Week commencing 2 February 2026

US market volatility and ASX 200 growth amid global changes

United States (US) equity markets have experienced a volatile week, with mixed performances across the major indices as investors navigated geopolitical headlines, key big tech earnings, and a dramatic flash crash in precious metals.

The S&P 500 and Nasdaq Composite are on track to finish the week higher, buoyed by strong earnings from Meta. This strength came despite pressure from Microsoft's sharp drop, which stemmed from concerns over artificial intelligence (AI) capital expenditure. In contrast, the Dow Jones is poised for its third consecutive week of losses, weighed down by underperformance in cyclical and healthcare names.

Locally, the ASX 200 is set to finish the week up approximately 1%, now sitting less than 2% below its all-time high of 9115.2. Its gains were significantly supported by the booming materials and energy sectors, which helped offset mounting rate-hike fears sparked by robust Australian labour data.

The week that was: highlights

• As widely expected, the Federal Reserve (Fed) kept rates on hold at 3.50% – 3.75%
• The Conference Board's consumer confidence index plunged 9.7 points to 84.5 in January, from a revised 94.2 in December, marking its lowest level since May 2014
• Initial jobless claims fell by 1000 to 209,000, while continuing claims fell by 38,000 to 1,827,000 last week
• In Japan (JP), consumer confidence increased to 37.9 in January from 37.2 in December
• The Reserve Bank of Australia's (RBA) preferred measure of inflation, the trimmed mean, rose by 0.9% quarter-on-quarter (QoQ). This pushed the annual rate to 3.4%, above the RBA’s own 3.2% forecast
• In New Zealand (NZ), ANZ business confidence dropped to 64.1 in January from 73.6 prior
• Crude oil rose $7.12 to $65.42, poised for a sixth week of gains
• Gold surged 7.67% to $5370
• Bitcoin fell 2.49% this week to $84,428
• The volatility index (VIX) rose to 16.87 from 16.08 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU building permits: Tuesday, 3 February at 11.30am AEDT
• RBA interest rate meeting: Tuesday, 3 February at 2.30pm AEDT
• RBA press conference: Tuesday, 3 February at 3.30pm AEDT
• NZ unemployment: Wednesday, 4 February at 8.45am AEDT
• AU balance of trade: Thursday, 5 February at 11.30am AEDT

China & Japan

• CN Rating Dog manufacturing purchasing managers' index (PMI): Monday, 2 February at 12.45pm AEDT
• CN Rating Dog services PMI: Wednesday, 4 February at 12.45pm AEDT
• JP General Election: Sunday, 8 February

United States

• Institute for Supply Management (ISM) manufacturing PMI: Tuesday, 3 February at 2.00am AEDT
• Job Openings and Labor Turnover Survey (JOLTS) job openings: Wednesday, 4 February at 2.00am AEDT
• Automatic Data Processing (ADP) employment change: Thursday, 5 February at 12.15am AEDT
• ISM services PMI: Thursday, 5 February at 2.00am AEDT
• Non-farm payrolls: Saturday, 7 February at 12.30am AEDT

Europe & United Kingdom

• EA inflation: Wednesday, 4 February at 9.00pm AEDT
• Bank of England (BoE) interest rate decision: Thursday, 5 February at 11.00pm AEDT
• European Central Bank (ECB) interest rate decision: Friday, 6 February at 11.00pm AEDT

Key events for the week ahead

AU: RBA interest rate meeting

Date: Tuesday, 3 February at 2.30pm AEDT

At its last meeting in December, the RBA kept its official cash rate on hold at 3.60%, as widely expected. This unanimous decision marked the RBA’s third consecutive hold.

This decision followed October's monthly consumer price index (CPI) report, which showed a rise in both headline and underlying inflation. While the RBA expressed caution about reading too much into the new monthly CPI data, the figures nonetheless pointed to a broader-based rise in inflation, parts of which could prove persistent.

The RBA also noted that growth, particularly in private demand, was picking up, the housing market continued to strengthen, the labour market remained tight, and surveys indicated capacity utilisation was above its long-run average. All these factors combined suggest that 'the risks to inflation had tilted to the upside.'

During the subsequent press conference, Governor Bullock confirmed the RBA did not consider a rate cut at the meeting but did discuss scenarios that could necessitate a hike. Bullock reiterated that if inflation pressures proved more persistent, the RBA would be compelled to consider whether higher rates were needed.

Since the December board meeting, key data points have come in firmer than expected. Last week, the December labour force report showed the unemployment rate falling to 4.1% from 4.3%, defying expectations of a rise to 4.4%. This week's fourth quarter (Q4) inflation report further solidified concerns, showing the RBA’s preferred measure, the trimmed mean, rising by 0.9% QoQ. This pushed the annual rate to 3.4%, exceeding the RBA’s own 3.2% forecast.

These outcomes have prompted the rates market to reprice more hawkishly. There is now 18 basis points (bp) (75% probability) of rate hikes built in for next week’s RBA board meeting. Furthermore, mindful that the RBA rarely hikes just once, the market has already priced in a second 25 bp RBA rate hike by August 2026.

RBA cash rate chart

UK: BoE interest rate decision

Date: Thursday, 5 February at 11.00pm AEDT

At its last meeting in December, the BoE's monetary policy committee voted by a majority of 5–4 to reduce the Bank Rate by 25 bp to 3.75%. Four members voted to keep rates on hold at 4%.

The monetary policy committee's (MPC) forward guidance remained cautiously dovish, highlighting that inflation had peaked and demand was softening. The statement noted: 'The risk from greater inflation persistence has become less pronounced recently, and the risk to medium-term inflation from weaker demand more apparent, such that overall, the risks are now more balanced.'

Subsequent data has reinforced the softer outlook. The unemployment rate stands at 5.1%, the highest since May 2021, signalling a loosening labour market. Core inflation is at 3.2%, the lowest since December 2024, and economic growth remains subdued.

Despite this, markets widely expect the BoE to remain on hold next week and indeed for the entire first quarter (Q1) of 2026, to allow the impact of the BoE’s rate-cutting cycle to gain further traction.

BoE official bank rate chart

US: non-farm payrolls report

Date: Saturday, 7 February at 12.30am AEDT

For December, the US economy added just 50,000 jobs, falling short of expectations for a gain of around 60,000 and coming in below November's downwardly revised figure of 56,000.

Despite the weak headline hiring number, the unemployment rate edged lower to 4.4%, down from a revised 4.5% in November, which had been the highest level since October 2021. This decline reflected a drop in the participation rate to 62.4% (from 62.5%), a decrease in the number of unemployed persons to 7.5 million, and some improvement in broader underemployment measures like the U-6 rate (down to 8.4% from 8.7%).

Markets largely looked past the softer job creation figures to focus on the lower unemployment rate, interpreting it as evidence of stabilisation rather than outright deterioration in the labour market.

In this week’s Federal Open Market Committee (FOMC) press conference, Fed Chair Jerome Powell highlighted these mixed signals, noting: 'Job gains have remained low, and the unemployment rate has shown some signs of stabilisation.'

Looking ahead, the upcoming January non-farm payrolls report, covering the first full post-holiday month, is expected to show 50,000 jobs added. The unemployment rate at this stage is expected to tick up to 4.5%.

US unemployment rate chart

Q4 2025 earnings season

The Q4 2025 earnings season continues with upcoming reports from Disney, Palantir, AMD, Super Micro Computer, Uber, Amazon, Qualcomm, Snap, MicroStrategy, Roblox, and Under Armour.