Week commencing 1 December 2025

ASX 200 rebounds as US rate cut hopes lift sentiment

United States (US) stock markets are set to finish the Thanksgiving-shortened week higher, supported by optimism over Federal Reserve (Fed) interest rate cuts. US rate markets are now pricing an 85% probability of a 25 basis point (bps) cut at the Fed’s 10 December meeting.

Locally, the Australia 200 (ASX 200) is on track to snap a four-week losing streak, rising more than 2%. Gains followed a rally on Wall Street and came despite a hotter-than-expected monthly inflation report, which is likely to keep the Reserve Bank of Australia (RBA) on hold at 3.60% for the foreseeable future.

The week that was: highlights

• In the US, durable goods orders excluding transport rose 0.6% in September, following an upwardly revised 0.5% gain in August
• The ADP employment report showed average weekly private payroll losses of 13,500 for the four weeks ending 8 November, a sharp increase from the 2500 weekly fall in the previous period
• Initial jobless claims declined by 6000 for the week ending 22 November to 216,000, marking a third consecutive fall and returning to levels last seen in February
• The retail sales control group for September, which feeds into US gross domestic product (GDP), fell 0.1%, well below expectations for a 0.4% rise
• The Conference Board (CB) Consumer Confidence Index for November fell to 88.7 from 95.5, as households became more pessimistic about the labour market outlook and the impact of the recent government shutdown
• Core producer price inflation (PPI) rose 2.6% year-on-year (YoY) in September, the slowest pace since July 2024
• In New Zealand, the Reserve Bank of New Zealand (RBNZ) cut rates by 25 bp to 2.25% and signalled it will pause further easing
• In Australia (AU), headline inflation accelerated to 3.8% YoY in October
• The RBA’s preferred inflation measure, trimmed mean consumer price index (CPI), ticked higher to 3.3% YoY from 3.2%, exceeding the consensus forecast of 3.0%
• Crude oil gained 1.79% to $59.10
• Gold rose 2.31% to $4158
• Bitcoin ended its four-week losing streak, rising 5.36% to $91,536
• The volatility index (VIX), Wall Street’s gauge of fear, fell to 17.22 from 23.42 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – Company gross profits and business inventories: Monday, 1 December at 11.30am AEDT
• AU – Building permits and net exports: Tuesday, 2 December at 11.30am AEDT
• AU – Q3 GDP: Wednesday, 3 December at 11.30am AEDT
• AU – Balance of trade: Thursday, 4 December at 11.30am AEDT

China & Japan

• JP – Bank of Japan (BoJ) Governor Ueda speech: Monday, 1 December at 12.05pm AEDT
• CN – RatingDog manufacturing purchasing managers’ index (PMI): Monday, 1 December at 12.45pm AEDT
• JP – Consumer confidence: Tuesday, 2 December at 4.00pm AEDT

United States

• US – Institute for Supply Management (ISM) manufacturing PMI: Tuesday, 2 December at 2.00am AEDT
• US – ISM services PMI: Thursday, 4 December at 2.00am AEDT
• US – Core personal consumption expenditures (PCE) price index (September): Saturday, 6 December at 2.00am AEDT
• US – Personal income and spending: Saturday, 6 December at 2.00am AEDT

Europe & United Kingdom

• EA – Inflation: Tuesday, 2 December at 9.00pm AEDT

Key events for the week ahead

CN: RatingDog manufacturing PMI 

Date: Monday, 1 December at 12.45pm AEDT

Last month, China’s RatingDog manufacturing PMI eased to 50.6 from September’s six-month high of 51.2, missing expectations for a modest decline to 50.9.

The slowdown reflected softer new orders at 48.8 (the weakest since July) and reduced output growth, compounded by the sharpest fall in export sales in five months amid trade tensions with Western economies. The official National Bureau of Statistics (NBS) PMI fell to 49.0 from 49.8, marking a seventh month of contraction and the weakest reading since April.

Consensus expects a mild rebound in November, with the index forecast to rise to around 50.8, keeping it in expansionary territory for a fourth month.

Rating Dog Manufacturing PMI chart

AU: GDP

Date: Wednesday, 3 December at 11.30am AEDT

In the second quarter (Q2) 2025, Australian GDP rose 0.6% (ahead of the 0.5% forecast), up from 0.3% in the first quarter (Q1), delivering an annual growth rate of 1.8%. This marked the economy’s 15th straight quarter of expansion.

Tom Lay, Australian Bureau of Statistics (ABS) head of national accounts, said: ‘Economic growth rebounded in the June quarter following subdued growth in the March quarter, which was heavily impacted by weather events.’

Key details from the report include:

• Per capita GDP increased 0.2% quarter-on-quarter (QoQ), returning to positive territory after a 0.2% fall in March
• Household saving-to-income fell to 4.2% from 5.2%, as spending rose faster than disposable income
• Household spending rose 0.9%, led by discretionary categories including recreation and culture (+2.0%), transport services (+1.7%) and hotels, cafes and restaurants (+0.7%)
• Inventories contributed 0.1 percentage points (pp), with mining seeing a large coal build-up as production recovered from earlier weather disruptions
• Net trade added 0.1 pp, as exports rose 1.7% and imports increased 1.4%
• Labour productivity rose 0.3%, while annual productivity growth remained weak at 0.2%
• Government spending increased 1.0%, driven by higher social benefit payments and increased electoral expenditure associated with the 2025 federal election
• Public investment fell 3.9%, subtracting 0.2 pp from GDP, as several infrastructure projects neared completion.

Australia’s Q2 GDP exceeded expectations, supported by a rebound in household consumption. With real disposable incomes rising after two years of per-capita recession, the pass-through from the RBA’s rate-cutting cycle is now being felt.

Ahead of next week’s GDP print, early estimates point to a 0.6% QoQ rise, lifting annual growth to 2.2%, above the RBA’s 2.0% forecast for December 2025.

If this forecast proves accurate, stronger employment data and upside inflation surprises will likely reinforce the case for the RBA to remain on hold at 3.60% for an extended period.

AU GDP chain volume measures chart

US: ISM services PMI 

Date: Thursday, 4 December at 2.00am AEDT

The ISM services PMI is a critical leading indicator for the US economy, given that services make up roughly 70% – 75% of GDP. Covering sectors such as retail, finance, healthcare and technology, it offers real-time insight into consumer-driven economic momentum. Readings above 50 indicate expansion; below 50 indicate contraction.

The employment sub-index remains in focus, offering forward-looking insight into labour demand, particularly relevant following the cancellation of the October non-farm payrolls report due to the recent US government shutdown.

The October ISM services PMI rose to 52.4 from 50.0, beating expectations of 50.8 and marking the strongest expansion since February 2025. Employment remained in contraction at 48.2 but improved slightly from 47.2.

Consensus expects the November reading to rise modestly to 52.7. Markets will be watching whether employment conditions weaken further, as persistent softness would reinforce the roughly 85% probability currently priced in for a 25 bps Fed rate cut at the 9 – 10 December Federal Open Market Committee (FOMC) meeting.

ISM Services PMI chart