Week commencing 3 November 2025

Trade truce and Fed cut surprise markets

United States (US) stock markets hit fresh record highs this week before retreating, as investors digested key earnings and the implications of a US-China trade truce and the Federal Open Market Committee (FOMC) meeting.

Thursday’s talks in South Korea between President Trump and President Xi produced a de-escalation in the form of a trade truce rather than a signed deal. Meanwhile, the Federal Reserve (Fed) cut rates by 25 basis points (bp), but Chair Powell surprised markets by pushing back on expectations of a December cut, injecting uncertainty into the policy path towards year-end.

ASX 200 falls amid global headwinds

Locally, the Australia 200 (ASX 200) fell almost 1% this week as hotter-than-expected consumer price index (CPI) ruled out a Reserve Bank of Australia (RBA) rate cut next week. This, combined with Fed Chair Powell casting doubt about a December rate cut, provided strong headwinds for the interest rate-sensitive ASX 200.

With just one trading session remaining before the month ends, the scorecard for major global equity markets paints a stark picture for the ASX 200, which lags significantly behind its peers.

• In South Korea, KOSPI: +19.34% month-to-date (MTD)
• In Japan, Nikkei225: +14.84% MTD
• In the US, Nasdaq 100: +4.27% MTD
• In France, CAC 40: +4.35% MTD
• In the UK, FTSE 100: +4.38% MTD
• In Australia, ASX 200: +0.41% MTD
• In Germany, DAX 40: +1.00% MTD

The week that was: highlights

• In the US, the FOMC cut the Fed funds rate by 25 bp to a range of 3.75% to 4.00%
• The Conference Board (CB) Consumer Confidence Index for October fell to 94.6 from 95.6 prior
• In the Euro Area, the European Central Bank (ECB) kept its key policy rates unchanged, including the Deposit Rate at 2%
• In Japan, the Bank of Japan (BoJ) kept its key policy rate on hold at 0.50% for a fourth consecutive meeting
• In Australia, headline inflation accelerated to 1.3% quarter-on-quarter (QoQ), lifting the annual rate to 3.2% year-on-year (YoY) from 2.1%
• The RBA's preferred trimmed mean measure climbed 1% QoQ, pushing its annual rate to 3% YoY from 2.7%
• Crude oil fell 2.03 to $60.25
• Gold fell 2.08% to $4,028
• Bitcoin fell 5.98% to $107,720
• Wall Street's gauge of fear, the volatility index (VIX), rose to 16.90 from 16.26 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – RBA interest rate meeting: Tuesday 4 November at 2.30pm AEDT
• AU – RBA press conference: Tuesday 4 November at 3.30pm AEDT
• NZ – Employment: Wednesday 5 November at 8.45am AEDT
• AU – Balance of trade: Thursday 6 November at 11.30am AEDT

China & Japan

• CN – RatingDog manufacturing purchasing managers' index (PMI): Monday 3 November at 12.45pm AEDT
• JP – BoJ monetary policy meeting minutes: Wednesday 5 November at 10.50am AEDT
• CN – RatingDog services PMI: Wednesday 5 November at 12.45pm AEDT
• CN – Balance of trade: Friday 7 November at 2.00pm AEDT

United States

• US – Institute for Supply Management (ISM) manufacturing PMI: Tuesday 4 November at 2.00am AEDT
• US – Automatic Data Processing (ADP) employment change: Thursday 6 November at 12.15am AEDT
• US – ISM services PMI: Thursday 6 November at 2.00am AEDT

Europe & United Kingdom

• UK – Bank of England (BoE) interest rate decision: Thursday 6 November at 11.00pm AEDT

Key events for the week ahead

AU: RBA interest rate meeting

Date: Tuesday 4 November at 2.30pm AEDT

At its last meeting in September, the RBA kept its official cash rate on hold at 3.60%, as widely expected. The Board’s decision to keep rates on hold was unanimous.

The RBA noted that 'Recent data, while partial and volatile, suggest that inflation in the September quarter may be higher than expected at the time of the August Statement on Monetary Policy.'

This proved accurate as the September quarter inflation report, released earlier this week, showed headline and trimmed mean materially exceeding expectations.

The annual rate of headline inflation rose to 3.2% YoY from 2.1% – well above the RBA's 2% to 3% target midpoint. The RBA's preferred trimmed mean measure increased by 3% YoY from 2.7% prior, for the first uptick since December 2022, placing it at the top of the RBA’s target band.

Given the extent that inflation exceeded expectations and the RBA’s 2.6% target (trimmed mean), the RBA is widely expected to keep rates on hold next week at 3.60%. This is likely to be accompanied by revisions higher to both the unemployment rate and inflation rate.

However, given the risk of a continuation of the labour market, the RBA is likely to reiterate they remain data dependent and that monetary policy remains restrictive.

The Australian interest rate market is pricing in just 2 bp of RBA rate cuts for next week’s RBA Board meeting, with the next 25 bp rate cut not fully priced now until June 2026.

RBA cash rate chart

US: ADP employment change

Date: Thursday 6 November at 12.15am AEDT

With the US government shutdown set to extend into next week, there is very little chance the October non-farm labour force report, JOLTS Job Openings, or initial claims will be released next week.

Instead, the focus will be on the ADP employment report and the employment component within the ISM PMIs to assess the health of the US labour market.

For September, the ADP employment report showed private business cut 32,000 jobs, following a revised loss of 3000 in August and below expectations of a 50,000 gain. It was the sharpest job decline since March 2023 and the first time since 2020 that the private sector has cut jobs for two consecutive months. The trend confirmed signs of a labour market cooling evident in other key measures of employment, which was behind the Fed cutting rates again this week.

For October, the primary expectation is for a rise of 15,000 jobs. The US interest rate market is pricing in 18 bp of rate cuts for the December FOMC meeting and a total of 82 bp of Fed rate cuts between now and December 2026.

US ADP employment change chart

BoE interest rate decision

Date: Thursday 6 November at 11.00pm AEDT

At the Bank of England’s last meeting in September, the Monetary Policy Committee (MPC) voted by a majority of 7–2 to keep the Bank Rate unchanged at 4.00%, as widely expected.

Policymakers highlighted progress in disinflation after past shocks, supported by restrictive policy, although inflation remains above target.

‘The Committee remains focused on squeezing out any existing or emerging persistent inflationary pressures to return inflation sustainably to its 2% target in the medium term,’ the BoE said in a statement.

Since then, the annual rate of core inflation has eased to 3.5% from the high of 3.8% reached in June. Meanwhile, the unemployment rate has edged higher to 4.8%, its highest level since July 2021. Growth has been generally better than expected.

For next week’s meeting, the market is expecting the BoE to keep rates on hold at 4.00%. However, softer-than-expected inflation data and rising unemployment have increased the probability above 50% that the BoE will cut rates by 25 bp before year-end.

BoE official bank rate chart

US Q3 earnings season

The US third-quarter (Q3) 2025 earnings season continues next week, with reports set to be released from companies including Palantir Technologies, Uber, Advanced Micro Devices, Super Micro Computer, Rivian, McDonald's, Robinhood, Qualcomm, DoorDash, Lyft, Snap, Under Armour, and Airbnb.