The global macroeconomic backdrop shifted notably in the week ending 23 November 2025, contributing to a significant risk-off sentiment that heavily impacted Australian equities. In the United States, a mixed labour market report showing rising unemployment alongside stronger-than-expected job additions, combined with firm Services PMI data and Federal Reserve minutes signalling a delay in rate cuts, led to a repricing of interest rate expectations.

Global Context

Several key U.S. labour-market indicators were released in recent days, with some reports delayed by the U.S. federal government shutdown, which pushed the release date of major datasets back by 26 days and caused temporary halts in Department of Labour operations. As a result, both the September employment report and certain weekly unemployment claims figures were published later than usual.

September Employment Report: The U.S. labour market sent mixed signals in September, as the unemployment rate rose to 4.4% from 4.3% in August, reaching its highest level since October 2021 and marking a four-year peak. The number of unemployed individuals increased by 219,000 to 7.603 million, while the number of employed rose by 251,000 to 163.645 million. Employers added a stronger-than-expected 119,000 jobs during the month, more than double economists’ forecasts of 50,000. Although hiring remains positive, unemployment is trending higher because new entrants and job-seekers are entering the labour force faster than jobs are being created. At the same time, tariff-related pressures and rising adoption of artificial intelligence are contributing to a moderation in hiring momentum.

Weekly Initial Unemployment Claims: Initial jobless claims for the week ending November 15 fell by 8,000 to 220,000, remaining well below post-Q2 averages, and this update incorporated revised counts following Department of Labour disruptions caused by the government shutdown, which had temporarily threatened the employment status of many federal workers in early October. Historical data for the week ending October 18 show that initial claims totalled 232,000, a figure also influenced by reporting delays tied to the shutdown. The next update on unemployment claims is scheduled for November 26, 2025. Despite ongoing job gains, the broader implications suggest a loosening labour market, as the rise in the unemployment rate indicates cooling economic momentum. While the low level of claims points to contained layoffs, signs of slower hiring and downward revisions highlight emerging weaknesses. Policymakers are likely to interpret this combination as a signal for potential shifts in consumer spending and future monetary policy decisions.

FOMC October Minutes and Implications for December Policy:

The minutes of the Federal Reserve’s October meeting, released on 19 November, confirmed what many officials have communicated in recent weeks: a December rate cut is now unlikely unless economic data shifts materially. The minutes emphasised that “many participants suggested that it would likely be appropriate to keep the target range unchanged for the rest of the year,” reflecting growing caution across the Committee. Fed members remain deeply divided between those prioritising support for a slowing labour market and those arguing for a higher-for-longer policy to ensure inflation continues to moderate. The situation has been complicated by the recent government shutdown, which has delayed or cancelled key economic reports, leaving policymakers with limited visibility.

Following the release of the minutes, market pricing shifted meaningfully: the probability of a December cut dropped from 50% to roughly one-in-three, according to the CME FedWatch tool. Treasury markets reflected this repricing as well, with the 6-month Treasury yield moving into the Fed’s current target range, signalling that traders now expect no change in December and only a minimal chance of easing at the January 27–28 meeting. As always, traders and algorithms dissected every line of the minutes and every Fed speech, driving immediate adjustments across rates and positioning.

US Average Hourly Earnings m/m: In September 2025, average hourly earnings for U.S. private nonfarm employees increased by 9 cents, or 0.2%, to $36.67. This fell short of the 0.3% forecast, indicating a slightly weaker outcome than expected. The moderate growth suggests wage pressures are softening, which could help ease inflation concerns. The recent trend of modest month-over-month growth (~0.2-0.3%) confirms that wage pressures persist but are not accelerating strongly.

Flash Manufacturing PMI: The S&P Global Flash US Manufacturing PMI slipped to 51.9 in November 2025—its lowest reading in four months—down from 52.5 in October and slightly below expectations of 52. Despite the decline, the index still indicated improving factory conditions for the tenth time in the past eleven months, with only July showing a slight setback. According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, the data suggests a "relatively buoyant" U.S. economy with Q4 GDP growth tracking at approximately 2.5% annually. He noted the expansion is encouragingly broad-based, encompassing both manufacturing and services. Business confidence has also surged due to expectations of further interest rate cuts, the end of the government shutdown, and a generally improved economic and political outlook.

