Week commencing 19 January 2026

S&P 500 and Dow Jones hit records; ASX 200 rises with materials strength

TheS&P 500 and the Dow Jones reached fresh record highs this week, as robust earnings from major United States (US) banks helped offset concerns regarding President Trump's proposed 10% cap on credit card interest rates. Additionally, a strong earnings report from Taiwan Semiconductor Manufacturing Company (TSMC) helped alleviate fears surrounding elevated tech stock valuations on Wall Street.

Locally, the ASX 200 posted solid gains, underpinned by an impressive 9.96% month-to-date surge in the ASX 200 materials sector driven by irrepressible demand for both industrial and precious metals. The ASX 200’s gains were also supported by energy stocks and big four banks, with Australia and New Zealand Banking Group Limited (ANZ) leading the charge as it gained 5.25% for the week.

The week that was: highlights

• In the US, core consumer price index (CPI) for December printed at 2.6% year-on-year (YoY), marking the lowest level since March 2021 and slightly below market expectations of 2.7%
• The retail sales control group - a key gross domestic product (GDP) input - rose 0.4% month on month (MoM) in November, following October’s 0.6% gain
• Meanwhile, core producer price index (PPI) came in flat at 0.0% for November, undershooting the expected 0.2% increase
• Initial jobless claims fell by 9000 to 198,000 for the week ending 10 January, the second-lowest reading in two years
• In China (CN), the trade balance for December reached US$114.1 billion as exports increased by 6.6% YoY, while imports rose by 5.7% YoY
• In Australia (AU), the Westpac Consumer Sentiment survey for January slipped 1.2% to a three-month low of 92.9, extending December's 9% plunge.
• Crude oil fell 0.17% to $59.02
• Gold rose 2.16% to $4607
• Bitcoin gained 5.16% to $95,572
• Wall Street's gauge of fear, the volatility index (VIX), rose to 15.83 from 14.48 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – Labour Force: Thursday, 22 January at 11.30am AEDT
• NZ – Fourth quarter (Q4) CPI: Friday, 23 January at 8.45am AEDT

China & Japan

• CN – House Price Index: Monday, 19 January at 12.30pm AEDT
• CN – Q4 GDP: Monday, 19 January at 1.00pm AEDT
• CN – IP, Retail Sales, FIA: Monday, 19 January at 1.00pm AEDT
• JP – Inflation: Friday, 23 January at 10.30am AEDT
• JP – Bank of Japan (BoJ) Interest Rate Meeting: Friday, 23 January at ~2.00pm AEDT

United States

• US – Core Personal Consumption Expenditures (PCE) Price Index: Friday, 23 January at 2.00am AEDT
• US – Personal Spending and Income: Friday, 23 January at 2.00am AEDT
• US – S&P Flash Purchasing Managers' Indices (PMI): Saturday, 24 January at 1.45am AEDT

Europe & United Kingdom

• UK – Unemployment: Tuesday, 20 January at 6.00pm AEDT
• UK – CPI: Wednesday, 21 January at 6.00pm AEDT
• UK – S&P Flash PMIs: Friday, 23 January at 8.30pm AEDT

Key events for the week ahead

CN: Q4 GDP

Date: Monday, 19 January at 1.00pm AEDT

China's economy expanded by 4.8% YoY in the third quarter (Q3) 2025, decelerating from the 5.2% growth recorded in the second quarter (Q2), marking its slowest pace since Q3 2024. The slowdown was primarily attributed to persistent US trade tensions, a prolonged slump in the property sector, and subdued consumer demand.

Since Q3, economic indicators have shown mixed but generally easing momentum into Q4. Industrial production accelerated to 6.5% YoY in September but slowed to around 4.8% by November, reflecting fading export front-loading ahead of US tariffs. Retail sales weakened to around 3% - 4% YoY in October - November, down from Q3 averages, as consumer subsidies tapered and confidence remained fragile amid job market strains.

More recently, the December PMI showed notable strength, driven by a quarter-end production push, robust exports, and policy pass-through on infrastructure projects. In contrast, the services PMI remained soft. On the trade front, both exports and imports beat forecasts in December, suggesting firms have successfully diversified into new markets and domestic demand has received a lift from holiday spending.

