6%, and the All Ords Gold index fell 2.8% to close right on its 200-day moving average. PLS Group fell 6.3% to $2.97 (now down 55% from its 1 June record), while Paladin Energy fell 5.0% to $6.91 (it was $14 back in April)

• Overall, the ASX 200 managed to hold recent lows thanks to a strong pivot into defensives and a return to banks, finishing 0.24% higher. But it’s carnage everywhere else. The resources sector, which feels increasingly correlated to the AI trade, has been smashed in recent days (or weeks, if you’re lithium or uranium). Meanwhile, the Small Ords is in breakdown mode and on life support, undercutting recent lows to trade at its lowest level since May 2025

  

• Australia unemployment rate steady at 4.7% in September vs. ests of 4.6%

  • Employment fell by 39,300 vs ests of a 20,000 gain, reversing August’s 29,300 increase

  • Full-time employment rose 34,400, while part-time employment fell 73,700

  • Participation rate down 0.2 percentage points to 66.8% vs 67.0% ests