Week commencing 15 June 2026

ASX 200 rallies as US equities stabilise on easing tensions

With just one session left in the week, United States (US) equity markets are on track to finish near the flatline, having successfully clawed back their early weakness. The turnaround was driven by a swift improvement in risk sentiment after President Trump announced he had cancelled planned strikes on Iran, hinting that a peace deal could be signed as early as this weekend. While technology stocks naturally led the charge, the relief rally was broad-based, fuelled by oil prices dropping to eight-week lows and a welcome easing in Treasury yields.

Closer to home, the ASX 200 is trading 1.80% higher near 8780, on track for its best week since early April. These strong gains were largely driven by a continued run of softer domestic data, which has prompted a handful of influential economists to call an end to the Reserve Bank of Australia’s (RBA) tightening cycle.

Unsurprisingly, the dovish repricing in the interest rates market has provided a strong tailwind for interest rate-sensitive sectors. Consumer discretionary has been the standout performer, surging 8.33% for the week. Consumer staples has followed closely, rising 7.69%, while the real estate sector has added 4.57% to round out the top three. In contrast, the local technology sector was the clear laggard, shedding 4.23% and handing back more than half of last week’s impressive 7.68% gain.

The week that was: highlights

• US headline inflation rose to 4.2% year-on-year (YoY) in May, matching the consensus forecast and accelerating from 3.8% in the previous month
• Core consumer price index (CPI) edged higher to 2.9% YoY from 2.8% prior, as expected
• May producer price index (PPI) rose 1.1% month-on-month (MoM), pushing the annual rate to 6.5%, its largest increase in three-and-a-half years
• However, the more important core PPI reading, which typically feeds directly into core personal consumption expenditures (PCE) inflation, came in at 4.9% YoY, well below the 5.4% expected
• Initial jobless claims rose by 229,000 last week, hitting their highest level in three months, while continuing claims edged 24,000 higher to 1,795,000
• China’s (CN) trade surplus widened significantly to $105.43 billion in May, exceeding the $92.1 billion consensus forecast, driven by a robust 19.4% YoY surge in exports
• Chinese headline inflation held steady at 1.2% YoY in May, slightly below the 1.3% forecast, while producer prices matched expectations by rising 3.9% YoY
• Japan’s (JP) finalised Q1 annualised gross domestic product (GDP) growth was revised higher to 1.8%, exceeding the 1.3% consensus and improving from the preliminary 0.7% reading
• The United Kingdom (UK) British Retail Consortium (BRC) retail sales monitor rose 3.4% YoY in May, sharply above the 0.6% forecast and reversing the 3.4% drop in the prior month
• Euro area economic sentiment edged lower to 96.6, missing expectations for 96.8 and declining from the previous month’s 98.2.
• The European Central Bank (ECB) raised its key lending rates by 25 basis points (bp) as widely expected
• Australian consumer sentiment worsened as the Westpac consumer confidence index fell 2.9% MoM to 80.6 in June, remaining in deeply pessimistic levels
• Meanwhile, National Australia Bank (NAB) business confidence in Australia improved to -14 in May, beating the -22 forecast but still remaining firmly in pessimistic territory
• West Texas Intermediate (WTI) crude oil dropped 4.55 to $86.41.
• The US dollar index (DXY) eased 0.28% to 99.78
• Bitcoin was unchanged at $63,581
• Gold fell 2.83% to $4205
• Wall Street’s gauge of fear, the volatility index (VIX), fell to 19.43 from 21.50 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU – RBA interest rate decision: Tuesday, 16 June at 2.30pm AEST
• AU – RBA press conference: Tuesday, 16 June at 3.30pm AEST
• AU – RBA Jones speech: Wednesday, 17 June at 11.30am AEST
• NZ – first quarter (Q1) GDP: Thursday, 18 June at 8.45am AEST

China & Japan

• CN – house price index YoY (May): Tuesday, 16 June at 11.30am AEST
• CN – industrial production YoY (May): Tuesday, 16 June at 12.00pm AEST
• CN – retail sales YoY (May): Tuesday, 16 June at 12.00pm AEST
• CN – fixed asset investment YoY (May): Tuesday, 16 June at 12.00pm AEST
• JP – Bank of Japan (BoJ) interest rate decision: Tuesday 16 June at 1.00pm AEST
• JP – CPI (May): Friday, 19 June at 9.30am AEST
• JP – BoJ meeting minutes: Friday, 19 June at 9.50am AEST

United States

• US – National Association of Home Builders (NAHB) housing market index (June): Tuesday, 16 June at 12.00am AEST
• US – building permits preliminary (May): Tuesday, 16 June at 10.30pm AEST
• US – housing starts (May): Tuesday, 16 June at 10.30pm AEST
• US – retail sales (May): Wednesday, 17 June at 10.30pm AEST
• US – pending home sales (May): Thursday, 18 June at 12.00am AEST
• US – Federal Reserve (Fed) interest rate decision: Thursday, 18 June at 4.00am AEST

Europe & United Kingdom

• UK – CPI (May): Wednesday, 17 June at 4.00pm AEST
• UK – unemployment rate (April): Thursday, 18 June at 4.00pm AEST
• UK – Bank of England (BoE) interest rate decision: Thursday, 18 June at 9.00pm AEST
• UK – retail sales MoM (May): Friday, 19 June at 4.00pm AEST

Key events for the week ahead

AU: RBA interest rate decision

Date: Tuesday, 16 June at 2.30pm AEST

At its May meeting, the RBA raised the official cash rate by 25 bp to 4.35% in an 8-1 vote. This was the third consecutive hike this year and fully unwound the 75 bp of cuts delivered in 2025.

