Week commencing 22 June 2026

Ceasefire lifts US equities as BHP shock hits ASX 200

In a holiday-shortened week, United States (US) equity markets finished with strong gains, boosted by the US–Iran ceasefire and a welcome retreat in energy prices. Investors also continued to aggressively chase technology stocks, brushing aside concerns around potential rate hikes under new Federal Reserve (Fed) Chair Kevin Warsh.

Closer to home, the ASX 200 is doing its best to finish the week in positive territory, but the index has surrendered its early gains following a late-week sell-off. The drag lower was firmly led by market heavyweight BHP Group, which shocked investors by announcing a major cost overrun and delay at its Jansen Stage 2 potash project in Canada. The mining giant lifted Stage 2 capital expenditure (capex) from US$4.9 billion to US$6.9 billion, booked a painful US$2.3 billion impairment, and pushed first production out two full years to late fiscal year (FY) 2031. In response, BHP shares dived as much as 3.72%, a sharp reversal after hitting a record high of $65.98 just two days earlier.

The week that was: highlights

• The Fed held its benchmark interest rate steady at 3.75%, matching market consensus, and sounded hawkish
• US headline retail sales jumped 0.9% month-on-month (MoM) in May, comfortably exceeding the 0.5% consensus forecast
• The closely watched retail control group rose 0.7% MoM against expectations of a 0.4% increase
• US pending home sales surged 3.8% MoM in May, smashing the 0.8% consensus forecast and marking a sharp acceleration from the downwardly revised 0.3% rise in the prior month
• US housing starts plummeted by 15.4% MoM to an annualised rate of 1.177 million in May, falling well short of the 1.43 million consensus
• Initial jobless claims fell to 226,000 last week, slightly better than the 225,000 expected. Continuing claims, however, rose by 24,000 to 1,810,000, the highest level in nearly three months
• The Bank of Japan (BoJ) raised its key interest rate by 25 basis points (bp) to 1%, the highest in 31 years
• Core inflation in Japan rose 1.4% year-on-year (YoY) in May, in line with forecasts
• Chinese retail sales disappointed, falling 0.6% YoY in May against expectations for a flat 0% reading, though industrial production provided a bright spot by rising 4.5% YoY to beat the 4.3% consensus
• China (CN) new home prices across 70 cities fell 3.5% YoY in May, marking a 35th month of declines
• United Kingdom (UK) headline inflation held steady at 2.8% YoY in May, missing the 3.0% consensus forecast, while core consumer price index (CPI) came in slightly below expectations at 2.6% YoY
• The Bank of England (BoE) kept its official bank rate on hold at 3.75% as expected
• Euro area ZEW economic sentiment staged a massive rebound in June, surging to 9.5 from -9.1 prior and easily beating the -7.2 consensus forecast
• The Reserve Bank of Australia (RBA) kept its official cash rate on hold at 4.35%, as widely expected
• New Zealand’s (NZ) economy grew by 0.8% quarter-on-quarter (QoQ) in the first quarter (Q1), accelerating from the prior quarter’s 0.5% growth but narrowly missing the 0.9% consensus forecast
• West Texas Intermediate (WTI) crude oil dived 10.64% this week to $75.85
• The US dollar index (DXY) surged 1.06% this week to 100.68
• Bitcoin lost 4.20% this week to $62,943
• Gold fell 1% to $4176
• Wall Street’s gauge of fear, the volatility index (VIX), fell to 16.41 from 17.67 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – CPI May: Wednesday, 24 June, at 11.30am AEST
• AU – RBA Hauser speech: Wednesday, 24 June, at 4.30pm AEST
• AU – labour force May: Thursday, 25 June, at 11.30am AEST

China & Japan

• CN – loan prime rate 1Y: Monday, 22 June, at 11.15am AEST
• CN – loan prime rate 5Y June: Monday, 22 June, at 11.15am AEST
• JP – S&P Global manufacturing purchasing managers' index (PMI) flash June: Tuesday, 23 June, at 10.30am AEST
• JP – S&P Global services PMI flash June: Tuesday, 23 June, at 10.30am AEST

United States

• US – S&P Global flash PMIs June: Tuesday, 23 June, at 11.45pm AEST
• US – core personal consumption expenditures (PCE)price index May: Thursday, 25 June, at 10.30pm AEST
• US – durable goods orders May: Thursday, 25 June, at 10.30pm AEST
• US – gross domestic product (GDP) growth rate QoQ final Q1: Thursday, 25 June, at 10.30pm AEST

Europe & United Kingdom

• EA – consumer confidence flash June: Tuesday, 23 June, at 12.00am AEST
• EA – S&P Global flash PMIs June: Tuesday, 23 June, at 6.00pm AEST
• UK – S&P Global flash PMIs June: Tuesday, 23 June, at 6.30pm AEST

Key events for the week ahead

US: S&P Global flash PMIs

Date:Tuesday, 23 June at 11.45pm AEST

For May, the S&P Global US flash composite PMI held steady at 51.7, unchanged from April.

