Week commencing 3 August 2026

US earnings beats and Fed hold lift markets ahead of ASX 200's strong July

United States (US) equity markets are poised to finish the week mostly higher, supported by strong earnings results from Microsoft and Alphabet that more than offset earnings disappointment from Apple and Meta.

Cooler US inflation data, a retreat in oil prices and the Federal Reserve (Fed)'s decision to leave the federal funds rate unchanged in the 3.50% – 3.75% range, provided additional support in a volatile week, particularly for tech stocks.

Closer to home, the ASX 200 is trading at 9010, on track for a fourth straight month of gains after adding 230 points (2.60%) month-to-date (MTD). This sees July once again living up to its reputation as the strongest month of the year. With half a session left to go – it's not far from the 2.73% average for July seen over the past 10 years.

The ASX 200's gains this week have been underpinned by the cooler Australian inflation report for June and a more measured tone from the Reserve Bank of Australia (RBA) Governor that reinforced expectations the cash rate will remain at 4.35% next month.

Solid trading updates from two of the major miners added further support, while the index continued to attract inflows as a lower-beta safe-haven destination while high-beta, tech-heavy markets across Asia remained volatile.

The week that was: highlights

• The Fed held the target range for the federal funds rate steady at 3.75% during its July meeting, a move that met broad market expectations
• Staying in the US, Conference Board (CB) consumer confidence dipped to 90.8 in July, falling short of the 92.3 consensus forecast and the 92.2 recorded previously
• US durable goods orders rose 0.3% month-on-month (MoM) in June, failing to meet the consensus forecast of a 2.5% gain, although the figure marked a recovery from the revised -4% contraction seen in May
• US S&P/Case-Shiller home prices rose 1.6% year-on-year (YoY) in May, exceeding the consensus forecast of 1.3% and picking up pace from the 1.2% prior reading
• Initial jobless claims for the week ending 25 July came in at 197,000 (below the 200,000 expected)
• The Fed's preferred measure of inflation, the core personal consumption expenditures (PCE) price index, fell to 3.3% YoY in July from 3.4% prior
• In China, National Bureau of Statistics (NBS) manufacturing purchasing managers' index (PMI) slipped to 49.2 in July from 50.30 points in June
• The Bank of England (BoE) kept rates on hold at 3.75% as expected
• In Australia, the headline inflation rate eased to 3.8% YoY in June, coming in below the consensus forecast of 4.0%, while the RBA's preferred trimmed mean consumer price index (CPI) also slowed more than expected to 3.6% YoY
• Australian second quarter (Q2) producer price index (PPI) surged by 1.3% quarter-on-quarter (QoQ), up from 0.4% in the first quarter (Q1)
• Australian building permits surged by 7.2% MoM in June, a massive surprise against the consensus forecast of a -1.0% decline and a sharp turnaround from the -1.1% prior reading
• New Zealand's ANZ business confidence skyrocketed to 56.1 in July, a significant leap from the 36.6 prior and far exceeding analyst expectations of 36
• WTI crude oil fell 5.93% this week to $84.01
• The US dollar index (DXY) fell 1.31% to 100.14
• Bitcoin is trading marginally lower this week at $64,719
• Gold is trading 1% higher this week at $4092
• Wall Street's gauge of fear, the volatility index (VIX), eased to 17.08 this week from 18.57 the previous week.

Key dates for the week ahead

Australia & New Zealand

• NZ- Unemployment rate: Wednesday, 5 August at 8.45am AEST
• AU – Balance of trade: Thursday, 6 August at 11.30am AEST

China & Japan

• CN – RatingDog manufacturing PMI: Monday, 3 August at 11.45am AEST
• JP – Bank of Japan (BOJ) monetary policy meeting minutes: Wednesday, 5 August at 9.50am AEST
• CN – RatingDog services PMI: Wednesday, 5 August at 11.45am AEST
• CN – Balance of trade: Friday, 7 August at 1.00pm AEST
• CN – Inflation rate YoY/MoM: Sunday, 9 August at 11.30am AEST
• CN – PPI YoY: Sunday, 9 August at 11.30am AEST

United States

• US – Institute for Supply Management (ISM) manufacturing PMI: Tuesday, 4 August at 12.00am AEST
• US – Job Openings and Labor Turnover Survey (JOLTS) job openings: Wednesday, 5 August at 12.00am AEST
• US – Factory orders MoM: Wednesday, 5 August at 12.00am AEST
• US – ADP employment change: Wednesday, 5 August at 10.15pm AEST
• US – ISM services PMI: Thursday, 6 August at 12.00am AEST
• US – Initial jobless claims: Thursday, 6 August at 10.30pm AEST
• US – Non-farm payrolls (NFP): Friday, 7 August at 10.30pm AEST

Europe & United Kingdom

• EA – Retail sales MoM: Thursday, 6 August at 7.00pm AEST
• UK – Lloyds house price index MoM/YoY: Friday, 7 August at 4.00pm AEST

Key events for the week ahead

US: ISM manufacturing PMI

Date: Tuesday, 4 August at 12.00am AEST

June's, the US ISM manufacturing PMI edged lower to 53.3, down from the 54 reading in May, though it remained comfortably within expansionary territory for a sixth straight month.

