Week commencing 16 February 2026

AI capital fears vs. ASX 200 earnings momentum

United States (US) equity markets began the week with optimism but retreated by the weekend. Concerns were driven by renewed fears surrounding artificial intelligence (AI) capital expenditures, anxieties about technology disruption, and a stronger-than-expected non-farm payrolls report delaying hopes for near-term Federal Reserve (Fed) rate cuts.

In contrast, the ASX 200 experienced a robust week, climbing over 2.5%. The February reporting season delivered its usual mix of earnings beats and bombshells. Strong earnings from heavyweight stocks, particularly the banks, overshadowed underperformance from smaller constituents, pushing the index higher.

The week that was: highlights

• The US economy added 130,000 jobs in January, exceeding the consensus forecast of 70,000 and marking the largest gain since December 2024; the unemployment rate eased to 4.3%
• US headline retail sales were flat against an expected 0.4% rise; the retail control group fell 0.1% month-on-month (MoM) against a forecast 0.4% increase
• Initial US jobless claims fell by 5000 to 337,000 for the first week of February
• In China (CN), the annual headline inflation rate eased to 0.2% in January, versus a forecast of 0.4%, down from 0.8% prior
• Chinese core inflation, excluding food and energy, rose 0.8% year-on-year (YoY), the weakest in six months, after 1.2% in December and November
• Chinese producer price index (PPI) YoY for January declined 1.4% versus a forecast of 1.5% and prior of 1.9%.
• In Australia (AU), National Australia Bank (NAB) business confidence rose to 3 in January from a downwardly revised 2 the prior month
• Westpac consumer confidence index declined 2.6% in February versus a consensus of 1.7%, with the index falling to 90.5 - a ten-month low
• Australian home loans in the fourth quarter (Q4) surged to 10.6% from an upwardly revised 6.2% in the prior quarter
• Investment lending for homes in Australia in Q4 rose 7.9%, easing from 9.2% in the prior quarter
• Crude oil fell 1.10% to $62.85
• Gold fell 0.9% this week to $4920
• Bitcoin fell 5.56% this week to $66,362
• Wall Street's volatility index (VIX) surged to 20.81 from 17.77 the previous week

Key dates for the week ahead

Australia & New Zealand (NZ)

• AU – Reserve Bank of Australia (RBA) meeting minutes: Tuesday, 17 February at 11.30am AEDT
• AU – wage price index Q4: Wednesday, 18 February at 11.30am AEDT
• NZ – Reserve Bank of New Zealand (RBNZ) interest rate decision: Wednesday, 18 February at 12.00pm AEDT
• NZ – RBNZ press conference: Wednesday, 18 February at 1.00pm AEDT
• AU – labour force report: Thursday, 19 February at 11.30am AEDT

China & Japan (JP)

• JP – gross domestic product (GDP) preliminary Q4: Monday, 16 February at 10.50am AEDT
• JP – consumer price index (CPI): Friday, 20 February at 10.30am AEDT

United States

• US – durable goods orders: Thursday, 19 February at 12.30am AEDT
• US – Federal Open Market Committee (FOMC) minutes: Thursday, 19 February at 6.00am AEDT
• US – GDP growth rate Q4 advanced: Saturday, 21 February at 12.30am AEDT
• US – personal income: Saturday, 21 February at 12.30am AEDT
• US – personal spending: Saturday, 21 February at 12.30am AEDT
• US – personal consumption expenditures (PCE) price index: Saturday, 21 February at 12.30am AEDT
• US – core PCE price index: Saturday, 21 February at 12.30am AEDT
• US – S&P Global flash purchasing managers' indices (PMIs): Saturday, 21 February at 1.45am AEDT

Europe & United Kingdom (UK)

• UK – inflation rate: Wednesday, 18 February at 6.00pm AEDT
• UK – retail sales: Friday, 20 February at 6.00pm AEDT
• EA – HCOB flash PMIs: Friday, 20 February at 8.30pm AEDT

Key events for the week ahead

NZ: RBNZ interest rate decision

Date: Wednesday, 18 February at 12.00pm AEDT

In its last meeting of 2025 on 26 November, the Reserve Bank of New Zealand (RBNZ) lowered its official cash rate (OCR) to 2.25%. The 25 basis point (bp) cut, approved by a 5-1 vote, brought total easing in the cycle to 325 bp from the peak of 5.50%.

