Ahead of the game
The US labour market's cooling trend lifts equities and fuels hopes for rate cuts, whereas the ASX 200 struggles under the weight of contrasting economic signals despite strong GDP growth.
United States (US) equity markets rose this week as the release of the Job Openings and Labor Turnover Survey (JOLTS) job openings and ADP employment report indicated a cooling labour market, raising expectations that the Federal Reserve (Fed) will restart its rate-cutting cycle in two weeks.
Locally, the Australia 200 (ASX 200) aims to break a four-week winning streak following an initial heavy sell-off at the start of the week. The market failed to recover despite a better-than-expected second quarter (Q2) 2025 gross domestic product (GDP) report, which showed growth in the Australian economy rising to 1.8% year-over-year (YoY) from 1.3% – the fastest annual growth rate since the third quarter (Q3) of 2023.
Date: Tuesday, 9 September at 10.30am AEST
For August, the Westpac Consumer Confidence Index rose 5.7% month-on-month (MoM) to 98.5 points, its highest level since February 2022, driven by Reserve Bank of Australia (RBA) rate cuts, rising wages, and easing cost-of-living pressures.
The significant rise suggests that Australian consumers are becoming more optimistic about major purchases and the economic outlook, potentially influencing business and consumer spending, employment, and growth prospects in the Australian economy.
The September reading likely coincides with the week ending, which included the release of the Q2 Australian GDP data, showing a rise to 1.8% YoY – the fastest rate of annual growth since Q3 2023.
This, along with speculation of a 25 basis point (bp) rate cut at the RBA’s November meeting, combined with easing inflation and positive global cues, is expected to see the Consumer Confidence Index rise further to 99.5 in September.
Date: Wednesday, 10 September at 11.30am AEST
For July, China’s consumer prices showed a YoY inflation rate of 0.0%, narrowly avoiding a return to negative territory. Core inflation, excluding volatile food and fuel prices, increased by 0.8% YoY, the highest level in 17 months.
For August, the market expects a fall of -0.2% YoY. Core CPI is expected to remain steady at approximately 0.7% YoY, as structural demand weakness persists.
The zero rate of inflation in July and the expected decline in August signal that China’s economy continues to face deflationary pressures, indicating insufficient consumer and business activity.
The threat of deflation, combined with slow demand and external challenges like US-China trade tensions, suggests that additional stimulus may be needed to boost economic momentum in China.
Date: Thursday, 11 September at 10.15pm AEST
At its last meeting in July, the ECB kept policy rates unchanged, marking a pause in the ECB’s rate-cutting cycle that began in June 2024. With inflation hovering at the 2% medium-term target, the eurozone economy shows resilience despite global trade tensions.
Expectations for the next meeting are that the ECB will keep key policy rates on hold. The European interest rate market is pricing just a 25% chance of another ECB rate cut before year-end.
Date: Thursday, 11 September at 10.30pm AEST
For July, headline inflation in the US increased by 0.2%, keeping the annual rate at 2.7%. The annual core consumer price index, excluding volatile items, rose by 0.3%, pushing the annual core inflation rate to 3.1%.
For August, the expectation is for the annual headline inflation rate to rise to 2.9% – the highest since January – with the core measure remaining at 3.1% YoY.
Ahead of this release, the US interest rate market is fully priced for a 25 bp rate cut on 17 September and is pricing in a total of 150 bp of Fed rate cuts between now and December 2026.
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