Market update: 2 December 2025
The Australian share market rebounded this week, with the ASX 200 rising 2.3% after four straight weeks of losses. Almost every sector finished in the green, with Technology, Healthcare and Materials leading the gains. However, optimism was slightly tempered by a higher-than-expected inflation reading. October CPI rose to 3.8% year-on-year, while trimmed mean inflation hit 3.3%, both sitting above the RBA’s target range and raising questions about the timing of any future rate cuts.
In the US, equities surged across the board during the holiday-shortened week. The Nasdaq led with a 4.9% gain as optimism around long-term tech growth returned, helping to ease concerns about AI-related spending and valuations. Weaker-than-expected economic data, including softer retail sales and a drop in consumer confidence, increased expectations for a rate cut in December. Meanwhile, the Fed’s Beige Book pointed to modest economic activity and ongoing cost pressures from tariffs. Small-cap stocks also rallied, with the Russell 2000 Index jumping 5.5%.
European markets posted strong gains, helped by cooling inflation across major economies and expectations that eurozone price growth will remain near the European Central Bank’s 2% target. The Euro Stoxx 50 rose 2.8%, while the UK’s autumn budget (which included £26 billion in tax hikes) weighed slightly on local sentiment. German business confidence weakened, but consumer sentiment saw a small improvement heading into December.
In Greater China, markets finished higher with the Hang Seng up 2.5% and the Shanghai Composite rising 1.4%. However, a surprise 5.5% fall in industrial profits for October pointed to softening economic momentum and raised fresh doubts about China’s ability to meet its 5% growth target. In Japan, the Nikkei rose 3.3%, supported by renewed confidence in tech and AI stocks, and by US rate cut expectations. Core inflation remained steady at 2.8%, still above the Bank of Japan’s target, reinforcing confidence in the domestic economic outlook.
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