U.S. Services Sector: The S&P Global U.S. Services PMI rose to 55.0 in November 2025 (flash estimate), up from 54.8 in October, exceeding market expectations of around 54.6. This marks one of the strongest readings in recent months and signals continued, solid expansion in the services economy, reinforcing the role of services as a key driver of U.S. economic growth. Demand conditions strengthened further, with new orders rising at the fastest pace this year, indicating resilient client spending despite elevated price levels and macro uncertainty.

The combination of intense activity and renewed price pressures may have policy implications. A firm services sector paired with rising costs could dampen expectations for near-term Federal Reserve interest-rate cuts, as the data signal limited slack and persistent inflation risks.

China's Economy

October's economic data for China pointed to an uneven recovery, characterised by a broad slowdown in industrial production, retail sales, and fixed-asset investment, alongside a contraction in exports. Conversely, the economy demonstrated resilience through robust service-sector spending and rising consumer confidence. Despite a weakening global demand and geopolitical tensions, officials maintain that China's economy will hit its annual growth target, favouring targeted measures over large-scale stimulus. The primary obstacle remains the property sector, where plunging investment, sales, and prices are eroding household and local government wealth. Furthermore, China's reliance on exports and state-investment, coupled with weak private investment, leaves the economy exposed to external shocks and hampers its transition to a more sustainable, consumption-driven model.

Gold and Oil Market Weekly Review

Oil prices dropped to a one-month low as prospects for a Ukraine-Russia peace deal, brokered by the US, alleviated supply concerns. The potential agreement, which may involve Ukrainian concessions and the lifting of sanctions, could increase Russian oil exports. Despite the diplomatic progress, European officials remain sceptical that a deal will be finalised. WTI crude finished the week down over 4%.

Gold prices eased this week, with the metal down 1.74% from last week and 6.75% from one month ago. Over the past 52 weeks, gold has traded between an intraday high of $4,530.00 and a low of $2,583.55, reflecting significant volatility. On Friday, gold pared some losses to trade near $4,080 per ounce, yet it remained on track for a weekly decline as investors assessed stronger U.S. labour-market data, dovish central-bank signals, and softer U.S. Treasury yields.

Bitcoin's Price and Crypto Market Review

After reaching a peak market cap of $2.5 trillion and a price of US$126,000 in October 2025, Bitcoin's value corrected to around US$80,000. Unlike previous cycles, this downturn lacked a clear political or technological catalyst. Instead, the core issue is that Bitcoin currently lacks a compelling new narrative to sustain its growth.

Historically, major price surges were fueled by stories like ETF launches, institutional adoption, and regulatory easing. Now, Bitcoin's fate is more intertwined with broader markets. Its strengthened correlation with tech stocks means shocks in either sector can spill over. Furthermore, the $300 billion stablecoin market poses a latent risk to bonds, as capital flight could force issuers to sell their vast Treasury holdings, potentially pressuring the U.S. debt market.

Australian Economic Indicators

Australia Wage Price Index (WPI) – Q3 2025 Financial Report: Australia’s seasonally adjusted Wage Price Index (WPI) rose by 3.4% year-on-year in Q3 2025, unchanged from the previous quarter and fully aligned with market expectations. Public sector wages increased by 3.8%, edging slightly higher than the 3.7% recorded in Q2, while private sector wages grew by 3.3%, easing from 3.4% previously.

On a quarterly basis, overall wage prices rose by 0.8%, matching both the previous quarter’s pace and consensus forecasts. Within the private sector, the health care and social assistance industry recorded the strongest wage growth at 4.1%, reflecting ongoing labour demand pressures. In contrast, financial and insurance services saw the weakest private-sector wage growth at 2.5%, highlighting a more subdued compensation environment in that segment. The next data release is scheduled for February 18, 2026.

RBA Board Meeting Notes: The Reserve Bank of Australia (RBA) has signalled that only minimal interest rate cuts are anticipated in the year ahead. Minutes from its early November policy meeting, released on Tuesday, reveal a Board committed to a careful and data-dependent approach. This caution stems from persistent inflationary pressures, a robust labour market, and uncertainty over the current restrictiveness of monetary policy. However, members said further cuts may be required if the labour market weakened “materially” or if gross domestic product (GDP) growth undershot expectations due to more cautious household spending. In such cases, excess capacity was likely to emerge and dampen inflationary pressures, which the board said meant it would be appropriate to ease monetary policy to keep inflation at target and the labour market around full employment. Nevertheless, members agreed that it was not yet possible to be confident about which of these scenarios was more likely.

