ASX 200 reaches new high amid US market caution

US tech stocks face caution as ASX 200 surges

United States (US) stock markets fell this week, led by the tech-heavy US Tech 100 (Nasdaq), as investors took a more cautious approach towards expensive tech stocks following a strong rally from the April lows. This cautiousness comes as the market awaits Federal Reserve (Fed) Chair Jerome Powell's speech at the Jackson Hole Symposium, which is expected to challenge the market's expectations of a 25-basis-point (bp) rate cut in September, as well as NVIDIA's earnings report next week.

Locally, the Australia 200 (ASX 200) reached a new record high of 9025 and is poised for a weekly gain of 0.70%. Its gains this week were driven by the defensive nature of the local index and its significant weighting of major banks. Additional support came from mostly solid earnings reports and a substantial rise in the Australian consumer confidence index for August, which bolstered consumer-facing stocks.

Next week is set to be another busy one for ASX 200 earnings, with reports expected from companies such as Fortescue, Reece, Endeavour Group, Kogan, G8 Education, Adairs, Nine Entertainment, Domino’s Pizza, Woolworths, Flight Centre, Mineral Resources, Qantas, TPG Telecom, and Medibank, among others.

The week that was: highlights

• In the US, housing starts decreased to 5.2% in July from 5.9% previously
• The Federal Open Market Committee (FOMC) meeting minutes indicated that the impact of new tariffs is expected to take time to materialise. Additionally, a majority of members viewed inflation risks as outweighing employment risks, signalling a continued cautious stance on rate cuts
• The S&P flash global composite purchasing managers' index (PMI) for August
• Initial jobless claims surged by 11,000 last week to 235,000, well above market expectations of 225,000
• Continuing jobless claims rose by 30,000 last week to 1,972,000, above expectations of 1,960,000, reaching the highest level since late 2021
• In Japan (JP), the headline inflation rate in July eased to 3.1% from 3.3% prior, while the Bank of Japan’s (BoJ) preferred measure of inflation, core-core, remained at 3.4%
• In the United Kingdom (UK), the core inflation rate in July rose to 3.8% year-on-year (YoY) from 3.7%
• In the euro area, the flash PMI for August rose to 51.1 from 50.9, exceeding expectations of 50.7
• In Australia (AU), the Westpac Consumer Confidence Index for August surged 5.7% to 98.5, its highest since February 2022
• In New Zealand (NZ), the Reserve Bank of New Zealand (RBNZ) cut rates by 25 bp to 3% and hinted at more rate cuts ahead
• Crude oil rose by 1% this week to US$63.43
• Gold traded flat this week at US$3332
• Bitcoin fell 3.76% this week to US$113,072
• Wall Street's gauge of fear, the volatility index (VIX), increased to 16.59 this week from 15.08 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU  Reserve Bank of Australia (RBA) meeting minutes: Tuesday, August 26 at 11.30am AEST
• AU monthly consumer price index (CPI) indicator: Wednesday, August 27 at 11.30am AEST
• NZ ANZ Business Confidence: Thursday, August 20 at 12.00pm AEST

China & Japan

• JP consumer confidence: Friday, August 29 at 3.00pm AEST
• CN National Bureau of Statistics (NBS) manufacturing PMI: Sunday, August 31 at 11.30am AEST

United States

• Durable goods orders: Tuesday, August 26 at 10.30pm AEST
• Second quarter (Q2) gross domestic product (GDP) second estimate: Thursday, August 28 at 10.30pm AEST
• Core personal consumption expenditures (PCE) price index: Friday, August 29 at 10.30pm AEST
• Personal income and spending: Friday, August 29 at 10.30pm AEST

Europe & United Kingdom

• EA economic sentiment index: Thursday, August 28 at 7.00pm AEST

Key events for the week ahead

AU: Monthly CPI indicator

Date: Wednesday, August 27 at 11.30am AEST

For June, the monthly CPI indicator rose 1.9% YoY in June, easing from 2.1% in May, its lowest level since March 2021. Annual trimmed mean inflation eased to 2.1% YoY from 2.4% prior, marking the lowest level since October 2021.

The monthly CPI indicator was released at the same time as the Q2 2025 CPI, which provided the green light for the RBA to cut rates by 25 bp to 3.60% at its meeting in mid-August and hint at more rate cuts to come.

The preliminary expectation is for headline inflation to rise to 2.3%. The Australian interest rate market is pricing in 23 bp of rate cuts for the RBA’s meeting in November, with a follow-up 25 bp rate cut almost fully priced for March 2026.

Monthly CPI indicator chart

US: Core PCE price index

Date: Friday, August 29 at 10.30pm AEST

For June, the core PCE index rose by 0.3% month-on-month (MoM) for its biggest rise in four months. This saw the annual rate of core PCE inflation rise to 2.8% above expectations of 2.7%.

The expectation for July is for the core PCE price index to rise by 0.3% MoM, which would see the annual rate rise to 2.9%, pulling further away from the 2.6% low it struck in April, as the inflationary impact of previous tariffs becomes more obvious.

The release of the FOMC meeting minutes this week showed that the committee expects the impact of new tariffs to take some time to fully materialise. Additionally, a majority of members viewed inflation risks as outweighing employment risks, signalling a continued cautious stance on rate cuts.

Nonetheless, the US interest rate market is pricing in a 75% chance of a 25 bp rate cut at the September 17 meeting after being as high as 100% after July’s inline inflation report.

Core PCE price index chart

CN: NBS manufacturing PMI

Date: Sunday, August 31 at 11.30am AEST

For July, China’s official NBS manufacturing PMI fell to 49.3 from 49.7 in June, marking a fourth month of contraction in factory activity.

It was the sharpest fall since January and supports the view that growth in the Chinese economy will slow in the third quarter (Q3) with payback of export and fiscal front-loading.

This month the market is looking for a modest rise to 49.7 as weather disruptions fade and the trade in subsidy resumes.

NBS manufacturing PMI chart

US: Q2 2025 earnings season

Q2 2025 earnings season continues next week with earnings reports scheduled from Snowflake, HP, NVIDIA, Dell, and Marvell Technology.