Market update: 19 August 2025
Global markets had a strong week, with most major share indices hitting fresh highs. Investors were encouraged by signs that central banks may start cutting interest rates later this year, after softer inflation data in the US. Even with a hotter producer price reading (which reflects costs earlier in the supply chain), markets stayed upbeat.
Here at home, the RBA cut the cash rate by 25 basis points (or “bips”) to 3.60%, as widely expected. It’s the lowest level in more than two years, and markets are now betting we’ll see another cut later this year, most likely in November. On the ASX, results season is heating up. Three of the four big banks reported, with mixed reactions, CBA slipped, but Westpac and ANZ helped the financial sector recover later in the week.
In the US, the S&P 500, Dow Jones and Nasdaq all pushed a little higher, reaching new records earlier in the week after that friendlier CPI print. Investors are now pricing in almost a full 25 bps Fed rate cut in September, though policymakers are still cautious with another inflation reading and jobs data due before then.
In Europe, shares also lifted, taking their lead from Wall Street. Locally, Eurozone economic data was a bit mixed, with industrial output weaker but employment still edging higher. Meanwhile, in Asia, both the Hang Seng and Shanghai Composite gained 1.7% as investors welcomed the extension of the US-China tariff truce and fresh signs of support from Beijing. In Japan, the Nikkei also finished 1.7% higher, helped by upbeat earnings and optimism that US rate cuts could be just around the corner.
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