Week commencing 27 July 2026

US earnings disappoint as the ASX 200 holds firm

United States (US) equity markets are poised to finish the week lower following disappointing earnings results from Alphabet and Tesla, while surging oil prices and a more hawkish rates backdrop weighed on risk appetite.

Closer to home, the ASX 200 is set to finish the week modestly higher, near the 8800 level where it has closed for the past six weeks. Gains in energy, resources and bank stocks helped offset falls in health care, information technology (IT) and consumer discretionary stocks.

The week that was: highlights

• In the US, initial jobless claims for the week ending 18 July fell to 187,000 – well below the 212,000 expected and the lowest level in nearly 60 years
• China's central bank left its 1-year and 5-year loan prime rates unchanged at 3% and 3.5% respectively, in line with broad market expectations for July
• Japan's trade deficit widened to ¥-406.9 billion in June, missing the consensus forecast of ¥-120 billion despite exports growing by a healthy 19.3% year-on-year (YoY)
• In Japan, headline inflation rose to 1.7% YoY in June from 1.5% prior. Core inflation rose to 1.6% YoY in June from 1.4% prior
• The United Kingdom (UK) labour market delivered a significant surprise as employment surged by 147,000 in May, far exceeding the consensus forecast of 85,000, while the unemployment rate stayed at 4.9%, defying expectations for a rise to 5.0%
• UK headline inflation eased to 2.6% YoY in June, slightly below the 2.7% consensus forecast, while the core inflation rate remained sticky at 2.6% against expectations of 2.5%
• Economic sentiment in the Eurozone saw a massive boost as the ZEW Index jumped to 23.4 in July, easily outperforming the 11.2 consensus forecast and the 9.5 prior reading
• The European Central Bank (ECB) delivered a hawkish hold as expected, with the press conference also largely in line with expectations, reinforcing the view of a 25 basis points (bp) rate hike in September
• The Australian economy produced a blockbuster labour force report as employment jumped by 76,300 in June, obliterating the consensus forecast of 15,000, while the unemployment rate held steady at 4.4%
• New Zealand's inflation rate rose by 1.5% quarter-on-quarter (QoQ) in the second quarter (Q2), exceeding the consensus forecast of 1.4% and marking an acceleration from the 0.9% gain in the first quarter (Q1)
• WTI crude oil surged 12.03% this week to $91.62
• The US dollar index (DXY) gained 0.62% to 101.39
• Bitcoin is trading marginally higher this week at $65,030
• Gold is trading 0.65% higher this week at $4043
• Wall Street's gauge of fear, the volatility index (VIX), eased to 18.69 this week from 18.76 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – Reserve Bank of Australia (RBA) Governor Bullock speech: Tuesday, 28 July at 1.05pm AEST
• AU – Inflation rate (June): Wednesday, 29 July at 11.30am AEST
• NZ – ANZ business confidence: Thursday, 30 July at 11.00am AEST
• AU – Building permits MoM, preliminary: Thursday, 30 July at 11.30am AEST
• AU – RBA Hunter speech: Friday, 31 July at 8.40am AEST
• AU – Producer Price Index (PPI) QoQ: Friday, 31 July at 11.30am AEST

China & Japan

• CN – National Bureau of Statistics (NBS) manufacturing Purchasing Managers' Index (PMI): Friday, 31 July at 11.30am AEST
• CN – NBS non-manufacturing PMI: Friday, 31 July at 11.30am AEST
• JP – Bank of Japan (BOJ) interest rate decision: Friday, 31 July at 1.00pm AEST
• JP – BOJ quarterly outlook report: Friday, 31 July at 1.00pm AEST

