The Monday Report – 08 December 2025

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SPI futures suggest yet another cautious opening awaits the ASX ahead of this week’s RBA and Federal Reserve interest rate meetings, which will likely direct market direction into the new calendar year.

World Overnight
SPI Overnight	8620.00	– 13.00	– 0.15%
S&P ASX 200	8634.60	+ 16.20	0.19%
S&P500	6870.40	+ 13.28	0.19%
Nasdaq Comp	23578.13	+ 72.99	0.31%
DJIA	47954.99	+ 104.05	0.22%
S&P500 VIX	15.41	– 0.37	– 2.34%
US 10-year yield	4.14	+ 0.03	0.75%
USD Index	98.97	– 0.06	– 0.06%
FTSE100	9667.01	– 43.86	– 0.45%
DAX30	24028.14	+ 146.11	0.61%

Good Morning,

SPI futures suggest yet another cautious opening awaits the ASX ahead of this week’s RBA and Federal Reserve interest rate meetings, which will likely direct market direction into the new calendar year.

Tony Sycamore, IG extract

The ASX200 finished 20 points or 0.24% higher last week at 8634, managing to carve out just a 71-point (0.82%) range for the week – among the smallest weekly ranges (as a percentage) since December 2019.

The cautious and subdued trading conditions were not entirely a surprise, ahead of this week’s RBA and Federal Reserve interest rate meetings, which will likely shape market movements into year-end. 

The key event on this week’s local calendar is Tuesday’s RBA interest rate meeting. At its last meeting in November, the Reserve Bank of Australia (RBA), kept its official cash rate on hold at 3.60%, as widely expected. The Board’s decision to keep rates on hold was unanimous and followed a pickup in underlying inflation during the September quarter, which significantly exceeded both the RBA’s and the markets forecasts. 

In its quarterly Statement on Monetary Policy, which accompanied the decision, the RBA released updated forecasts. The Bank revised higher its inflation forecasts with trimmed mean inflation rising to 3.2% until mid-2026, only falling back to the 2.5% mid-point target in mid-2027.

This has been followed by a hotter than expected October inflation report, which showed the trimmed Mean measure rose by 3.3% YoY, up from 3.2% in the previous period. It has also been followed by better-than-expected employment data, firmer details within last week’s Q3 GDP reading and robust household spending data for October. 

This combination is expected to see the RBA keep rates on hold this week at 3.60%. Attention will focus on how the RBA’s communications evolve after the run of firmer data. While it is unlikely the RBA will be considering either a rate cut or hike at this meeting, they will want to keep all their options on the table for next year, with the phrase “data dependence” expected to again feature. 

The Australian interest rate market is pricing in no change for this week’s meeting. It is then pricing in 4bp of rate hikes for February and a cumulative 36 bp of RBA rate hikes between now and December 2026.

What happened overnight, NAB Markets Research Today

US equities posted small gains, with the S&P500 up 0.19% and the NASDAQ 0.31% on Friday. Communication services, consumer discretionary, and tech led the advance, while defensive sectors lagged. Nvidia’s partner Hon Hai reported strong sales, boosting sentiment, while Netflix shares were volatile after agreeing to acquire Warner Bros Discovery.

In Europe, the DAX rose 0.61% and the Eurostoxx600 edged down -0.01%. Asian indices were mostly higher, with the Hang Seng up 0.58% and the CSI300 up 0.84%.

Over the week, the NASDAQ was the US outperformer, up 0.91%, second to the CSI300 topping the leader board at 1.28%. The EuroStoxx600 gained 0.41 over the past five days, our S&P/ASX200 gained 0.24% while the FTSE100 lagged, down -0.55%.

Moving to commodities, gold consolidated above US$4,200/oz, and over the weekend we learned China’s central bank added to reserves for a 13th consecutive month, Bloomberg also noted the PBOC continues to court foreign central banks to store gold in China. 