Despite positive signals more recently, external headwinds persist and the recovery's foundation remains fragile. Based on the current trajectory, preliminary expectations point to Q4 GDP easing to 4.6% YoY.

China GDP annual growth rate chart

AU: labour force

Date: Thursday, 22 January at 11.30am AEDT

For November, employment in Australia fell by 21,000 jobs, falling short of the 20,000 gain the market expected. Despite this, the unemployment rate held steady at 4.3%, below the 4.4% expected, largely due to a dip in the participation rate to 66.7% from October's 66.9%.

While monthly labour force data can be volatile and subject to noise, the November labour force report aligns with other indicators, such as easing job vacancies and slower wage growth, suggesting gradually increasing spare capacity in the labour market.

The Reserve Bank of Australia (RBA) faces a delicate balancing act in 2026, pursuing its dual mandate of low and stable inflation alongside full employment. With headline inflation pushing above the 2% – 3% target band, policymakers are juggling efforts to cool price pressures without inducing significant job losses.

For now, inflation remains the primary factor influencing potential policy moves. However, softer labour market data next week could alleviate concerns over domestic momentum driving persistent inflation.

December preview: The December 2025 Labour Force Survey is expected to show a modest rebound in employment, with consensus forecasts pointing to a gain of around 20,000 jobs. The unemployment rate is expected to edge higher to 4.4%, aligning with the RBA's quarterly forecast for the remainder of this year and next year.

Next week’s jobs data, alongside the Q4 inflation report at the end of January, will be pivotal in shaping the outcome of the RBA’s 3 February  Board meeting. Ahead of the meeting, the Australian interest rate market is pricing in 6 basis points (bp) of RBA rate hikes for February. There are 25 bp of RBA rate hikes priced for August, and a cumulative 33 bp of rate hikes priced between now and the end of 2026.

Australian unemployment rate chart

JP: BoJ interest rate meeting

Date: Friday, 23 January at approximately 2.00pm AEDT

At the BoJ's last Monetary Policy Meeting in December, the central bank raised its policy rate by 25 bp to 0.75%, marking its highest level since 1995.

The decision, widely anticipated by markets, was approved by a unanimous vote, marking a shift from the more divided votes seen in prior meetings. This hike followed the previous increase to 0.5% in January 2025 and represented a landmark step in normalising monetary policy after decades of ultra-loose conditions. Governor Kazuo Ueda emphasised that real interest rates would remain significantly negative post-hike, maintaining accommodative conditions to support economic activity while gradually adjusting toward the sustainable achievement of the 2% price stability target.

Looking ahead to next week's Monetary Policy Meeting, the BoJ is widely expected to maintain the status quo at 0.75%, with no rate change expected until June, depending on developments in wages, inflation, and the Japanese yen.

However, the hike could be brought forward if yen depreciation accelerates, as excessive weakness could fuel import-driven inflation and prompt faster action. Overall, the BoJ's path remains gradual, with real rates staying deeply negative for some time to ensure a durable economic recovery.

BoJ policy rate chart

US: S&P flash PMIs

Date:Saturday, 24 January at 1.45am AEDT

The S&P Global US Composite PMI (final) came in at 52.7 in December, marking the lowest reading in eight months and down from the preliminary flash estimate of 53.0 and November's 54.2 reading. This signalled further moderation in private sector expansion, with growth rates slowing across both manufacturing (PMI at 51.8, down from 52.2) and services (PMI at 52.5, down from 54.1 and revised lower from the flash 52.9).

Despite the softer activity, the headline reading above 50 still indicates ongoing expansion in the US economy, consistent with solid growth heading into 2026. Looking ahead to next week's number for January, the market is looking for a modest rebound to around 52.9 in the composite reading.

 US S&P global composite PMI chart

US: Q4 2025 earnings season

The Q4 2025 earnings season rolls in with reports set to drop next week from companies including Netflix, Johnson and Johnson, Procter and Gamble, and Intel.