Drilling into the details, the manufacturing PMI climbed to 55.3 from 54.5, its strongest reading since May 2022, as new orders rose at the fastest pace in four years and output accelerated sharply on stockpiling efforts to mitigate the impact of the earlier energy shock. Meanwhile, the services PMI eased slightly to 50.9 from 51.0, as new business intake fell for the first time in two years on war-related uncertainty and tariff concerns. Input price pressures remained elevated across both sectors due to higher energy and staffing costs.

Tuesday’s June flash PMIs will be closely watched for signs of whether this resilience is holding or beginning to fade after the Fed’s hawkish pivot this week. With the rates market now pricing in a rate hike as soon as October, any softening in the composite or manufacturing readings could help ease rate hike fears, while another solid print would support the view that the US economy retains enough momentum to absorb tighter policy.

Consensus expects a modest easing, with the manufacturing PMI forecast to pull back slightly to 54.8 and the services PMI to remain near current levels.

The US rates market is currently pricing in a full 25 bp Fed rate hike by October 2026, with two hikes now priced in by March 2027.

US composite PMI chart

AU: CPI

Date: Wednesday, 24 June at 11.30am AEST

For April, CPI data saw some cooling, with headline inflation falling to 4.2% YoY in the 12 months to April 2026, down from 4.6% in March. Housing remained the largest contributor with a 6.3% rise, while transport eased sharply to 6.6% after automotive fuel prices fell 7.0% in the month (partly reflecting the halving of the fuel excise). The RBA’s preferred measure of inflation, the trimmed mean, edged higher to 3.4% from 3.3%.

At its Board meeting earlier this week, the RBA acknowledged that ‘inflation is still too high’ and noted that the disruption to global oil supply is continuing to feed into broader prices, with some firms passing on higher costs. The Board judged it appropriate to hold the cash rate at 4.35% while assessing the impact of the three hikes delivered this year and the evolving energy shock.

However, it made it clear that its hawkish bias remains firmly intact, noting that the Board is focused on its mandate to deliver price stability and full employment and that it ‘will do what it considers necessary to achieve that outcome, including increasing the cash rate target further if required.’

Wednesday’s May CPI release will therefore be in sharp focus. Consensus expects headline inflation to rise back to 4.6% YoY, with the trimmed mean likely to climb towards 3.6%. A hotter-than-expected core reading would reinforce the RBA’s hawkish bias and keep the door open for further tightening, while a softer print would add weight to the view that policy is now restrictive enough.

The interest rate market ends this week pricing in 8 bp of rate hikes for the RBA’s August meeting, with a cumulative 15 bp of RBA rate hikes priced for the remainder of 2026.

AU all groups CPI and trimmed mean chart

AU: Labour force

Date: Thursday, 25 June at 11.30am AEST

Last month, the April employment report delivered a softer-than-expected outcome, with the number of employed people falling by 18,600, well below the roughly +15,000 consensus forecast. At the same time, the unemployment rate rose 0.2 percentage points (pp) to 4.5%, the highest level since late 2021, while the participation rate eased slightly to 66.7% from 66.8%.

At its Board meeting earlier this week, the RBA noted that ‘The unemployment rate was higher than expected in April, but other measures of labour market conditions have been more resilient.’

Looking ahead to the May update, consensus expects a rise in employment of around 25,000, with the unemployment rate expected to ease lower to 4.4%. A number that shows ongoing softening, particularly another rise in the jobless rate toward 4.6% or further weakness in full-time employment, would add weight to the view that the RBA has done enough on rates. Conversely, a stronger print would keep tightening risk alive, especially with the central bank still alert to lingering wage and inflation pressures.

Australian unemployment rate chart

US: Core PCE price index

Date: Thursday, 25 June at 10.30pm AEST

Last month, headline PCE inflation rose 0.4% for the month, lifting the annual rate to 3.8% from 3.5%, the highest reading since May 2023. The Fed’s preferred inflation gauge, core PCE, rose 0.2% MoM in April, lifting the annual rate to 3.3% from 3.2%. This was the highest core reading since late 2023 and well above the Fed’s 2% target.

This week’s Federal Open Market Committee (FOMC) meeting delivered a sharp hawkish shift. While the Fed held rates steady at 3.50% - 3.75% as expected, the updated Summary of Economic Projections showed nine of the 19 officials now see at least one rate hike by the end of 2026, a major reversal from March when the median forecast still called for rate cuts.

The policy statement removed earlier language around potential easing, and in his debut press conference, new Chair Kevin Warsh emphasised the Fed’s commitment to price stability. He also refrained from submitting a dot in the projections.

Thursday’s May core PCE release will therefore carry extra weight. Consensus preliminary forecasts are looking for the rate to edge higher to 3.4%. While energy prices have fallen sharply in recent weeks, there is some offset from a firmer labour market and resilient activity data. A hotter-than-expected print would reinforce the hawkish pivot and add to expectations of tighter policy later this year, while a softer reading would help temper rate hike fears.

Core PCE price index annual change chart