WTI crude rose 0.69% on Friday and 2.61% for the week, while Brent gained 0.77% and 0.87%, respectively. Copper and base metals were broadly higher, with copper up 1.65% on Friday and 3.6% for the week. Iron ore rose 1.16% over the week, while coal prices were mixed.

Finally in other news, negotiators from the US and Ukraine agreed on a “framework of security arrangements” as part of ongoing efforts to end the war with Russia. Progress depends on Russia’s willingness to de-escalate and commit to long-term peace.

European leaders are set to meet with President Zelenskiy in London to discuss next steps, while France condemned recent Russian strikes on Ukrainian infrastructure.

On Friday, the delayed (Sep) income/spending and PCE report didn’t elicit a major reaction by markets, the S&P500 initially headed towards its October high (6910), but lost steam before the close and just like other US major equity indices it ended the day with modest gains.

US Treasury and core global yields climbed with Australian 10-year futures the notable weekly mover, up 19.5bps over the past five days. The USD softened, down on Friday and for the week. CAD was Friday’s outperformer on the back of robust employment data. The AUD starts the new week at 0.6638, the G10 week’s outperformer up 1.4%.

Friday’s US data painted a mixed picture for the consumer. Real personal consumption was flat in September, missing expectations, while nominal incomes rose 0.4%, slightly above consensus. The core PCE deflator increased by 0.2%, in line with forecasts, bringing the annual rate down to 2.8%.

The University of Michigan consumer sentiment index rebounded to 53.3 in December, driven by improved expectations, but the average for Q4 still signals subdued spending ahead. The survey’s five-to ten-year inflation expectations fell to 3.2% from 3.4% in November.

The PCE data should allow the Fed to revise down near-term forecasts, supporting expectations for further policy easing in 2026. Market pricing for the upcoming FOMC was little changed in response to the data and a -25bp cut to the Fed Funds Rate is all but fully discounted.

Japan’s October household spending fell -3% y/y, the first decline in six months and well below expectations, clouding the domestic demand picture ahead of the BoJ meeting and possible rate hike on 19 December. 

Late during our session on Friday, Bloomberg reported BoJ officials are ready to raise rates this month, with overnight index swaps pricing a 90% probability for a 25bps hike.

The report triggered a short-lived strengthening of the yen, nevertheless USD/JPY ended Friday’s NY session slightly higher (JPY weaker by 0.15% and at 155.50). Domestic yields rose with the 2-year JGB hitting its highest level since 2007 (1.047% and closing at 1.043%) while the 10y rate closed at 1.939%, up 13bps on the week.

Sticking with Japan, over the weekend the Takaichi Government lodged a strong protest after a Chinese military aircraft locked radar on Japanese jets near Okinawa, escalating regional tensions. The government remains divided on the timing of the BoJ’s next move, but the central bank is expected to signal further hikes if its outlook is realised.

Canada delivered a strong November jobs report, adding 53,600 positions and pushing the unemployment rate down to 6.5%, the lowest since July 2024. The CAD rallied over 1% on Friday, the best G10 performer, as traders shifted from pricing further BoC easing to anticipating a rate hike by December 2026.

The jobs gain was driven by part-time and private sector hiring, particularly in health care and social assistance. The BoC is expected to hold rates steady at 2.25% this week, but after a string of better-than-expected data releases, there is a risk the Bank could deliver a hawkish bias in his message.

European data releases were generally better than expected. German factory orders rose 1.5% in October, led by domestic demand, and Euro area Q3 GDP was revised up to 0.3% q/q. Spanish and French industrial production also beat forecasts. 

Jamie Dimon, CEO of JPMorgan, warned that Europe’s slow bureaucracy is driving away investment and poses a risk to the US, calling for a long-term strategy to strengthen the continent.

Bond yields rose across major markets on Friday. US 10-year Treasuries climbed 3.7bps to 4.14%, capping a week where yields rose by 12bps. German Bunds and UK Gilts also saw yields rise, with the 10-year Bund up 2.7bps to 2.80% and the Gilt up 4.1bps to 4.48%.

