The S&P/ASX 200 (ASX: XJO) share market is currently up 0.5% following a strong day for the US share market amid rate cut expectations.
Overnight, the Dow Jones rose 1.36%, the S&P 500 climbed 0.85% and the NASDAQ Composite climbed 0.72%. All three of these indices ended at record levels, according to CNBC.
What caused the excitement overnight?
This wasn’t a massive jump for shares in one night, but it has added onto a large number of positive days this year where the share market has steadily climbed since the April 2025 tariff decline.
In 2025 to date, the S&P 500 has gone up 12%, which shows 2025 is lining up to be another strong year for the index if it doesn’t lose ground.
CNBC reported that the consumer price index (CPI) inflation reading for August was actually stronger than expected on a monthly basis, but in line with expectations on an annual basis. Market commentators don’t think it was strong enough to stop a rate cut this month.
Additionally, according to the Bureau of Labor Statistics, the CPI reading showed a 0.4% rise for the month, higher than the 0.3% increase that economists were expecting.
The CPI numbers showed a 2.9% rise on an annual basis, which was expected.
CNBC also reported that core CPI, which excludes food and energy prices, saw a 0.3% rise in August and a 3.1% increase from a year ago. These were in line with economist forecasts.
These numbers come after the producer price index released the day before showed a decline of 0.1% for the month compared to a forecast 0.3% increase.
On top of that, the US labour market is showing signs of weakening, with weekly jobless claims released this week seeing an unexpected jump. CNBC reported that workers filing for unemployment compensation for the week to 6 September 2025 increased 27,000 from the previous period to a seasonally-adjusted 263,000, which is the highest level since October 2021. This compares to the 235,000 that was forecast.
US rate cut expected helping the (ASX 200) share market
Economists are now very confident on a rate cut of 25 basis points (0.25%) in September and there are also some suggesting there could be a 50 basis point (0.50%) decrease in rates.
The lower the interest rate, the better it is for asset prices, in theory, which helps assets like the US share market and the ASX share market.
Share prices have already risen considerably – the market is already pricing in plenty of success for US and Australian companies. RBA rate cuts have helped.
I’m optimistic about the long-term, though I’m not expecting near-term returns to continue to be as large as the last 12 months. I’m individually choosing the ASX growth shares and ASX dividend shares I like.