United States

• US – Durable goods orders MoM: Monday, 27 July at 10.30pm AEST
• US – Conference Board (CB) consumer confidence: Wednesday, 29 July at 12.00am AEST
• US – Federal Reserve (Fed) interest rate decision: Thursday, 30 July at 4.00am AEST
• US – Fed press conference: Thursday, 30 July at 4.30am AEST
• US – Gross domestic product (GDP) growth rate QoQ, advance: Thursday, 30 July at 10.30pm AEST
• US – Core Personal Consumption Expenditures (PCE) price index MoM: Thursday, 30 July at 10.30pm AEST
• US – PCE price index YoY: Thursday, 30 July at 10.30pm AEST
• US – Initial jobless claims: Thursday, 30 July at 10.30pm AEST

Europe & United Kingdom

• EA – GDP growth rate YoY, flash: Thursday, 30 July at 7.00pm AEST
• EA – Unemployment rate: Thursday, 30 July at 7.00pm AEST
• UK – Bank of England (BoE) interest rate decision: Thursday, 30 July at 9.00pm AEST
• EA – Inflation rate YoY, flash: Friday, 31 July at 7.00pm AEST
• EA – Core inflation rate YoY, flash: Friday, 31 July at 7.00pm AEST

Key events for the week ahead

AU: Inflation rate June

Date: Wednesday, 29 July at 11.30am AEST

May's consumer price index (CPI) data saw headline inflation ease to 4.0% YoY in the 12 months to May 2026, down from 4.2% in April and well below the 4.4% consensus. A decent chunk of the softer outcome came from lower transport costs, with automotive fuel prices falling sharply again. However, the RBA's preferred measure – the trimmed mean – rose to 3.6% YoY from 3.4% in April. That was a touch above the 3.5% market expectation, leaving both measures still well above the RBA's 2% – 3% inflation target band.

The May inflation report followed the RBA's Board meeting on 15 – 16 June, where the Bank held the cash rate at 4.35% after three 25bp hikes earlier this year. The Board 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.

Following this week's stronger-than-expected June labour force report and a 32% rise in crude oil prices this month, next Wednesday's Q2 CPI release will be in sharp focus.

Consensus expects headline inflation to edge higher to 4.1% YoY in June, with the trimmed mean rising to 3.8%. This would put the Q2 CPI at around 3.7% YoY, up from 3.5% in Q1, leaving inflation on all metrics well above the midpoint of the RBA's 2% – 3% target band.

Ahead of the release, the Australian interest rate market is pricing in around 9bp (a 36% chance) of a hike at the RBA's 11 August Board meeting. A 25bp hike is fully priced for November, which would see the cash rate finish the year at 4.60%.

An in-line or hotter-than-expected core reading would severely test the RBA's hawkish bias and raise the chances of a rate hike in August, while a softer print would likely keep the RBA on the sidelines until the September meeting.

AU all groups CPI and trimmed mean chart

US: Fed interest rate decision

Date:Thursday, 30 July at 4.00am AEST

At its June meeting, the Federal Open Market Committee (FOMC) kept the target range for the federal funds rate at 3.50% – 3.75%. Under new Chair Kevin Warsh, the meeting delivered a hawkish surprise. The updated dot plot showed nine officials now expecting at least one rate hike by the end of 2026, while the statement removed previous easing language.

Warsh was notably direct in his press conference, repeatedly stressing 'price stability' and signalling that he wants markets to react to the data rather than front-run forward guidance.

Since the June FOMC meeting, inflation data has been cooler than expected. The June CPI report showed headline inflation falling to 3.5% YoY from 4.2% in May – the first decline in five months and below forecasts of 3.8%. Core inflation eased to 2.6% from 2.9%, below expectations of 2.8%, driven by softer shelter costs and easing in categories such as airline fares, apparel, medical care and household furnishings.

However, the 32% rally in crude oil prices this month has reignited inflationary concerns and triggered a hawkish repricing in the US rates market. Markets are now pricing in a 34% chance of a 25bp hike at next week's FOMC meeting, with two full 25bp hikes priced by January 2027.

While this means there is a non-negligible chance the Fed delivers its first rate hike next week since July 2023, the most likely outcome is for a hawkish hold – with perhaps two or three members dissenting and voting for a hike.

