ASX 200 reaches all-time high

US markets sustain momentum; ASX 200 reaches new highs

United States (US) stock markets gained this week as upbeat corporate earnings and a White House announcement that President Donald Trump will meet Chinese President Xi Jinping next Thursday in South Korea eased US-China tensions.

The Australia 200 (ASX 200) extended its record-breaking run, surging to a fresh all-time intraday high of 9115.2 before consolidating. Its gains were driven by a landmark US-Australia critical minerals deal and a robust rally in the energy sector, following the US government's announcement of new sanctions targeting Russia’s two largest oil producers, Rosneft and Lukoil.

The week that was: highlights

• In the United Kingdom (UK), the core inflation rate in September fell to 3.5% from 3.7%
• In China (CN), third quarter (Q3) gross domestic product (GDP) eased to 4.8% year-on-year (YoY) from 5.2%
• In Japan (JP), core inflation rose to 2.9% YoY in September from 2.7%
• In New Zealand (NZ), the Q3 inflation rate increased to 1% from 0.5% in the second quarter (Q2), reaching the highest in almost two years
• Crude oil surged 7.98% to $61.71
• Gold fell 3.28% to $4114
• Bitcoin rose 1.24% to $110,003
• Wall Street's gauge of fear, the volatility index (VIX), dived to 17.29 from 20.77 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU Q3 consumer price index (CPI): Wednesday, 29 October at 11.30am AEDT
• NZ ANZ business confidence: Thursday, 30 October at 11.00am AEDT
• AU Q3 producer price index (PPI): Friday, 31 October at 11.30am AEDT

China & Japan

• JP Bank of Japan (BoJ) interest rate decision: Thursday, 30 October at approximately 2.00pm AEDT
• CN National Bureau of Statistics manufacturing purchasing managers' index (PMI): Friday, 31 October at approximately 12.30pm AEDT

United States 

• Conference Board consumer confidence: Wednesday, 29 October at 1.00am AEDT
• Federal Open Market Committee (FOMC) interest rate decision: Thursday, 30 October at 5.30am AEDT
• Q3 GDP advanced: Thursday, 30 October at 11.30pm AEDT
• Core personal consumption expenditures (PCE) price index: Friday, 31 October at 11.30pm AEDT

Europe & United Kingdom

• EA Q3 GDP: Thursday, 30 October at 9.00pm AEDT
• EA  European Central Bank (ECB) interest rate meeting: Friday, 31 October at 12.15am AEDT
• EA CPI: Friday, 31 October at 9.00pm AEDT

Key events for the week ahead

AU: Q3 CPI 

Date: Wednesday, 29 October at 11.30am AEDT

In the June 2025 quarter (Q2), headline inflation rose by 0.7% over the quarter, which saw the annual rate ease to 2.1% from 2.4%, the lowest annual inflation rate since March 2021.

The Reserve Bank of Australia’s (RBA) preferred measure of inflation, the trimmed mean, rose by 0.6% quarter-on-quarter (QoQ), allowing the annual rate to fall to 2.7% from 2.9% prior. This marked a tenth quarter of lower annual trimmed mean inflation and equalled the lowest rate of trimmed mean inflation since the December quarter of 2021.

Since then, the market has received two firmer monthly CPI reports predominantly at the headline level. The most recent one (for August released, in late September) showed headline inflation rose by 3.0% year-over-year (YoY) in August, from 2.8% in July. Annual trimmed mean inflation, which provides a better indication of how inflation is trending, eased to 2.6% YoY in August from 2.7% in July.

In the aftermath of the two firmer monthly inflation reports and a weaker-than-expected labour force update for September, the RBA now finds itself in a very awkward position and missing at both ends of its dual mandate. The unemployment rate is set to finish the year well above the RBA’s forecasts of 4.3% and trimmed mean inflation above its 2.6% forecast

Irrespective of whether the Q3 inflation report is hotter than expected, we continue to think the RBA should cut rates by 25 basis points (bp) in November and follow the path of least regret given mounting evidence of a sharp slowdown in the Australian labour market.