The RBNZ cited significant spare capacity in the economy, providing confidence that medium-term inflation would return to and remain around the 2% target mid-point. Inflation stood at 3% in the September quarter but was projected to fall to around 2% by mid-2026 as one-off pressures dissipated and core measures declined.

The central bank highlighted early signs of improvement in economic activity and the labour market. Near-term indicators suggested a return to modest GDP growth in the September quarter after weakness earlier in 2025, with business feedback indicating demand had stabilised despite remaining subdued.

Reflecting this, the RBNZ's forward guidance shifted from dovish towards data dependence: 'Future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolve.'

Reinforcing this optimism, the RBNZ lowered its official cash rate (OCR) track to 2.20% by June 2026, slightly less than market expectations. While leaving room for one more cut, this signalled the RBNZ likely considers its easing cycle largely complete.

Looking ahead to next week's meeting (the first under new Governor Anna Breman), the RBNZ is expected to maintain the OCR at 2.25%. Unlike the RBAs recent hike on persistent inflation, New Zealand faces spare capacity, cooling wage growth, and labour market slack. With no equivalent demand pulse and easing inflation pressures, there is no rush to tighten.

RBNZ official cash rate and projection chart

AU: labour force report

Date: Thursday, 19 February at 11.30am AEDT

For December, employment in Australia surged by 65,000, significantly exceeding the 30,000 gain expected. The unemployment rate fell to 4.1% from 4.3%, defying expectations of a rise to 4.4%, while the participation rate edged higher to 66.7%.

While December data is notoriously volatile, often influenced by seasonal factors like Christmas hiring, this labour force report nonetheless reinforced the RBA’s assessment of tight labour market conditions. It also validated feedback from RBA liaisons, who noted that a significant share of firms continues to struggle with sourcing labour.

The RBA’s primary concern here is that this persistent labour market tightness will feed into wage growth and, more broadly, into inflation within an Australian economy where price pressures are already uncomfortably high.

These factors, alongside elevated inflation, prompted the RBA to raise rates by 25 bp at its meeting last month. The rate hike was accompanied by updated RBA forecasts which lowered its year-end unemployment forecast to 4.3% from 4.4%, while simultaneously raising its core inflation forecast to 3.2% from 2.7%.

Next week's January labour force update is expected to show a more modest gain of 25,000 jobs, with the unemployment rate ticking up to 4.2%. Markets will be watching for confirmation of a cooler number after December's outlier.

Should we see another strong job number, it could lead the market to pull forward the timing of the RBA’s next rate hike, currently about 75% priced for June.

Australian unemployment rate chart

US: GDP growth rate Q4 advanced

Date: Saturday, 21 February at 12.30am AEDT

The US economy expanded at an annualised rate of 4.4% in the third quarter (Q3) 2025, marking its strongest advance in two years and accelerating from Q2's 3.8%. This impressive growth was fuelled by resilient consumer spending and robust exports. While imports and inventory adjustments provided some offsets, the overall performance highlighted the economy's resilience, even amidst tariff uncertainties and softening labour markets.

However, the 43-day US government shutdown last year casts a notable shadow over the upcoming Q4 GDP release, with expectations for Q4 2025 GDP to moderate towards 3.5%. Interestingly, the Atlanta Fed's GDPNow estimate, updated 10 February 2026, projects a slightly stronger 3.7% annualised rate for Q4, having incorporated recent trade data and other indicators without subjective adjustments.

A partial rebound from the shutdown's impact is anticipated in the first quarter (Q1) 2026, also supported by the tailwinds of President Trump's 'One big, beautiful Bill'.

US GDP growth rate chart

US: Q4 2025 earnings season

The Q4 2025 earnings season rolls on with reports set to drop next week from companies Dash, Coca Cola, Walmart, Deere and Company, and Dropbox.