Australian shares close lower as banks slump; CBA`s lofty valuation weighs

Published on 08/13/2025 at 02:50 am EDT

• Overvaluation weighs on financials, Commonwealth Bank of Australia
• CBA drops to lowest since May 15
• Financials close lowest in two weeks
• Treasury Wine Estates hits two-week high

(Reuters) - Australian shares fell on Wednesday as the Commonwealth Bank of Australia slumped despite record earnings, highlighting concerns over the banking sector's stretched valuations that have left even stellar results unable to justify sky-high prices.
The S&P/ASX 200 index closed 0.6% lower at 8,827.1 points after scaling a record high in the previous session.
Financials, the market's heaviest-weighted sector, led the decline to fall 2.6% to their lowest close in two weeks, and continued their retreat from the all-time high of 9,676.6 reached on June 27.
That peak came after a more-than-10% surge in the first half of the year -- a rally that now appears overstretched.
Australian banks have faced criticism for their extremely high valuations, with CBA and the other lending majors trading at significantly higher price-to-earnings ratios relative to their global peers.
The country's central bank cut interest rates on Tuesday for the third time this year, signalling further easing may be needed, a move analysts say will compress margins and limit banks' ability to capitalise on their vast deposit base.
CBA, whose shares have rallied more than 50% since November 2023, fell as much as 6.4% on the day to its lowest level since May 15. The bank had delivered a record full-year cash earnings of A$10.25 billion ($6.69 billion).
"CBA carried very high valuations and post-earnings, we're seeing profit-taking that's been long overdue," said Junvum Kim, Asia-Pacific senior sales trader at Saxo Markets.
Energy stocks fell nearly 1%, tracking oil price declines, with Woodside Energy and Santos both down.
Bucking the trend, gold and mining stocks rose 1.6% and 1%, respectively, with FireFly Metals gaining 6.3%, and the 'big three' miners up between 1 and 1.4%.
Among individual stocks, Treasury Wine Estates climbed as much as 5.6% to a two-week high, following a 16% rise in annual underlying profit.
Across the Tasman, New Zealand's S&P/NZX 50 index closed 0.1% higher at 12,766.54 points.
 (Reporting by Adwitiya Srivastava in Bengaluru; Editing by Janane Venkatraman) 

Sumber : Reuters