Executive Summary:

Global markets rallied on hopes of a resolution to the U.S. government shutdown, though the Fed's caution dampened expectations for a December rate cut. In Australia, robust employment data and a resilient labour market have reduced near-term expectations of an RBA rate cut. The ASX posted its weakest week in four months amid sector rotation and global tech selloffs.

Global Context:

Global Markets Rally on Hopes of Imminent U.S. Government Shutdown Resolution:

Global markets started the week on a strong upswing, fueled by optimism that the most extended US government shutdown in history could soon be over. A bipartisan Senate vote on Sunday signalled a potential deal to reopen the government, immediately boosting investor confidence worldwide, as investors hoped it would end the uncertainty caused by missing economic data. This positive sentiment propelled US stock futures higher, a move that was mirrored by major European indices.

Fed Caution Narrows Expectations for December Rate Cut:

Reuters reported that most economists still expect the Federal Reserve to cut rates again in December, although financial markets have become less confident following the Fed’s more cautious communication. Policymakers delivered hawkish remarks on inflation and highlighted gaps in the economic data caused by the government shutdown, prompting investors to reassess the likelihood of near-term easing. As a result, short-term Treasury yields moved higher as traders reduced the probability of a December rate cut,

Equities and precious metals weakened, with S&P futures, gold and silver all coming under pressure as markets adjusted to the diminished prospect of monetary easing, given that lower interest rates typically support both risk assets and commodities. In foreign-exchange markets, the U.S. dollar strengthened modestly as falling rate-cut odds improved USD carry. However, the size of the move varied across currency pairs depending on divergences in global monetary policy settings. Overall, despite economists maintaining expectations for a December cut, the market has adopted a more cautious stance, reflecting a combination of inflation concerns, incomplete data and shifting policy signals from the Federal Reserve.

Eurozone Economy Shows Resilience with Rising Trade Surplus and Steady Growth:

Recent data shows renewed momentum in the Eurozone economy, highlighted by a substantial trade surplus of €19.4 billion in September. This represents a sharp improvement from €1.9 billion in August and significantly exceeds the €12.9 billion surplus recorded in September 2024. The stronger trade position was supported by robust export demand from the United States and a notable uptick in the chemicals sector. The Eurozone economy expanded by 0.2% quarter-on-quarter in Q3 2025. On an annual basis, Eurozone GDP rose 1.4%, slightly above the preliminary estimate of 1.3% but below the 1.5% pace recorded in Q2. This level of resilience, despite ongoing global uncertainties, reduces pressure on the European Central Bank to pursue additional interest-rate cuts in the near term.

China’s CPI Turns Positive: China’s latest inflation data signalled a modest improvement in price dynamics, with consumer prices rising 0.2% year-on-year in October 2025, beating expectations for no change and reversing a 0.3% decline in the previous month. This marks the first annual increase since June and the fastest pace of consumer inflation since January, while on a monthly basis, the CPI also increased 0.2%. According to the National Bureau of Statistics, the improvement in consumer prices reflects the combined effects of policies aimed at expanding domestic demand and the seasonal boost from the National Day and Mid-Autumn Festival holidays.

China’s PPI Contraction Eases in October: China’s Producer Price Index

fell by 2.1% year-on-year in October 2025, marking a modest improvement from September’s 2.3% decline and coming in slightly better than the expected 2.2% drop. This suggests that the contraction in factory-gate prices is continuing but at a slower pace. On a month-over-month basis, the PPI rose by 0.1% in October, following no change in September. The October decline is the mildest since August 2024, signalling some success in efforts to alleviate deflationary pressures.

Gold retreated from earlier highs on Friday to trade below $4,100 an ounce but was still poised for a weekly gain of about 3%. The market was weighed down by uncertainty, as investors faced a backlog of key U.S. economic data released after the historic government shutdown, raising concerns over the upcoming reports.

Brent crude futures rose over 1% to near $64 a barrel on Friday, putting them on course to end a two-week decline. The increase was driven by supply concerns, including a Ukrainian drone strike on a key Russian port and warnings that up to a third of Russia's seaborne oil exports face significant shipping delays.

Australian Economic Indicators

Employment figures beat forecasts: Australia’s labour market strengthened in October, with the seasonally adjusted unemployment rate falling to 4.3%, down from 4.5% in September, according to data released by ABS. The decline returned the jobless rate to the same level recorded in June, July, and August 2025, reversing September’s uptick and coming in slightly below market expectations of 4.4%. The number of employed people increased by 42,000, while the number of unemployed fell by 17,000, reflecting a stronger-than-usual transition from unemployment into work for the month. The participation rate remained steady at 67.0%, and the employment-to-population ratio was unchanged at 64.0%, indicating continued stability in overall labour market engagement. Strong October jobs data, pointing to a robust labour market, have led economists to scale back expectations for an imminent interest rate cut. This reinforces the view that the Reserve Bank will keep rates unchanged for the rest of the year.

