Weekly recap
What happened in markets
The Australian sharemarket declined last week, despite stronger base metal commodity prices. The banks were the main detractors, with Commonwealth Bank (-5.3%), Westpac (-3.7%), National Australia Bank (-4.3%) and ANZ (-2.0%) all lower. Interestingly, CBA slumped to a two-month low and had its worst session in months during the week. Meanwhile, miners like BHP (+1.3%), Rio Tinto (+5.1%) and Newmont (+7.1%) advanced strongly. We think these moves represented a rotation from banks to miners throughout the week, along with reduced foreign investment, as global trade conflict de-risked with news of US trade deals.
US sharemarkets advanced strongly last week, with the S&P 500 and NASDAQ closing at fresh record highs. Big tech and homebuilders led gains. The ongoing 2Q 2025 earnings season reports remained a key driver, with over a hundred companies reporting. Overall, results seemed to exceed expectations, though the size of the beats lagged historical averages. Google’s parent Alphabet (+4.4%) rose on strength in Search, YouTube, and Cloud, while Tesla (-4.1%) disappointed on free cash flow and cautious commentary. Semiconductor stocks struggled, with Texas Instruments (-14.6%) and Intel (-10.4%) notable decliners. Macro data was light, though we learned of US trade deals with Indonesia, Japan and the Philippines.
European sharemarkets posted modest gains last week. Trade hopes, especially for a 15% EU-US tariff framework similar to Japan’s recent deal, boosted the automobile and luxury sectors, with Mercedes-Benz and Porsche gaining over 8% and 10%, respectively. However, doubts about EU negotiating strength persisted. Economic data released was mixed and the European Central Bank decided to hold its cash rate steady after eight cuts. Company earnings season continued in the region as well, with 20% of the STOXX Europe 600 constituents having reported. Earnings growth has outpaced expectations, however, fewer companies beat estimates compared to history.
Stock & sector movements
What caught our eye
July’s RBA minutes painted a picture of a central bank board split between “cautious and gradual” easing and those urging quicker cuts. It’s rare to see such transparency in voting. This time the RBA even published the tally for the first time and the detail gives us fresh insights into the thinking behind the surprising decision to keep the cash rate on hold at 3.85% in July.
At its heart, the majority (6 of 9) of board members felt policy was already “modestly restrictive” and that lowering rates a third time in four meetings would be inconsistent with their strategy of gradual easing. They pointed to monthly inflation indicators running a touch above forecasts, stronger-than-expected household demand and stubbornly tight labour market conditions, as reasons to pause and await more data.
Yet the minority (3 of 9) disagreed. These members argued the evidence was already there for a cut. Those being that underlying inflation was back near the 2.5% midpoint, wage growth was cooling, households were saving more, and global growth risks remained pronounced. They warned of the long and variable lags in monetary policy transmission and feared waiting too long might risk derailing the recovery in consumer and business confidence.
Interestingly, a week later employment data was released and seemed to support the RBA minority. Just 2,000 jobs were added to the economy in June, well below the market’s expectation for 20,500. Meanwhile, the unemployment rate rose 0.2% to 4.3%. While still relatively low by historical standards, this unemployment rate represented a 3.5 year high. This news reinforced expectations of an August cut and underlined that the RBA’s “cautious” pace might already be behind the curve.
Market pricing now puts a ~98% chance on a 0.25% cut next month, with a ~50% probability of a larger 0.50% rate cut, suggesting traders have sided with the RBA minority.
Some economists worry the RBA is clinging too tightly to its mantra, with the “cautious and gradual” approach at risk of becoming an end in itself rather than a flexible framework for policy decisions driven by fresh data.
So, as we look to the August meeting, what caught our eye is less about the direction of rates. Few doubt they’ll head down, it's more about the pace and psychology around interest rate cuts. The RBA’s new-found vote disclosure, the tug-of-war over timing and the surprise in the employment data reminds us that central banking is as much about communicating with the market as it is about assessing the latest data.
The week ahead
An eventful week coming up, with important economic data and company reports being released both domestically and abroad.
In Australia, we will get an update on inflation, along with building approvals and retail sales.
Internationally, a slew of companies will report their quarterly earnings, in addition to US Consumer Confidence, inflation, employment and GDP data. On top of that, the US Federal Reserve will meet to determine if a change to its cash rate is necessary.
Meanwhile, a number of European countries will report their inflation and GDP data. Both the Japanese and Canadian central banks will also have their monetary policy meetings.
This has to be the most action packed week of news we've seen in a long time!
Company Reports
Wade is the head of the Investment Services division at Cutcher & Neale and has over 10 years of industry experience in accounting and investment advisory roles.
Ryan is our Portfolio Manager, bringing over 15 years of experience in managing multi-asset investment portfolios with a specialisation in fundamental equity analysis.
