The S&P/ASX 200 Index (ASX: XJO) jumped by 1.6% today, with S&P/ASX 200 Financials (ASX: XFJ) bank shares playing an important part in the stock market's positive return today.
The ASX 200 financial sector saw a 2.2% rise, with the big four banks contributing significantly.
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ASX 200 financial shares deliver the goods
Here's a rundown of the sector's share price movements today:
- The Commonwealth Bank of Australia (ASX: CBA) share price climbed 2.1%
- The National Australia Bank Ltd (ASX: NAB) share price grew by 1%
- The Westpac Banking Corp (ASX: WBC) share price went up by 3.1%
- The ANZ Group Holdings Ltd (ASX: ANZ) share price dropped 0.7%
- The Macquarie Group Ltd (ASX: MQG) share price climbed 3.2%
- The Suncorp Group Ltd (ASX: SUN) share price gained 1.9%
- The QBE Insurance Group Ltd (ASX: QBE) share price increased by 2.5%
- The Challenger Ltd (ASX: CGF) share price rose 2%
While it wasn't a gigantic jump for the sector, its constituents collectively saw share price gains, driving the index higher.
Indeed, the ASX 200 saw positive price movement in different sectors on Wednesday. For example, ASX 200 tech shares also experienced a pleasing bump today.
It was a welcome sign on the second trading day of the new year. Yesterday, on 3 January, we saw a hefty fall.
Certainly, ASX financial shares have seen plenty of volatility over the last 12 months.
According to reporting by CNBC, Asian investors have pushed valuations (including in Hong Kong) higher as focus turns to the US Federal Reserve meeting minutes for possible signs about future interest rate increases.
The media outlet also reported that European share markets are headed for a positive opening.
The ASX's return is often influenced by what happens in overseas markets. While there are plenty of large businesses on the ASX, it only makes up a small part of global share markets.
What could influence the sector this year?
Investor expectations about interest rates could significantly impact how share prices move this year.
ASX bank shares provide loans to borrowers. With central banks increasing interest rates, the Aussie banks are quickly passing on those increases to households. But, savers are seeing less of the interest rate hikes, so it's benefiting bank margins.
However, if interest rates go too high then it could negatively impact the budgets of some households and businesses. Banks typically check that investors can afford their loans if the interest rate were to rise by 2%. The Australian official interest rate has risen by 3%, going from 0.1% to 3.1%.
Time will tell how high interest rates have to go to control inflation, and what impact this will have on ASX 200 financial shares.