Australian 10-year futures yields jumped 19.5bps over the week, the largest move among developed markets.

Is AI a clear and present danger? Clearbridge, Franklin Templeton extract

The S&P500 Index saw its first -5% pullback in six months during November, only to recover late in the month and ultimately eke out a 0.2% gain. The benchmark now sits within -1% of its all-time high.

This volatility was not entirely unexpected; in recent months, discussion of a market bubble has dominated investor conversations. In our view, the initial November slump appears to have been primarily driven by retail investors de-risking as high-momentum darlings bore the brunt of the selloff.

Moving into the new year, we continue to believe that a solid earnings backdrop and upside revisions to EPS estimates should drive markets higher despite the S&P500 Index trading at a lofty 22.4x forward earnings multiple.

From a fundamental perspective, little appears to have changed in the last month. Although the government shutdown has ended, the flow of government data remains interrupted as various agencies work through backlogs.

Since our last update, October data has been released for three of the five missing dashboard indicators —Jobless Claims, Retail Sales and Wage Growth— none of which saw changes from their September readings.

However, only Jobless Claims has November data available today, meaning four indicators are still not up to date. Crucially, the rest of the dashboard saw no signal changes this month and alternative data sources suggest a continuation of trends consistent with no individual signal changes. As a result, the overall dashboard signal remains firmly in green expansionary territory.

With underlying economic activity and corporate earnings holding up, many investors are left questioning what sparked the mid-November stock market pullback. One fear that has come up frequently when talking with clients is the concern that more widespread adoption of artificial intelligence (AI) is weighing on job creation.

The proponents of this narrative point to younger workers, whose more limited experience and narrower skillset in theory allows for easier substitution of capital (AI) for labor. The pickup in the unemployment rate for the youngest Americans (16–24 years old) to 10.4% from a low of 6.6% in April 2023  has helped bolster this storyline.

A deeper review of labor data shows that while AI is impacting the jobs market, its influence is much less than is commonly perceived. Pockets of AI-induced labor market weakness do exist in specific industries such as software development and call centers.

However, when evaluating job creation and AI adoption by industry, labor weakness has been most evident in industries with the lowest AI adoption rates. This suggests that other dynamics —changes in immigration and trade policy, the continued aging of the US population and DOGE-related efforts to shrink the Federal workforce— are playing a larger role than AI in slowing the pace of job creation.

Although AI may not be the leading cause of softer job creation so far, many investors fear the potential for larger AI-induced job cuts in the years to come. While this is certainly possible, job losses stemming from technological progress are typically a feature, not a bug, of the US economy.

In fact, this year’s Nobel Prize in Economics was awarded for research into the concept of creative destruction: the process where new innovations replace and make obsolete older ones and how this can drive sustained growth through technological progress. This dynamic is always playing out in the US economy, just to a greater or lesser degree depending on the business cycle.

While this time could be different —AI could be more disruptive than past technological innovations— we believe the evidence thus far points to more fear than fact. Further, job losses from AI are only half the story: the creative destruction process also entails job creation as new businesses and whole industries sprout from the seeds of technological progress.

The surge in business formation over the past few years (2025 in particular) suggests that some of tomorrow’s leading corporations may already be in their infancy today.

Ultimately, the timing and magnitude of disruption will determine how troublesome AI becomes to the economy. Corporate boards will certainly welcome the prospect of efficiency gains and higher profits, and how quickly new businesses can scale their AI adoption will be key in how seamlessly workers transition to new roles and workflows.

However, this pattern has played out with past technological shifts dating back to the steam engine, and history shows most job losses in areas impacted by technological developments occur during recessions, not expansions.

In times of economic strength, there tends to be more of a slow bleed in routine jobs where technology can more easily substitute for workers. The big shifts have come during broader bouts of economic weakness when harder choices must be made, resulting in more pronounced layoff cycles.

