Australia 200 hits new record high as global markets await key economic data

Apple's commitment lifts tech and Australia 200 soars on earnings

United States (US) stock markets gained this week, led by technology stocks after the White House announced that  Apple would unveil a $100 billion domestic manufacturing commitment. The rally was further supported by strong corporate earnings and expectations of Federal Reserve (Fed) interest rate cuts between now and the end of the year.

Locally, the Australia 200 (ASX 200) surged to a fresh record high of 8848.8 and is on track for a weekly gain of 1.9%. Its strong performance followed a solid week on Wall Street and was driven by the big miners, who regained favour this week after a shakeout following Rio Tinto's lacklustre earnings report last week. The rally was also supported by robust corporate earnings from companies including Pinnacle Investments, REA Group, Block, Nick Scali, and News Corp.

The week that was: highlights

• The Institute for Supply Management (ISM) services purchasing managers index (PMI) fell to 50.1 in July from 50.8 in June
• US factory orders declined by 4.8% in June after an 8.3% gain in May
• The US trade deficit narrowed to $60.2 billion in June, the lowest since September 2023
• Initial jobless claims increased by 7000 from the previous week to 226,000 for the last week of July
• Outstanding jobless claims in the US soared by 38,000 to 1,974,000 from the previous week, marking the highest level of unemployment since November 2021
• In Australia (AU), the trade surplus in June widened to $5.37 billion, exceeding the expected $2.5 billion, fuelled by a 6% month-over-month (MoM) rise in exports
• In the United Kingdom (UK), the Bank of England (BoE) cut rates by 25 basis points (bp) to 4%
• In New Zealand (NZ), the unemployment rate rose to 5.2% in the second quarter (Q2), slightly above 5.1% in the previous quarter
• Crude oil fell by 5.15% this week to $63.86
• Gold gained 0.62% this week to $3384
• Bitcoin gained 2.46% this week to $117,084
• Wall Street's gauge of fear, the volatility index (VIX), eased to 16.58 this week from 20.37 the previous week.

Key dates for the week ahead

Australia & New Zealand

• National Australia Bank (NAB) business confidence: Tuesday, 12 August at 9.30am SGT
• Reserve Bank of Australia (RBA) interest rate meeting: Tuesday, 12 August at 12.30pm SGT
• AU labour force report: Thursday, 14 August at 9.30am SGT
• Business NZ PMI: Friday, 15 August at 6.30am SGT

China & Japan

• Gross domestic product (GDP) Q2 preliminary (prelim): Friday, 15 August at 7.50am SGT
• House price index: Friday, 15 August at 9.30am SGT
• Industrial production, retail sales, and fixed asset investment (FAI): Friday, 15 August at 10.00am SGT

United States

• Consumer price index (CPI): Tuesday, 12 August at 8.30pm SGT
• Producer price index (PPI): Thursday, 14 August at 8.30pm SGT
• Retail sales: Friday, 15 August at 8.30pm SGT
• Michigan consumer sentiment: Saturday, 15 August at 10.00pm SGT

Europe & United Kingdom

• Unemployment: Tuesday, 12 August at 2.00pm SGT
• GDP Q2 prelim: Thursday, 14 August at 2.00pm SGT

Key events for the week ahead

AU: RBA interest rate meeting

Date: Tuesday, 12 August at 12.30pm SGT

At its last meeting in July, the RBA kept its official cash rate unchanged at 3.85%, surprising many as the market widely expected a 25 bp rate cut. The RBA noted that recent monthly inflation data had been marginally stronger than expected and stated it could afford to wait for more information to confirm that inflation is heading sustainably back toward the target. RBA Governor Bullock mentioned that the decision to hold rates was more about timing rather than the overall direction.

Since then, the case for further monetary policy easing has strengthened. July’s labour force report showed the unemployment rate rose to 4.3% from 4.1%, reaching its highest level since November 2021. Meanwhile, the Q2 inflation report indicated further signs of disinflation, with headline inflation in Q2 falling to 2.1% from 2.4%. The RBA’s preferred measure of inflation, the trimmed mean, eased to 2.7% from 2.9%, moving closer to the midpoint of the RBA’s 2-3% inflation target.

These factors, combined with the first-quarter (Q1) GDP report released in June, which showed the Australian economy grew at an annual rate of just 1.3%, are expected to see the RBA cut its cash rate by 25 bp next week to 3.60%. The accompanying commentary is expected to be dovish, supporting the case for additional 25 bp rate cuts in November and February, which would bring the RBA official cash rate down to 3.10%.

RBA cash rate chart

US: CPI

Date: Tuesday, 12 August at 8.30pm SGT

For June, the annual rate of headline inflation in the US rose to 2.7% from 2.4%, marking its highest level since February. The annual core inflation rate increased slightly to 2.9% from 2.8%, just below market expectations of 3%.

For July, the expectation is for the annual headline inflation rate to climb to 2.8%, with the core measure edging higher to 3%, as the inflationary impact of tariffs begins to be observed. Despite an expected rise in inflation, the US interest rate market is almost fully priced for a 25 bp cut at the September Federal Open Market Committee (FOMC) meeting after last week’s soft US non-farm payrolls (NFP) jobs report. There is a total of 60 bp of cuts expected between now and the end of the year.

US core CPI chart

AU: Labour force report

Date: Thursday, 14 August at 9.30am SGT

For June, employment in Australia rose by 2000 jobs, well below the 22,000 gain the market had expected. The unemployment rate increased to 4.3% from 4.1%, marking its highest level since November as the participation rate rose to 67.1% from 67.0%.

Sean Crick, Australian Bureau of Statistics (ABS) head of labour statistics, noted: 'This month we saw the unemployment rate rise 0.2 percentage points, driven by a 34,000 increase in the number of unemployed people'.

The rise in the unemployment rate pushed it marginally above the RBA’s forecast of 4.2% for June 2025 and meets the 4.3% rate the RBA expected by year-end. Combined with growth at subpar levels, and inflation falling back towards the midpoint of the RBA’s target band, the RBA is widely expected to cut rates next week as outlined above.

The preliminary expectation for July is that the Australian economy will add 25,000 jobs and the unemployment rate will fall back to 4.2%.

AU unemployment rate chart

US: Q2 2025 earnings season

The Q2 2025 earnings season continues next week, with scheduled reports from Cisco, Deere & Company, JD.com, and Alibaba.