ASX 200 achieves record high with earnings boost amid global economic influences

US stock market performance

United States (US) stock markets gained this week, with the US 500 (S&P 500) and US Tech 100 (Nasdaq 100) reaching fresh record highs. However, the Russell 2000 and the blue-chip Dow Jones outperformed as investors rotated out of tech and into these indices, which offer greater exposure to Federal Reserve (Fed) rate cuts and the broader real economy.

ASX 200 records and local earnings

Locally, the Australia 200 (ASX 200) hit a fresh record high of 8901.8 on Friday, marking a fifth consecutive record high this week and poised for a weekly gain of 1%. The index's gains were supported by a rally in Wall Street, a Reserve Bank of Australia (RBA) interest rate cut, and July’s in-line labour force report, which confirmed the RBA is on the right track with its cautious approach to rate cuts in 2025 and hints of further easing ahead.

The rally was also bolstered by robust corporate earnings from companies including Westpac, Pro Medicus, Suncorp, Temple & Webster, and Origin Energy. Next week promises another busy week of earnings reports from companies including a2 Milk Company, BlueScope Steel, Ampol, CSL, BHP, Stockland, Santos, Xero, Domain, Brambles, Super Retail Group, Bega, Telix Pharmaceuticals, and Zip.

The week that was: highlights

• In the US, headline inflation remained at 2.7% in July, unchanged from June and below forecasts of 2.8%
• Meanwhile, core inflation, excluding food and energy, accelerated to a five-month high of 3.1%, up from 2.9% in June and above the forecast of 3%
• The July producer price index (PPI) report showed a stronger-than-expected 0.9% month-on-month (MoM) gain in both the headline and core indices. On an annual basis, this pushed core PPI up to 3.7% from 2.6% the prior month
• Initial jobless claims eased by 3000 from the previous week to 224,000
• Outstanding jobless claims eased by 15,000 to 1,953,000, below expectations of 1,960,000
• In Japan (JP), second-quarter (Q2) gross domestic product (GDP) rose by 0.3%, quickening from an upwardly revised 0.1% rise in the first quarter (Q1)
• In the United Kingdom (UK), the unemployment rate remained at 4.7% in the three months to June 2025
• Staying in the UK, Q2 GDP slipped to 0.3% from 0.7% in Q1
• In Australia (AU), the RBA cut rates by 25 basis points (bp) to 3.60%, as widely expected, and hinted at further rate cuts into 2026
• Staying in Australia, employment rose by 24,500 in July, in line with the 25,000 the market expected. The unemployment rate eased to 4.2% from 4.3% prior, also as expected, as the participation rate held steady at 67%
• Crude oil rose by 0.09% this week to $63.94
• Gold fell 1.82% this week to $3334
• Bitcoin fell 0.70% this week to $118,451 after hitting a fresh record high earlier this week at $124,517
• Wall Street's gauge of fear, the volatility index (VIX), eased to 14.82 this week from 15.15 the previous week.

Key dates for the week ahead

Australia & New Zealand

• AU Westpac confidence: Tuesday, 19 August at 8.30am SGT
• Reserve Bank of New Zealand (RBNZ) interest rate meeting: Wednesday, 20 August at 10.00am SGT

China & Japan

• CN Loan Prime Rate 1Y and 5Y: Wednesday, 20 August at 9.15am SGT
• JP Inflation: Friday, 22 August at 7.30am SGT

United States

• Building permits: Tuesday, 19 August at 8.30pm SGT
• Housing starts: Thursday, 19 August at 8.30pm SGT
• Federal Open Market Committee (FOMC) minutes: Thursday, 21 August at 2.00am SGT
• Jackson Hole Symposium: Thursday, 21 August at 8.00am SGT
• Existing home sales: Thursday, 21 August at 10.00pm SGT
• Jackson Hole Symposium: Friday, 22 August at 8.00am SGT
• Jackson Hole Symposium: Saturday, 23 August at 8.00am SGT

Europe & United Kingdom

• UK Inflation: Wednesday, 20 August at 2.00pm SGT
• European Union (EU) HCOB flash purchasing managers' indices (PMIs): Thursday, 21 August at 4.00pm SGT
• UK S&P flash PMIs: Thursday, 21 August at 4.30pm SGT
• UK Retail sales: Thursday, 22 August at 2.00pm SGT

Key events for the week ahead

AU: Westpac consumer confidence

Date: Tuesday, 19 August at 8.30am SGT

The Westpac Consumer Confidence Index rose 0.6% MoM in July to a four-month high of 93.1. The rise was tempered by disappointment after the RBA surprised and opted to keep interest rates on hold at 3.85% at its July meeting.

