Market update: 12 August 2025
Global equity markets posted a strong rebound this week, with all major indices finishing in positive territory as investors welcomed solid corporate earnings and growing expectations of interest rate cuts. Trade developments remained in focus, as the US announced a 100% tariff on imported semiconductors while exempting companies that reshore manufacturing. Optimism also lifted over the prospect of a US-China trade truce, while the EU and US finalised a trade agreement introducing a blanket 15% tariff on most EU goods.
In Australia, the ASX 200 rose 1.7%, marking its first weekly gain in three weeks as rate cut expectations boosted sentiment. The index briefly climbed above 8,800 points for the first time on Wednesday before easing slightly on Friday after the latest US tariff announcements.
According to a Finder survey, 91 per cent of economists believe the RBA will cut the cash rate following its two-day meeting, which began yesterday, with a 25 basis point cut bringing the cash rate down from 3.85 per cent to 3.60 per cent. Any changes will be announced later today, while earnings season continues to provide stock-specific drivers.
In the US, the Nasdaq, S&P 500 and Dow Jones gained 3.9%, 2.4% and 1.3% respectively, supported by strong earnings results, with over 80% of companies beating expectations. Softer economic data, including weaker July payrolls and a subdued ISM Services print, reinforced market views of multiple Fed rate cuts by year end.
In Europe, equities also rallied as the EU-US trade agreement and upbeat earnings outweighed caution over uneven economic conditions across the Eurozone. Greater China markets advanced as better-than-expected trade data and easing rhetoric from Washington encouraged risk appetite, while Japan’s Nikkei came close to record highs on robust corporate earnings and policy clarity on tariffs.
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