ASX 200 Soars to Record Highs Amid Optimism for RBA Rate Cuts
The Australian Stock Exchange (ASX 200) has hit an all-time high of 9109.7 points. This significant increase of 81 points, or 0.91%, was noted at 1:30 PM AEDT.
Labour Market Insights
The growth in the Australian employment sector shows promising yet concerning trends. In September, only 14,900 jobs were added, falling short of the anticipated 20,000. Additionally, the unemployment rate rose to 4.5%, the highest level since November 2021. This marks an upward shift from the previously revised rate of 4.3%.
Impact of the Job Market on the RBA
The recent report indicates a cooling labour market in Australia. This trend, initially observed a few months ago, became more apparent following last month’s job data.
Contrastingly, a surprising increase in the month’s consumer price index (CPI) had previously suggested that the Reserve Bank of Australia (RBA) might soon halt its rate cuts. However, recent hawkish commentary from the RBA has made future rate cuts less certain.
Speculations on Rate Cuts
The RBA faces a challenging situation. In light of the US experiences, rapid decreases in interest rates often follow signs of a weakening labour market.
- The RBA is expected to cut the cash rate by 25 basis points (bp) in November 2025.
- This would lower the rate to 3.35%.
- An additional cut of 25 bp is forecasted for February 2026, bringing the rate down to 3.10%.
As the Australian financial landscape evolves, market participants are keenly observing any developments from the RBA. The link between the labour market performance and interest rates is becoming increasingly relevant.
