The Monday Report – 08 September 2025

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US markets weakened on a much softer than expected payrolls print last Friday. Gold and the Australian dollar advanced.

The ASX200 traded lower last week to start 'volatile' September. Futures are pointing to a softer Monday start.

Good Morning,

Australian markets update, Tony Sycamore IG

The ASX200 finished 101 points (-1.14%) lower last week at 8871, snapping a four-week winning streak after failing to recover from Tuesdays heavy sell off. 

Tuesday’s plunge in the ASX200 reveals a historical pattern of heavy early month falls.  

The aggressive nature of Tuesday’s decline in the ASX200 stood out starkly against the relative stability observed in other regional equity markets and US equity futures during the session. 

Scrolling back through the chart of the ASX200 over the past four years, it can be observed that Tuesday’s sell-off, which occurred three trading days into a new month, is not an isolated incident.

Over the past 47 months, dating back to October 2021, there have been 26 instances where the ASX200 has dropped by more than -0.9% in a session within the first 11 calendar days of a new month, with an average drop of -1.56%. Most often the falls are centred a few days either side of the 4th of the 5th day of the month. 

In a few cases, such as August 2024, heavy losses were followed by a second day of heavy declines. Conversely, in a few instances, heavy early session losses appear to have attracted strong buying interest, reducing the net daily decline to below -0.9%. For example, this occurred on November 1, 2024, and I have not included either of these instances in the numbers highlighted above. 

While some of these falls may be attributed to typical market forces, such as the Liberation Day sell off in April 2024, a clear pattern emerges, with a pronounced tendency for the ASX200 to take a sharp dive a few days either side of the 4th or 5th day of the new month.

Based on a careful review of the data, I believe there is a good chance that the seller is one or a group of similar type/style of accounts and we should be keeping an eye for a repeat performance at the start of next month.

Looking ahead, the main event on the local data calendar is Tuesday’s Westpac Consumer Confidence reading. Last month (August), the Westpac Consumer Confidence Index rose 5.7% month-on-month to 98.5 points, its highest level since February 2022, as RBA rate cuts, rising wages, and easing cost-of-living pressures buoyed household sentiment.

The survey period for the Westpac Consumer Confidence Index typically occurs over the first week and a half of the new month. This means the survey period for September’s reading likely coincides with the week just ending, which included the release of Q2 AU GDP that showed the fastest rate of annual growth since Q3 2023.

This, along with the widespread speculation of a -25bp rate cut at the RBA’s meeting in November, coupled with optimism from easing inflation and positive global cues, is expected to see the Consumer Confidence Index rise to 99.5 in September.

What happened on Friday, Chris Weston, Pepperstone

Whilst the topic has been well debated, Friday’s US nonfarm payrolls (NFP) report was significant in several ways. The US jobs report was poor, though it compares favourably to the deterioration seen in Canadian employment data, down -65k, unemployment rate at 7.1%.

The CAD swaps market has subsequently raised its expectation that the Bank of Canada will cut rates at the 17 September meeting to 73%. With the BoC and FOMC meetings both scheduled that day, 17 September now stands out as a key date in the risk diary.

After 53 consecutive positive monthly jobs prints, the revision to June’s payrolls, to  -13k, formally ended that impressive streak. Taken holistically, it epitomises the challenges faced by central banks and corporate entities alike: the accuracy and reliability of data that drive critical decisions are essential to maintaining confidence in policy and strategic direction.

Revisions to prior payrolls reports are not new, but had the Fed initially known June payrolls growth was down -13k instead of up 147k, it is highly likely they would have cut rates at the July FOMC meeting,  a classic case study of poor data resulting in a (probable) different policy outcome.

Perhaps Trump was on to something with his persistent claims that Powell and the Fed are behind the curve. The three-month average job growth now stands at a meager 29k, while the unemployment rate has ticked up for a second consecutive month to 4.3%. Slack is clearly building in the US labour market. While widespread layoffs are limited, the Fed will likely take a pre-emptive stance to prevent deterioration.

Another factor unlikely to have gone unnoticed is deterioration in the compensation channels, notably, average earnings for all employees slowed on a year-on-year basis, while average hours worked also edged lower to 34.2.

Payrolls revisions return to the spotlight on Tuesday, when the BLS reports its preliminary revisions for the Establishment Payrolls Survey, adjusting data for the 12 months up to March 2025. Expectations are for some punchy revisions lower.

As expected after a weak NFP outcome, the interest rate swaps market has moved to price a small 7% premium for a -50bp cut in September. A -25bp cut at the September FOMC meeting is now seen as a done deal, with no dissent expected among any of the voting Fed members.