The preliminary estimate for the September 2025 quarter (Q3) CPI report is for headline inflation to rise 1.1% QoQ, and for the annual rate to rise to 2.9%. The more significant measure, the trimmed mean, is expected to increase by 0.8% QoQ, which would see the annual rate remain at 2.7%. This should provide the green light for the RBA to cut rates at its meeting in November.

Ahead of next week’s CPI release, the Australian interest rate market is pricing in 17 bp (65% chance) of a 25 bp rate cut for the RBA meeting in November and a cumulative 44 bp of RBA cuts between now and June 2026.

AU all groups CPI and Trimmed mean chart

US: FOMC interest rate decision

Date: Thursday, 30 October at 5.30am AEDT

At the last FOMC meeting in September, the Federal Reserve (Fed) cut rates by 25 bp to a target range of 4.00% – 4.25%, marking the first reduction of the year in an 11–1 vote. The lone dissenter was newly sworn-in Governor Stephen Miran, who advocated for a more aggressive 50 bp cut, citing further labour market softening and inflation nearing the 2% target.

Fed Chair Jay Powell described the decision as a 'risk management move' to address labour market vulnerabilities rather than a recession signal, emphasising a data-dependent approach amid uncertainties from tariffs and fiscal policy. This dovish tilt contrasted with July's hawkish hold at 4.25% – 4.50%, as Powell highlighted persistent inflation and solid jobs data.

The Fed's rate cut in September was seeded at Jackson Hole in late August, where Powell flagged labour slowdown risks as outweighing inflation pressures. This shift has been reinforced by a string of soft labour indicators, including August's meagre +22,000 non-farm payrolls and the Bureau of Labor Statistics' blockbuster downward revision of 911,000 jobs for the 12 months through March 2025, indicating hiring stalled earlier than thought.

The cooling labour market is poised to drive another 25 bp rate cut at next week's FOMC meeting with the US rates market pricing in a cumulative 125 bp of Fed rate cuts between now and December 2026.

Fed funds rate chart

JP: BoJ interest rate decision

Date: Thursday, 30 October at approximately 2.00pm AEDT

At the Bank of Japan’s (BoJ) last monetary policy meeting in mid-September, the BoJ kept its key policy rate on hold at 0.50% for a fourth consecutive meeting.

The decision reflected ongoing caution due to uncertainties from US tariffs and their impact on Japan’s export economy, despite a recent US-Japan trade agreement. Softer inflation data and political uncertainty following the Liberal Democratic Party’s election loss further influenced the hold.

At next week’s meeting, the BoJ is expected to again keep rates steady at 0.50%. The market is assigning a 50% chance of a rate hike at the BoJ’s December meeting as speculation builds that new Japanese Prime Minister Sanae Takaichi is set to unveil a new stimulus package in the weeks ahead.

BoJ policy rate chart

EA: ECB interest rate meeting

Date: Friday, 31 October at 12.15am AEDT

At its last meeting in September, the ECB kept policy rates unchanged, including the deposit rate at 2%. This decision was widely anticipated and marked the second consecutive on-hold decision after the ECB cut interest rates by 175 bp between June 2024 and June 2025.

Since September, there has been a slight uptick in headline inflation (2.2% YoY in September, up from 2.0% in August) driven by services and stabilising energy prices, while core inflation remains steady at approximately 2.3%.

Growth has been resilient but modest, with PMI surveys indicating a pickup in business activity. Despite global trade tensions, notably US tariffs, the ECB views the economy as 'in a good place', with balanced risks to inflation and growth, as reiterated by President Christine Lagarde’s data-dependent, meeting-by-meeting approach.

As such, the expectation for next week’s meeting is that the ECB will keep its key policy rates on hold. The European interest rate market is pricing just a 15% chance of another ECB rate cut before year-end.

ECB deposit rate chart

US: Q3 earnings season

US Q3 2025 earnings season heats up next week, with reports set to drop from companies including UPS, Visa, Caterpillar, Boeing, Microsoft, Meta, Alphabet, Starbucks, Chipotle, Amazon, Apple, Coinbase, MicroStrategy, Roku, and Colgate. These reports will offer critical updates on everything from consumer spending to tech innovation and industrial resilience.