The “jobless recovery” of the early/mid 2000s following the tech bubble could be a good parallel for what lays ahead when the current economic cycle eventually culminates.

Importantly, with the ClearBridge Recession Risk Dashboard continuing to signal expansion in the year ahead, this scenario is not a pressing concern, in our view.

Given economic strength and scant evidence of AI driving widespread job losses, we believe fears of substantial further downside to labor from AI are currently misplaced.

While AI labor fears could lead to higher market volatility, the dual tailwinds of fiscal and monetary policy support should power the US economy and corporate earnings in 2026.

As a result, we remain firmly in the “buy the dip” camp.

Corporate news in Australia

-Brookfield and the Government of Singapore Investment Corporation are reportedly close to making a binding offer for National Storage ((NSR)).

-Sembcorp, based in Singapore, is preparing to sign an agreement to acquire Alinta Energy.

-Healthscope’s hospitals are being sold off rapidly, with Calvary and other groups picking up major sites.

-Affinity has bought Perth’s Western Radiology, moving ahead of Crescent Capital Partners’ intended add on acquisition.

-Pace Farm Eggs’ roughly $1b sale process is drawing interest from Private Equity Partners and BGH Capital, with bidders focused on whether current earnings can hold up.

-StraitNZ, valued at up to NZ$1bn, is being readied for sale after MSIP abandoned its expansion strategy.

-Quadrant Private Equity has begun early investor discussions about listing Amart Furniture on the ASX.

-Pepper Money’s ((PPM)) share price has lifted its valuation to about $1b, prompting speculation about whether KKR might exit or trim its holding.

-Bubble, a skincare brand, is moving into Woolworths Group ((WOW)) stores to broaden reach with Australian teenagers.

-Meta is bringing real time news from major publishers into its AI assistant via new media partnerships.

-WiseTech Global ((WTC)) is facing rising AI driven competition, alongside customer pushback about more expensive AI bundle offerings.

-OpenAI supported about $7b NextDC data centre project is expected to accelerate investment in renewable energy supply.

-The Planet Fund has invested $5m in Electric Futures, a start up aiming to electrify Australian homes.

On the calendar today:

-JP 3Q GDP (2nd Prelim)

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	4243.00	+ 3.05	0.07%
Silver (oz)	59.05	+ 1.48	2.57%
Copper (lb)	5.46	+ 0.10	1.89%
Aluminium (lb)	1.32	+ 0.00	0.26%
Nickel (lb)	6.68	+ 0.02	0.27%
Zinc (lb)	1.41	+ 0.00	0.24%
West Texas Crude	60.08	+ 0.29	0.49%
Brent Crude	63.75	+ 0.36	0.57%
Iron Ore (t)	107.24	– 0.64	– 0.59%

The Australian share market over the past thirty days…

Index	05 Dec 2025	Week To Date	Month To Date (Dec)	Quarter To Date (Oct-Dec)	Year To Date (2025)
S&P ASX 200 (ex-div)	8634.60	0.24%	0.24%	-2.42%	5.83%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
BEN	Bendigo & Adelaide Bank	Upgrade to Neutral from Sell	Citi
		Upgrade to Accumulate from Hold	Ord Minnett
BOQ	Bank of Queensland	Upgrade to Hold from Lighten	Ord Minnett
CKF	Collins Foods	Downgrade to Hold from Accumulate	Ord Minnett
FBU	Fletcher Building	Downgrade to Neutral from Buy	Citi
IMD	Imdex	Upgrade to Outperform from Neutral	Macquarie
MVF	Monash IVF	Downgrade to Neutral from Outperform	Macquarie
PRU	Perseus Mining	Downgrade to Lighten from Hold	Ord Minnett
STP	Step One Clothing	Downgrade to Hold from Buy	Bell Potter
		Downgrade to Hold from Speculative Buy	Morgans
WTC	WiseTech Global	Upgrade to Outperform from Neutral	Macquarie

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

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