Week commencing 8 June 2026

Global markets rotate as US equities rise and ASX 200 lags

With one session to go, United States (US) equity markets are on track to finish the week higher ahead of tonight’s critical non-farm payrolls report and the usual end-of-week headlines from the Middle East. Under the surface, investors have been taking profits on technology stocks after their strong run higher, rotating into more defensive and cyclical sectors. This rotation has supported the blue-chip Dow Jones, even as the  Nasdaq declined, reflecting growing caution around stretched valuations in large-cap technology names.

Closer to home, the ASX 200 is set to finish the week around 1% lower near 8650, continuing to lag global peers. The materials sector, the backbone of the local index this year, came under pressure as metal prices retreated, while the heavyweight financials sector remains subdued following the Federal Budget. Investors remain cautious that new tax measures could weigh on credit growth and property prices. On a brighter note, the information technology (IT) sector has been a standout, rebounding sharply with an 8.5% gain this week after its 51% decline from mid-2025 highs to the March low.

The week that was: highlights

• The US Institute for Supply Management (ISM) services purchasing managers’ index (PMI) rose to 54.5 in May, exceeding the 53.8 consensus forecast, with the prices-paid component climbing to 71.3, its highest level in nearly four years
• The ISM manufacturing PMI also rose to 54.0, beating expectations of 53.0 and marking its fastest pace of expansion in four years
• US private payrolls increased by 122,000 in May, according to the Automatic Data Processing (ADP) report, surpassing the 117,000 forecast
• Job Openings and Labor Turnover Survey (JOLTS) job openings rose to 7.618 million in April, above expectations of 6.88 million
• US factory orders increased 4.8% month-on-month (MoM) in April, exceeding the 4.6% forecast and accelerating from 1.8% previously
• Initial jobless claims rose to 225,000 for the week, 10,000 above consensus and the highest level since mid-December
• In China (CN), the RatingDog services PMI rose to 54.4 in May, well above the 52.3 forecast, while the National Bureau of Statistics (NBS) manufacturing PMI held at 50.0, in line with expectations
• Euro area (EA) core inflation rose to 2.5% year-on-year (YoY) in May from 2.2%, while headline inflation increased to 3.2%
• Australia’s (AU) economy grew 0.3% quarter-on-quarter (QoQ) in the first quarter (Q1), below the 0.5% forecast and down from 0.9% previously
• Australian building approvals fell 3.4% MoM in April, worse than the 1.5% expected decline, while company gross operating profits fell 1.3% QoQ, compared with an expected 0.5% increase
• Australia’s balance of trade returned to a surplus of A$1.791 billion in April, in line with expectations
• West Texas Intermediate (WTI) crude oil rose 6.28% to $92.85
• The US dollar index (DXY) rose 0.49% to 99.42
• Bitcoin fell 13.34% to $63,750
• Gold fell 1.69% to $4463
• The volatility index (VIX) rose to 15.39 from 15.31 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU  – Westpac consumer confidence: Tuesday 9 June at 10.30am AEST
• AU – National Australia Bank (NAB) business confidence: Tuesday 9 June at 11.30am AEST
• New Zealand (NZ) – Business New Zealand (BNZ) PMI: Friday 12 June at 8.30am AEST

China & Japan

• Japan (JP) – current account: Monday 8 June at 9.50am AEST
• CN – balance of trade: Tuesday 9 June at 1.00pm AEST
• CN – consumer price index (CPI) and producer price index (PPI): Wednesday 10 June at 11.30am AEST
• CN – new yuan loans: Saturday 13 June (time to be advised)

United States

• US – CPI: Wednesday 10 June at 10.30pm AEST
• US – PPI: Thursday 11 June at 10.30pm AEST

Europe & United Kingdom

• EA – European Central Bank (ECB) rate decision: Thursday 11 June at 10.15pm AEST
• EA – ECB press conference: Thursday 11 June at 10.45pm AEST
• United Kingdom (UK) – gross domestic product (GDP): Friday 12 June at 4.00pm AEST

Key events for the week ahead

AU: Westpac consumer confidence

Date: Tuesday 9 June at 10.30am AEST

Last month, the Westpac–Melbourne Institute consumer sentiment index rose 3.5% to 83 in May following a sharp 12.5% plunge to 80.1 in April, the largest monthly decline since the onset of the Covid-19 pandemic and the lowest reading since November 2023.

The April collapse was driven by spiking fuel prices following Middle East escalation and the Reserve Bank of Australia’s (RBA) latest 25 basis point (bp) rate hike, which intensified pressure on household finances and pushed near-term expectations back to 2022 - 2023 cost-of-living crisis lows.

The June reading will be the first to capture households’ response to the Federal Budget handed down by Treasurer Jim Chalmers on 12 May. Based on the negative reception the budget has received, a modest decline towards 80 appears likely.

The Australian interest rate market is set to finish the week pricing in 1 bp of tightening for the RBA’s June meeting, with a cumulative 24 bp of hikes expected over the remainder of 2026.

Westpac consumer sentiment index chart

CN: CPI

Date: Wednesday 10 June at 11.30am AEST

For April, China’s CPI rose 1.2% YoY, accelerating from 1.0% in March and exceeding consensus expectations of 0.8%. Non-food prices picked up notably (1.8% vs 1.2%), driven by higher transport costs due to elevated energy prices and supply-chain effects linked to Middle East tensions. Conversely, food prices fell 1.6%, reversing a previous marginal gain, on the back of weak pork and fresh produce pricing. Core CPI edged higher to 1.2% from 1.1% prior.

Consensus for the May print suggests headline CPI will hold steady at 1.2% YoY. An outcome in line with expectations would likely provide policymakers with more than enough space to re-accelerate fiscal stimulus in the months ahead if required.

 China annual inflation chart

US:CPI

Date: Wednesday 10 June at 10.30pm AEST

For April, headline CPI rose 0.6% MoM, lifting the annual rate to 3.8%, the highest reading since May 2023, from 3.3% prior. Core CPI increased 0.4% MoM, pushing the annual rate to 2.8% from 2.6%. Energy, particularly gasoline, along with shelter costs were the main drivers, while goods prices also showed some reacceleration.

Next week’s inflation update comes at a sensitive juncture for the Federal Reserve (Fed). At the late-April Federal Open Market Committee (FOMC) meeting, the Fed held rates steady in the 3.50% - 3.75% range but delivered its most divided vote since 1992.

Consensus for May expects a monthly headline gain of around 0.5%, lifting the annual rate to 4.2%. Core inflation is expected to rise 0.3% MoM to 2.9% annually. A stronger print would support the US dollar and pressure risk assets, while a softer outcome would ease those concerns.

The US interest rates market is set to finish this week pricing in 17 basis points (bp) of tightening for December, with a full 25 bp hike priced for March.

 US core CPI chart

EA: ECB interest rate decision

Date: Thursday 11 June at 10.15pm AEST

At its April meeting, the ECB held key rates steady, with the deposit facility remaining at 2.00%, as the conflict in the Middle East created a challenging dual pressure of rising inflation and slowing growth.

Since then, incoming data has only reinforced this difficult backdrop. Euro area headline inflation climbed to 3.2% in May, a significant jump from the 1.7% low struck in January, while core inflation rose to 2.5%, its highest level since April 2025. Simultaneously, economic momentum remains tepid, with real GDP expanding by just 0.1% in Q1 2026.

Despite growth concerns, policymakers are widely expected to raise all three key lending rates, including the deposit rate, by 25 bp next week to slow inflation. A second 25 bp rate hike is then expected in September.

EA deposit rate facility chart