Is the Australia 200 rally at risk ahead of the CPI release?

The Australia 200 8 points (-0.09%) lower at 8688 as of 2.35pm AEST.

Sharp sell-off as market reacts to US-EU trade deal

The Australia 200 (ASX 200) experienced a sharp 54-point (-0.62%) sell-off in early trading, taking the index to a seven-day low of 8643.5 before dip buyers emerged to steady the market.

The initial excitement generated by the United States-European Union (US-EU) trade deal over the weekend evaporated. Concerns grew over how effectively the White House has used its economic and diplomatic leverage to secure significant investments and concessions for the US, potentially at the expense of other nations.      

RBA rate decision hinges on inflation data

Also contributing to today’s cautious session are nerves ahead of tomorrow’s Australian second-quarter (Q2) consumer price index (CPI) report. This report will be the final determining factor as to whether the Reserve Bank of Australia (RBA) cuts interest rates in August - bringing potential relief to Australia's mortgage holders - or elects to keep rates on hold, opting for short-term pain for long-term gain in the fight against inflation, which many think has already been won.

For the record, the core measure of inflation, the trimmed mean, is expected to increase by 0.7% quarter-on-quarter (QoQ), which would see the annual rate ease to 2.7%, down from 2.9% in Q1. This would be in line with the RBA’s forecasts and, along with June’s disappointing jobs report, could give the green light for the RBA to cut rates at its August meeting.

However, a trimmed mean print of 2.9% year-on-year (YoY) or higher would increase the chances of the RBA keeping rates on hold in August, which in turn would likely lead to a sharp sell-off in the Australia 200 tomorrow.

Australia 200 stocks

Given this risk, it’s notable that the interest rate-sensitive financials, consumer discretionary, and real estate sectors have been the main drags today.

Banking sector

• Australia and New Zealand Banking Group fell 0.86% to $30.05
• Macquarie Group dropped 0.63% to $214.85
• Commonwealth Bank of Australia lost 0.52% to $173.99
• Westpac Banking Corporation edged 0.42% lower to $33.07

Consumer discretionary sector

• Cettire dropped 4.11% to $0.35
• Domino’s Pizza Enterprises fell 2.1% to $18.35
• Kogan slipped 1.88% to $3.91
• Myer declined 1.54% to $0.64

Health care sector

The Australia 200 health care sector is now up 9% in July after another day of steady gains. 

• Fisher & Paykel Healthcare rose 1.46% to $33.78
• Cochlear gained 0.63% to $319.01, nearing a six-month high
• CSL Limited climbed 0.41% to $271.75, also at a six-month peak

Real estate sector

• Vicinity Centres declined 1.82% to $2.42
• Mirvac Group slipped 1.12% to $2.20
• GPT Group fell 0.80% to $4.98
• Scentre Group lost 0.67% to $3.71

Australia 200 technical analysis

After a test of the 8530 to 8510 support zone in mid-July, the Australia 200 regrouped and springboarded almost immediately to a fresh record high of 8776.4. Provided the Australia 200 holds above short-term support at 8620 to 8600ish, coming from previous record highs, we expect it to extend its gains towards 8850.

Be aware that a daily close below 8600 would be an initial warning that the move to the 8776.4 high was a false break higher and that a retest of the late June 8420 low is underway.

Australia 200 daily chart

• _{Source: TradingView. The figures stated are as of 29 July 2025. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}