Market update: 16 December 2025
The Australian share market rose 0.7% this week, supported by strength in the materials and gold sectors. The RBA kept interest rates on hold, as expected, but struck a firmer tone in its messaging. Governor Michele Bullock made it clear that the RBA doesn’t see rate cuts in the “foreseeable future,” noting that future decisions will remain dependent on how the data evolves into 2026. While only a few sectors finished higher this week, resources helped lift the market overall.
In the US, markets were mixed. The Dow finished higher, but the S&P 500 and Nasdaq edged lower as investors weighed a fresh rate cut from the Federal Reserve against signs of a cooling job market and tech sector pressure. Federal Chair Jerome Powell acknowledged that the labour market is showing some cracks, and while only one rate cut is currently projected for 2026, markets are now pricing in two cuts for next year. Investor sentiment briefly surged on Thursday before pulling back, especially in tech stocks. Big names like Oracle and Broadcom dropped sharply as questions emerged around rising AI spending and uncertain timelines for returns.
In Europe, markets dipped slightly. European Central Bank officials hinted that further rate hikes are still possible, even though many expect the bank to hold steady for now. UK economic data disappointed, with GDP contracting in October and housing demand weakening. While inflation is mostly under control, concerns about growth remain in focus for investors.
Greater China markets also softened this week. The Hang Seng and Shanghai Composite both edged lower as inflation data continued to reflect deflationary pressure. Consumer prices rose just 0.7%, and producer prices fell for the 38th straight month. Although Beijing has been working to address oversupply and price competition, the impact has been limited so far. In Japan, the Nikkei rose 0.7%, supported by confidence from the Bank of Japan that it can sustainably reach its 2% inflation target. While a slowdown in global AI investment is a potential risk, domestic wage growth and inflation momentum appear strong enough to support the outlook.
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