The S&P/ASX 200 fell 1.6% to close at 8,417 on Friday, retreating to its lowest level in over five months. The benchmark also slid 2.5% for the week—its sharpest weekly drop since late March—and recorded its fourth consecutive weekly loss, weighed down by global overvaluation concerns and diminishing expectations for further domestic policy easing. Since its late-October peak, the index has fallen 7.3%, erasing approximately A$220 billion in market value over four weeks. All 11 sectors finished in the red, reflecting the broad-based nature of the downturn.

Industry/Sector performance in the week ending 21 November 2025:

Source: marketindex

The Information Technology sector led the market's decline last week, falling 8.31%. This sharp pullback has pushed the industry to a -20.47% monthly performance, underscoring a significant loss of momentum. The downturn was driven primarily by mounting concerns over stretched technology valuations, combined with a broader global risk-off sentiment ahead of key US earnings releases. Macro-sensitive tech stocks were particularly impacted, as rising bond yields, tightening credit conditions, and softer global growth expectations exerted additional pressure on the sector. However, sentiment improved late in the week after a strong earnings report from US chipmaker Nvidia, which helped ease global fears of a potential AI-driven bubble. The upbeat results sparked a broad relief rally, partially stabilising the sector after several sessions of heavy selling.

After weeks with a positive status, the ASX 200 materials sector (mining/resources) posted a mixed performance over the past week. Early strength was driven by a rally in battery and lithium stocks, but the sector ultimately declined by 5.38% amid a spike in risk sentiment. Investor activity suggests rotation out of higher-risk mining assets amid broader market concerns, despite underlying fundamentals such as strong lithium demand—remaining supportive. Lithium stocks, which led the early gains, were not immune to the broader sector pullback. For long-term opportunities in lithium and other critical minerals, this week’s weakness may represent a temporary shakeout rather than a trend reversal, with timing and stock selection proving crucial. Even traditionally defensive mining plays, such as gold, came under pressure as risk-off flows weighed in the broader sector.

The Australian financial sector extended its underperformance through a volatile trading period; major banks remain under pressure. The industry is on track for its weakest monthly performance since mid-2022, despite a transient and fragile rebound earlier in the week. The downturn is primarily attributable to macroeconomic dynamics rather than idiosyncratic factors. Key headwinds include heightened interest-rate sensitivity, deteriorating risk appetite, and persistent uncertainty about global growth. Consequently, a brief technical relief rally proved insufficient to counter the dominant cautious narrative, which anticipates continued volatility.

The overall market sentiment for the week ending 21 November 2025 was broadly negative, with the chart clearly indicating widespread losses across the Australian equity market. Even traditionally defensive sectors such as Utilities (-3.82%) and Energy (-3.11%) posted declines unusual in downturns, as they typically hold up better suggesting this was a broad-based selloff rather than a flight to safety. Cyclical sectors also underperformed, with Discretionary (-2.50%) and Industrials (-2.48%) falling in line with investor concerns about weakening consumer spending or reduced business investment. Telecommunication (-2.17%)—another sector usually seen as defensive also showed vulnerability. Among the best performers (i.e., the least negative), Health Care (-1.70%) and Real Estate (-1.47%) displayed relative resilience despite still ending the week in negative territory; Health Care’s stability reflects its non-cyclical nature, while Real Estate may have benefited from specific property market dynamics or yield-seeking behaviour. Meanwhile, Consumer Staples (-0.13%) stood out as the clear outperformer of the week, recording only a minimal loss, underscoring its role as a defensive haven during market downturns, as demand for essential goods tends to remain stable regardless of broader economic conditions.

Short-Term Australian Market Outlook

Macro Concerns Keep Australian Market on Edge. The short-term outlook for the Australian equity market appears cautious, following a broad-based selloff in the week ending 21 November 2025. With all 11 sectors in negative territory, investor sentiment has clearly turned risk-averse. The underperformance of typically defensive sectors like Utilities and Energy suggests that the decline is not just cyclical but driven by macro-level concerns, possibly including rising bond yields, global growth fears, or renewed inflation worries. The relative resilience of Consumer Staples, Health Care, and Real Estate indicates that investors are still seeking stability, which could support a modest rebound if market volatility eases. However, without a clear catalyst such as dovish signals from the Reserve Bank of Australia, stabilising commodity prices, or improved global risk appetite the market may remain range-bound or vulnerable to further downside in the near term.