The implied pricing for a -50bp cut in September could increase if US core PPI and CPI prints come in more benign than expected. The median expectation is for US core CPI to rise 0.3% m/m, leaving the y/y rate unchanged at 3.1%. The market will closely assess tariff pass-through into core goods inflation, while core services inflation is expected to ease.

Should core CPI come in at 3% or even with a 2-handle, US swaps pricing could price the implied probability of a -50bp cut in September at 30–40%. In this scenario, it’s fair to assume the USD would break and close below the range lows of 97.60, with pro-cyclical risk currencies (AUD, NZD, SEK, and ZAR) outperforming. AUDUSD should trade to new YTD highs, with AUD longs looking attractive tactically given the rising likelihood that the RBA may have only one cut, or perhaps none, left in the cycle.

US equities should push firmly higher, breaking to new highs in the S&P500 and NAS100 partly because falling UST yields would lift the net present value of duration equity. The increased prospect of a -50bp cut, combined with a less concerning inflation print, would coincide with Q3 GDP tracking around 2.5–3%, strong earnings, and a weaker USD providing tailwinds for the US listed multinationals.

Alternatively, should US core CPI surprise to the upside, say 3.2%-plus y/y, the outcome would likely bring modest USD strength, driven by a -5–10bp sell-off in 2yr USTs. While bond investors are also tasked to take down US$119b in Treasury supply this week, limits remain on how far shorter maturity UST selling could extend, given that a -25bp September cut seems all but assured.

However, assumed rate cuts further out the curve would be pared back, and the assumed terminal Fed funds rate (currently 2.87%), which now trades below the Fed’s assumed neutral rate would rise. US equities would likely react poorly, and while buyers stepped in to support intra-day weakness last week, that support may fade if stagflationary dynamics intensify.

While US Treasuries continue to find buyers, the real winner remains gold. The intra-day chart of the past five days is a thing of beauty, with price moving bottom left to top right. Pick any fundamental reason for gold’s recent strength, any could be true but the fact that it is rallying strongly, with no statistical correlation to the S&P500 or US Treasuries, makes it incredibly attractive to multi-asset managers seeking to lower portfolio variance through diversification.

Outside of incoming US economic data, Thursday’s ECB meeting should be a low-impact event, with the ECB almost certain to keep rates at 2% and unlikely to signal urgency to change policy. Meanwhile, China delivers a heavy data week, with August trade data (imports/exports), August credit data (new loans and aggregate financing), and CPI all due.

Political developments in France are also worth monitoring. Traders will focus on any widening in the France 10yr OAT vs German 10yr bund spread. The political saga could overshadow the ECB meeting in market focus, and while many retail traders may avoid this, if markets see a rising prospect of a snap legislative election, it could feed into EUR volatility and raise the likelihood of Fitch downgrading France’s sovereign rating.

Corporate news in Australia

-Rio Tinto ((RIO)) could be forced by the Guinean government to invest in downstream processing or steelmaking where the Simandou project is being developed.

-The SA government has asked FIRB to block the Cosette $672m takeover of Mayne Pharma ((MYX)) over factory closure fears.

-A deal between Perpetual ((PPT)) and AZ Next Generation Advisory for the $21bn wealth management unit sale is expected this week.

-Wagners Holding Co ((WGN)) is seeking $30m equity at $2.60 a share to invest for ramping up growth.

-Major shareholder IFM has warned Atlas Arteria ((ALX)) against rushing into debt or equity funded acquisitions.

-ANZ Bank’s ((ANZ)) venture fund, 1835i has divested Airwallex with a US$44m sale. 

-ABC has invested $4m on AI tools, including $2.7m on chatbot ABC assist.

-Artrya ((AYA)) is raising $60m via an institutional placement with a follow up $5m share purchase plan at $2.05 after a 626% rise in the share price over the last year.

On the calendar today:

-JP 2Q GDP

-CH Aug Trade Bal

-AUSTRALIAN FINANCE GROUP LIMITED ((AFG)) ex-div 5.30c (100%)

-AUB GROUP LIMITED ((AUB)) ex-div 66.00c (100%)

-CASH CONVERTERS INTERNATIONAL LIMITED ((CCV)) ex-div 1.00c (100%)

-HUB24 LIMITED ((HUB)) ex-div 32.00c (100%)

-SMARTGROUP CORPORATION LIMITED ((SIQ)) ex-div 19.50c (100%)

-SUPER RETAIL GROUP LIMITED ((SUL)) ex-div 30.00c (100%)

-SUPER RETAIL GROUP LIMITED ((SUL)) ex-div 34.00c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

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