Australian shares post best week in nearly 3 months; RBA decision next week

By Aamir Khalid

Oct 30 (Reuters) - Australian shares logged their best week in nearly three months after edging higher on Friday, as banking stocks rose ahead of the central bank decision next week.

The benchmark S&P/ASX 200 index .AXJO logged a 1.3% weekly jump, its best since August 3, and rose 1.4% for the month. It rose 0.2% to 8,908.10 points on the day.

Rate-sensitive and heavyweight banks .AXFJ rose almost 7% this month, nearly recouping the loss from the last two months.

David Tuckwell, CIO at ETF Shares, attributed the financial sub-index's moves as a "flight to safety" and a rebound from a technical oversold level.

The subindex closed at its highest level since mid-August after three successive weekly advances that saw it log its best monthly gain since February.

Tuckwell added that banks could also benefit from higher interest rates in the short run, as the hikes flow through to net interest income and boost margins.

The Reserve Bank of Australia is expected to raise cash rate to a near two-decade high of 4.85% next Tuesday, a Reuters poll of 32 economists showed.

In other sections of the market, discretionary stocks .AXDJ advanced 2.7% to its best session since mid-June.

The sector has rebounded due to some short-covering and a sense that the recent selling had become overdone, said Tim Waterer, chief market analyst at KCM Trade.

Energy stocks .AXEJ gained 1%, with sector majors Woodside Energy WDS.AX and Santos STO.AX up 1.8% and 1.3% respectively.

However, miners .AXMM fell 1.1% on easing copper prices. Heavyweight Rio Tinto RIO.AX dropped 1.6%. MET/L

The sub-index recorded its worst month since March.

The consumer staples index .AXSJ slipped 1%, weighed by a 7.7% decline in grocer Coles COL.AX.

The country's second-largest grocer marked its worst day since March 2020, after missing estimates for first-quarter sales revenue.

The New Zealand benchmark S&P/NZX 50 index .NZ50 rose 0.6% to 13,797 points. A central bank member showed support for a December hike if inflationary pressures continued.