Australia’s sharemarket is poised for further gains, building on its recent record-breaking performance. Futures indicate the S&P/ASX 200 Index is set to jump, potentially reaching an all-time high. This surge follows signals from US Federal Reserve chairman Jerome Powell, hinting at possible interest rate cuts as early as next month.
The prospect of imminent rate cuts in the United States has ignited investor enthusiasm. Powell’s comments at the annual Jackson Hole gathering of central bankers were perceived as more dovish than anticipated, prompting a rush into stocks and cryptocurrencies on Friday. According to Arian Neiron from VanEck, the market is highly sensitive to low-rate environments and growth narratives, benefiting small-cap stocks in particular.
Previously, Powell had resisted pressure to cut rates, citing the need for more evidence of easing cost pressures. However, his recent address highlighted growing risks in the US jobs market, suggesting the Fed may act sooner rather than later. This shift in tone has led analysts, such as those at Barclays, to bring forward their expectations for US rate cuts, anticipating quarterly reductions from September 2025 through June 2026.
Despite some caution that a rate cut is not a certainty, the market is reacting positively. This week’s Australian earnings season will feature reports from major players like Coles, Wesfarmers and Qantas. Investors will also be closely monitoring the upcoming Australian inflation data set to be released on Wednesday, along with the US PCE inflation print, as they look for further cues regarding monetary policy decisions.