Fed funds rate chart

UK: BoE interest rate decision

Date: Thursday, 30 July at 9.00pm AEST

At its last meeting in June, the BoE held the Official Bank Rate steady at 3.75% on a 7-2 vote. Two members, Huw Pill and Megan Greene, preferred a 25bp hike to 4%. The Committee struck a cautious but data-dependent tone as it continued to grapple with the ongoing Middle East conflict and the associated surge in global energy prices.

'The Committee will continue to monitor closely the situation in the Middle East and its impact on global energy supply and energy prices. It stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.'

This week's inflation and employment data provided a mixed picture. The annual CPI rate eased to 2.6% in June from 2.8% in May, marking the lowest reading since March 2025. Core inflation held steady at 2.6%, slightly above expectations of 2.5%. On the labour market side, employment rose by 148,000 in the three months to May, beating expectations of 85,000, while the unemployment rate remained unchanged at 4.9%, better than the expected rise to 5.0%.

Overall, the decline in headline inflation from 3.3% in March to 2.6% in June has helped push back market expectations of the first rate hike until later in the year. That said, next week's BoE decision and accompanying Monetary Policy Report will be watched closely for any shift in tone, especially given the recent rebound in energy prices and renewed geopolitical risks.

Bank of England cash rate chart

CN: NBS manufacturing PMI

Date: Friday, 31 July at 11.30am AEST

Last month, China's official NBS manufacturing PMI beat expectations, rising 0.3 points to 50.3 in June. The improvement was driven by a quarter-end production push and stronger exports, with the production index lifting to 51.4 and new orders climbing to 51.2.

The survey continued to highlight a deepening K-shaped economy: while high-end manufacturing and exports performed well, domestic demand remained lacklustre despite a modest infrastructure push.

With China's Q2 GDP recently undershooting at 4.3% – missing both consensus and Beijing's target – due to a slower infrastructure push after Q1 front-loading, oil-related drags, softer consumption from faded trade-in effects and lingering property weakness, next week's PMIs will be crucial. Consensus expects a decline to 49.9 for July, reinforcing the need for a faster infrastructure rollout to support the decelerating economy.

China NBS manufacturing PMI chart

JP: BOJ interest rate decision

Date: Friday, 31 July at 1.00pm AEST

At its last meeting in June, the BOJ held its short-term policy rate steady at 0.50% in a 7-2 split vote. Two board members dissented in favour of a hike, highlighting growing internal pressure to normalise policy further. The BOJ also revised up its core inflation forecast, citing the impact of higher crude oil prices on energy and goods costs, while trimming its growth outlook.

The macro backdrop has become even more complicated since then. Japan's core CPI (excluding fresh food but including energy) rose 1.6% YoY in June, up from 1.4% in May – but still well below the 2% target for a fifth straight month as government fuel subsidies helped offset price pressures from higher oil costs linked to the Middle East conflict. The index excluding volatile fresh food and fuel – the BOJ's preferred gauge of demand-driven inflation – rose 1.7% YoY in June after a 1.8% rise in May.

Despite reports this week that the BOJ is considering accelerating the pace of its rate-hiking cycle, the market is widely expecting the Bank to remain on hold next week. Japanese rates markets are currently pricing in the next rate hike for December.

Markets will watch closely for any fresh guidance from the statement and post-meeting comments on the pace of future normalisation, bond tapering, and how the Bank views the balance between inflation risks and growth.

BOJ interest rate setting chart

US: Q2 earnings season

US Q2 2026 earnings season continues next week with earnings reports from companies including AstraZeneca and Cadence on Monday, followed by PayPal, Coca-Cola, Boeing, Visa and Ford on Tuesday. The intensity reaches a fever pitch as the focus shifts to Microsoft, Meta, ARM and Qualcomm reporting on Wednesday. The high-stakes momentum continues with a blockbuster Thursday headlined by Apple, Amazon and Coinbase, before energy giants Chevron and ExxonMobil report on Friday to round out the week.