In the accompanying statement, the Board noted that inflation had picked up materially due to capacity pressures, with the Middle East conflict now adding a clear near-term impulse through sharply higher fuel and related commodity prices. They also noted signs that many firms are passing on cost pressures, and short-term inflation expectations have risen further.

In the post-meeting press conference, Governor Michele Bullock sounded more dovish and emphasised that the three hikes had put the RBA in a good position to ‘observe now what happens to the war and what happens to employment’. She highlighted that the Board has more space to balance both growth and inflation risks, while stressing the need for a growth slowdown to prevent cost pressures from becoming entrenched in inflation expectations.

Since that meeting, incoming data has generally been softer. The labour market has shown early signs of easing, with unemployment ticking higher to 4.5% and employment growth moderating. Headline inflation has been pushed up by energy costs, but underlying measures have been less concerning than feared. GDP growth in Q1 came in below expectations, while both consumer and business confidence have remained weak. The unpopular Federal Budget delivered earlier this month has further weighed on sentiment, with households and businesses viewing the measures as adding to cost-of-living pressures rather than providing meaningful relief.

Markets are currently pricing in almost no chance of a move at next week’s meeting, with the cash rate expected to remain at 4.35%. Attention will instead centre on the accompanying statement and Governor Bullock’s press conference for any fresh guidance. With inflation risks still tilted to the upside but growth clearly slowing, the market will be watching closely for any shift in language around the balance of risks and the likelihood of further tightening later in the year, or a move towards a more neutral bias.

RBA official cash rate chart

JP: BoJ interest rate decision

Date: Tuesday, 16 June at 1.00pm AEST

At its April meeting, the BoJ held its short-term policy rate steady at 0.75% in a 6-3 split vote, the most divided outcome since 2016. Three board members dissented in favour of a hike, highlighting growing internal pressure to normalise policy further. The BoJ also revised up its core inflation forecast, citing the impact of higher crude oil prices on energy and goods costs, while trimming its growth outlook.

The macro backdrop has become even more complicated since then. Governor Kazuo Ueda firmed his tone in a key speech earlier this month, stressing that a temporary energy shock can become entrenched if it feeds through to wages, inflation expectations and broader price-setting behaviour. He noted that upside risks to prices now appear to outweigh downside risks to economic activity, even with uncertainty around the Middle East conflict, and explicitly said the BoJ must thoroughly discuss the pros and cons of raising the policy rate if that assessment holds. These comments have pushed markets to price in roughly a 90% chance of a 25 bp hike to 1.00% next week.

This would take the policy rate to its highest level in more than 30 years and help narrow the yield gap with the US, supporting the yen. Markets will watch closely for any fresh guidance from the statement and post-meeting comments, with Ueda hospitalised, Deputy Governor Shinichi Uchida is expected to lead proceedings, on the pace of future normalisation, bond tapering and how the Bank views the balance between inflation risks and growth.

BoJ Interest rate chart

US: Fed interest rate decision

Date: Thursday, 18 June at 4.00am AEST

At its April meeting, the Federal Open Market Committee (FOMC) maintained the target range for the federal funds rate at 3.50% - 3.75%, emphasising a data-dependent approach while acknowledging added uncertainty from the Middle East conflict and higher energy prices.

This will be the first FOMC meeting chaired by Kevin Warsh, who was sworn in as Chair on 22 May. Since the April meeting, firmer-than-expected US data has shifted market expectations. May CPI showed headline inflation accelerating to 4.2% YoY, while the May employment report saw non-farm payrolls rise 172,000 versus expectations around 85,000, with unemployment steady at 4.3%.

Furthermore, recent manufacturing purchasing managers’ indices (PMIs) have also surprised to the upside, pointing to improving factory activity. These stronger data points have seen the US rates market now pricing in a 25 basis point rate hike by December.

No change is expected next week, with futures pricing in a near-100% probability of a hold. However, all eyes will be on Chair Warsh’s first press conference and any signals on policy direction. The shift toward pricing in a December hike reflects a more cautious outlook than earlier in the year, when 50 bp of rate cuts were priced.

Fed Funds rate chart

UK: BoE interest rate decision

Date: Thursday, 18 June at 9.00pm AEST

At its last meeting in April, the BoE held the official bank rate steady at 3.75% on an 8-1 vote. One member, Huw Pill, preferred a 25 bp hike to 4%. The Committee struck a notably cautious tone as it grappled with the ongoing Middle East conflict and the associated surge in global energy prices. It highlighted significant uncertainty around the scale and persistence of the energy supply shock, revised its near-term inflation projections higher, and published three scenarios in the Monetary Policy Report to illustrate the range of possible outcomes.

'The Committee will continue to monitor closely the situation in the Middle East and its impact on global energy supply and energy prices. It stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.'

The annual inflation rate in the UK slowed to 2.8% in April 2026 from 3.3% in March, coming in below market expectations of 3.0% and marking the lowest reading since March last year. The UK’s annual core inflation rate eased further to 2.5% from 3.1% the prior month, slightly below expectations of 2.6%. This marked the lowest core reading since July 2021, driven by a sharp slowdown in core services inflation, which fell to 3.2% from 4.5%.

The softer core numbers have helped push back market expectations of the first rate hike until September. That said, the May CPI release, due the day before the decision, remains important and, if it comes in stronger than expected, it may see a rate hike pulled forward to the July meeting.

BoE bank rate chart