Market Update – Waiting on the Fed

Market Update – Waiting on the Fed

Markets around the world edged higher last week, with investors still watching closely to see what central banks will do with interest rates in the months ahead.

United States:

• Inflation is proving a little sticky, but not as bad as many feared. Prices are still rising, but the impact of tariffs hasn’t shown up much yet.

• The US jobs market has cooled slightly but remains solid, giving the Federal Reserve some room to think about cutting interest rates in September.

• Markets are betting strongly that the Fed will trim rates next month, which has been enough to push Wall Street to fresh record highs.

Japan:

• The Nikkei hit record highs, helped by steady wages, a bit of inflation (the good kind), and companies paying more attention to shareholders.

Australia:

• The Reserve Bank cut interest rates last week as expected. The language around the decision suggested more cuts could be on the way, though probably not until later this year.

• Unemployment ticked down slightly to 4.2%, but overall job growth has slowed compared to last year.

• The sharemarket hit record highs, led by strong performances in mining companies as metal prices lifted. Small-cap stocks and technology names also had a good run.

The Week Ahead:

• Globally, the focus will be on the US Federal Reserve’s meeting minutes, which should give more clues about whether rates will be cut in September.

• Locally, consumer confidence numbers are due, which may show whether the recent rate cut is helping to lift sentiment.

In short: Markets are being driven by expectations that interest rate cuts are coming soon. Investors are welcoming this, but the real test will be whether inflation stays under control and job markets hold steady.