Pain and gain
The ASX 200 surged past 9,000 today as a surprise rise in unemployment fuelled bets on a November rate cut. But should markets be in such good shape?
The ASX 200 surged past 9,000 today following a shock rise in unemployment to 4.5%, igniting speculation of a November rate cut.
The shift in sentiment was immediate, and saw markets price in 18 basis points of easing next month compared to just 10 basis points before the jobs data dropped.
It's a peculiar rally. "Should equity markets be in such an ebullient shape if the economy is potentially cooling down rapidly?" asks GSFM market strategist Stephen Miller. "It's a bit of a double-edged sword."
Miller attributes the market's buoyancy largely to Wall Street's performance since Liberation Day, calling it "probably the most unloved rally I can recall in equity markets for a long, long time".