While the headline figure remained resilient, the details were more nuanced, with the employment sub-index remaining in contraction at 49.7. This softening in the labour component, paired with a slight cooling in new orders, has raised questions about whether the manufacturing sector is beginning to lose momentum under the weight of restrictive interest rates and tariff and geopolitical uncertainty.

For July, the consensus expectation is for the index to rise back to 54.0. Markets will be paying particularly close attention to the 'Prices Paid' component to see if disinflationary trends are continuing to take hold, alongside the new orders sub-index for clues on future demand.

A print that surprises to the upside would support the case for a Fed rate hike before year-end.

US ISM manufacturing PMI chart

NZ: Unemployment rate

Date: Wednesday, 5 August at 8.45am AEST

New Zealand's seasonally adjusted unemployment rate delivered a marginal surprise in the March 2026 quarter, inching down to 5.3% against market expectations of 5.4%. While the headline figure pulled back slightly from the multi-year highs seen in late 2025, the underlying details pointed to a market that remains fundamentally soft. Employment increased by a modest 4000 to 2.89 million, leaving the employment rate unchanged at 66.7%. Crucially, the underutilisation rate – a broader measure of spare labour capacity – remained elevated at 12.9%, well above the 12.4% level recorded a year prior, signalling that significant slack remains embedded in the system.

The upcoming June quarter release arrives at a critical juncture following the Reserve Bank of New Zealand (RBNZ)'s decision to commence a fresh tightening cycle earlier this month. With inflation proving stickier than anticipated, the central bank has pivoted back to a hawkish stance, with further RBNZ rate hikes now widely expected in both September and December. This shift is designed to aggressively rein in domestic demand and ensure inflation expectations remain anchored, even as the economy navigates a period of heightened structural challenges.

For the labour market, the consensus expects the unemployment rate to edge back up to 5.4%. While the soft labour market and elevated spare capacity continue to limit wage growth and reduce the risk of a wage-price spiral, further rate increases will add pressure on households and businesses, potentially weighing further on employment and consumer demand down the track.

NZ unemployment rate chart

US: Non-farm payrolls

Date: Friday, 7 August at 10.30pm AEST

Junes's, the US labour market delivered a downside surprise as NFP grew by just 57,000, missing the consensus forecast of 115,000. Despite the headline miss, the unemployment rate held steady at 4.2%, partly due to a fall in the participation rate to 61.5%.

The mixed labour force report and cooler June inflation report contributed to the Fed keeping the federal funds rate unchanged this week in the 3.50% – 3.75% range, as widely expected. The decision came on a 9-3 vote, with Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan dissenting in favour of a 25-basis-point (bp) hike. The statement noted that inflation remains elevated, partly due to energy supply shocks linked to the Middle East conflict.

For the July report, expectations are for a modest rebound in hiring, with a headline print of 88,000, while the unemployment rate holds steady at 4.2%. This number would represent a 'Goldilocks-type' print – soft enough to help keep the Fed on hold in September but strong enough to avoid recession fears. Ahead of the key jobs data, the US rates market is pricing in a 63% chance of a 25bp hike at the September Federal Open Market Committee (FOMC) meeting.

US unemployment rate chart

CN: Inflation rate YoY/MoM

Date: Sunday, 9 August at 11.30am AEST

In the prior reading (June), China's headline inflation eased to 1.0% YoY, down from 1.2% previously and below the 1.1% consensus forecast, marking the softest increase in three months. Core inflation, excluding food and energy, rose 1.0% YoY after a 1.1% increase in May.

This low-inflation backdrop continues to give the People's Bank of China (PBOC) room for further stimulus, though the central bank remains cautious about the yuan. Yesterday's Politburo meeting reinforced that stance: Beijing acknowledged mounting growth challenges and called for faster rollout of already-announced measures rather than a fresh stimulus package. The focus remains on executing the roughly RMB2 trillion of unused in-budget fiscal and quasi-fiscal impulse still available for the second half, via accelerated government bond issuance, greater use of new policy-based financial instruments and broader interest-rate subsidies. Policy stays firmly supply-centric – prioritising hard-tech ('AI+') and infrastructure ('Six Networks') – with only brief, non-specific mentions of consumption and housing.

For the July release, the preliminary expectation is for headline consumer price index (CPI) to moderate further to 0.9% YoY. A weaker-than-expected print would likely intensify calls for more aggressive support and could bring the 'effective and practical new measures' the Politburo pledged for the September – October window into sharper focus.

China inflation rate chart

US: Q2 earnings season

US Q2 2026 earnings season continues next week with earnings reports from companies including Marriott International, Palantir, and Snap Inc. on Monday, followed by consumer and industrial leaders including Spotify, Pfizer, Caterpillar, and AMD on Tuesday. The momentum accelerates mid-week as the focus shifts to major tech and healthcare updates from Shopify, Uber, Disney, SanDisk, Figma, eBay and Eli Lilly on Wednesday. The action continues Thursday with key reports from Warner Bros. Discovery, Lyft, Roku, Airbnb, and DraftKings, before Take-Two Interactive, Under Armour and Wendy's round out the week on Friday.