Those surveyed before the RBA decision was announced reported an index read of 95.6, while those surveyed after reported an index read of 92. The survey period for the Westpac Consumer Confidence Index is typically conducted over the first week and a half of the new month. This means that the survey period for August’s reading was likely the first or second week of August, before the RBA cut rates on Tuesday.

The reading for August is expected to climb above 95. The anticipated rise reflects widespread speculation of an RBA 25 bp rate cut at its 12 August meeting, which materialised post-survey, alongside optimism from easing inflation and positive global cues.

Westpac consumer confidence chart

UK: Inflation

Date: Tuesday, 20 August at 2.00pm SGT

For June, annual headline inflation climbed to 3.6%, a seven-month high, up from 3.4% in May. Core inflation unexpectedly surged to 3.7%, exceeding forecasts of 3.5%. The uptick was driven by consumer price index (CPI) goods inflation rising to 2.4% (from 2.0%), while CPI services inflation held firm at 4.7%.

For July, markets expect annual headline inflation to rise to 4.0%, matching the Bank of England’s (BoE) revised third quarter (Q3) 2025 peak forecast, up from 3.5% previously. Core inflation is expected to edge up to 3.8%, reflecting persistent price pressures.

Presuming these forecasts are correct, and following the BoE’s hawkish 25 bp rate cut last week, it should ensure that the BoE stays on hold in September at 4.0%, before a 25 bp reduction to 3.75% in December.

UK core inflation chart

US: Jackson Hole Symposium

Date: 21–23 August

The Jackson Hole Economic Policy Symposium, hosted by the Federal Reserve Bank of Kansas City from 21 to 23 August 2025 in Jackson Hole, Wyoming, is a pivotal gathering for central bankers, economists, and policymakers to discuss this year’s theme, ‘Labour Markets in Transition: Demographics, Productivity, and Macroeconomic Policy.’

This 48th annual event will feature Fed Chair Jerome Powell delivering a keynote on 22 August at 8.00am SGT, focusing on the economic outlook and the Fed’s policy framework review, as announced by the Fed this morning. With Powell’s speech coming amid data showing tariff impacts on inflation and a slowing job market, his address could sway expectations ahead of the September FOMC meeting, which are currently pricing in a 95% chance of a 25 bp rate cut.

Over the past decade, Jackson Hole has been used to reveal policy shifts, like Powell’s 2020 employment-first framework and the 2022 ‘pain’ speech signalling rate hikes. Confirmed speakers include Jerome Powell (Federal Reserve), with Christine Lagarde (European Central Bank), Kazuo Ueda (Bank of Japan), and Andrew Bailey (Bank of England) likely to join, based on historical trends, though the final list awaits official confirmation.

Fed funds rate chart

JP: Inflation

Date: Friday, 22 August at 7.30am SGT

For June, Japan’s annual headline inflation rate eased to 3.3% from 3.5%, marking the lowest reading since last November. Japan’s core inflation rate, excluding fresh food but including energy, rose 3.3% year-on-year (YoY) in June 2025, easing from 3.7% prior, which marked the first slowdown since February.

The decline was mainly due to the resumption of fuel subsidies aimed at helping households cope with rising living costs. The Bank of Japan’s (BoJ) core-core measure of inflation - which excludes both fresh food and energy prices to focus on domestically driven inflation - rose by 3.4% YoY in June, after a 3.3% increase in May 2025, marking the fastest rise since January 2024.

This month, the preliminary expectation is for headline inflation to rise to 3.7% YoY from 3.3% prior, driven by persistent food price increases and a weaker yen, despite government utility subsidies. Core CPI, excluding fresh food, is projected to increase to 3.6% YoY from 3.3% in June, reflecting rising non-fresh food and service costs. Core-core CPI, excluding both fresh food and energy, is expected to remain steady at 3.4% YoY, indicating sustained domestic demand-driven price pressures.

The core-core CPI’s persistence above 2% (e.g., 39 months above target as of June 2025) keeps pressure on the BoJ to consider further rate hikes. The BoJ last raised its policy rate to 0.5% in January 2025 after ending negative rates in March 2024, but uncertainties like US tariffs, political uncertainty, and a fragile economic recovery complicate the timing of additional hikes. Markets expect a potential 25 bp increase by year-end to 0.75%.

JP core-core CPI chart

US: Q2 2025 earnings season 

The Q2 2025 earnings season continues next week with earnings reports scheduled from Home Depot, Target, and Walmart.