ASX Market Overview and Sector Performance:

The ASX faced a notably weak week and closed at 8,634.5, its lowest level in nearly four months. On Friday, the benchmark S&P/ASX 200 fell 118.9 points, or 1.36%, extending its losing streak to four consecutive days and three straight weeks. For the week, the index dropped 1.54%—its steepest weekly loss since the first week of April, when it tumbled 3.9%.

The Friday sell-off was driven by a sharp drop on Wall Street overnight, with technology stocks leading the decline on the ASX. Australian banking shares also weighed on the market, pressured by the Commonwealth Bank’s (CBA) latest earnings and a stronger-than-expected jobs report released Thursday. CBA, the ASX’s most extensive stock by market capitalisation, slid 1.8%, while global mining giant BHP fell 1.3%. In total, roughly A$37 billion was erased from the value of the Australian equity market.

Industry/Sector performance in the week ending 14 November 2025:

Source: marketindex

Over the last week, the Information Technology sector on the ASX experienced significant volatility, as market sentiment shifted sharply. The industry showed strength early in the week, helping lift the ASX 200 by 0.75% on 10 November, driven by substantial gains in names such as WiseTech Global (+6.2 %), Technology One (+1.7 %), Life360 (+3.6 %) and Iress (+6.6%) following a margin-improvement announcement. However, investor enthusiasm faded later in the week following a sharp sell-off on 14 November, which saw the IT sector drop 4.4% and drag the broader market down with it. Overall, the IT sector swung from being a major market outperformer early in the week to the sharpest laggard by week’s end and experienced a decrease of nearly 12 per cent. The rout came amid broader macro concerns namely, market participants are re-pricing interest rate expectations, and stronger-than-expected U.S. data is reducing confidence in near-term rate cuts, putting growth tech under pressure.

The financial sector, especially big banks, also saw heavier losses. Commonwealth Bank (CBA) dropped 1.8% in one session. Macquarie Group (ASX: MQG) reported a first-half net profit of A$1.655 billion, up 3% year-on-year. However, that result missed analyst expectations, particularly due to weakness in its commodities & global markets business. Macquarie’s share price dropped ~5–7% following the earnings release. Macquarie’s profit miss is significant, and the market has responded accordingly. This situation isn’t limited to a single bank but indicates a wider investor scepticism towards financials.

The ASX 200 materials sector (mining/resources) posted a strong performance. Lithium producers Pilbara Minerals, IGO, and Liontown Resources surged due to rising lithium prices driven by renewed global battery demand, contributing to a 3.21% sector gain.

Gold stocks delivered strong outperformance, driven by robust gold prices supported by a weaker US dollar and the US government shutdown. Meanwhile, ASX-listed copper stocks such as Sandfire Resources and Capstone Copper also climbed, buoyed by a 27% year-to-date rise in copper prices fueled by growing demand linked to the energy transition. Beyond the major miners, other materials-related companies also saw notable moves: for instance, Monadelphous an engineering services provider to the mining sector surged approximately 11% following news of a robust project pipeline. Investor interest in critical minerals, such as rare earths, remains elevated, with geopolitical pressures and the push for supply chain diversification continuing to provide a structural tailwind.

Energy equities on the ASX recorded modest gains over the week, supported by a favourable commodities backdrop. The sector benefited from rising natural gas prices and relatively steady oil markets, which helped underpin investor sentiment and lifted overall valuations.

Short-Term Australian Market Outlook: Cautious Optimism Amidst Risks

Over the short term, the Australian equity market is expected to experience modest gains, underpinned by moderate economic growth, gradually easing inflation, and a resilient labour market. However, contrary to earlier market expectations, the Reserve Bank of Australia has recently reaffirmed its neutral-to-hawkish stance, explicitly stating that rate cuts are not on the immediate horizon given persistent domestic demand pressures and inflation still hovering near the top of its target band. This policy stance implies that monetary conditions will remain restrictive for longer, which may temper the pace of economic expansion and weigh on rate-sensitive sectors such as housing. Nevertheless, household consumption has shown surprising resilience, supported by strong employment and wage growth, while business investment particularly in the resources sector continues to benefit from firm global commodity demand.

In this environment, we see selective opportunities in large-cap consumer discretionary stocks with pricing power and solid balance sheets, as well as in resource companies exposed to structural demand drivers (e.g., critical minerals). Overall, market performance will likely depend on RBA policy signals, corporate earnings momentum, and global demand, particularly from China and other key trading partners, with careful monitoring of valuations and sectoral developments crucial for assessing potential upside and downside.