RBC Capital Markets chief economist Su-Lin Ong said the consumer outlook was key in the Reserve Bank’s decision-making.

“Consumption may be a little softer than [the RBA’s] current forecasts and that could have implications for the activity and inflation outlook. RBA communication continues to highlight the uncertainty over the consumer outlook for which we have sympathy,” Ong wrote.

“[We] remain comfortable with our base case for 75bp of easing to commence in February 2025.”

Overnight, Powell signalled more interest rate cuts were in the pipeline but suggested they would occur at a measured pace intended to support a still-healthy economy.

The broad S&P 500 stock index initially fell 0.6 per cent after his remarks, but recovered afterwards to close about 0.4 per cent higher, clinching its fifth straight winning month and fourth straight winning quarter. The Dow Jones added 17 points, or less than 0.1 per cent, to its record set on Friday. The Nasdaq composite rose 0.4 per cent.

The ASX added 0.7 per cent on Monday.

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Powell’s comments, at a conference of the National Association for Business Economics in Nashville, Tennessee, disappointed the hopes of many investors that the Fed would implement another steep half-point reduction in its key rate before the end of the year. The Fed cut its rate by a larger-than-usual half point earlier this month as it has moved past its inflation fight and pivoted toward supporting the job market.

Wall Street has catapulted to records on hopes the slowing US economy can keep growing while the Federal Reserve cuts interest rates to offer it more juice. A big test will arrive Friday, when the US government offers its latest monthly update on the job market.

An overriding worry on Wall Street is whether the economy may already be heading for a recession. Even though the Fed cut rates earlier this month and has indicated more relief is on the way, US employers have already begun paring back on their hiring. Before this month, the Fed had kept interest rates at a two-decade high in hopes of slowing the economy enough to stamp out high inflation.

“Payrolls remain the biggest catalyst” for the US stock market until the election, strategists and economists at Bank of America wrote in a BofA Global Research report.

At Goldman Sachs, economist David Mericle said he’s expecting Friday’s report to show hiring in September was stronger than the 146,000 growth in payrolls that economists across Wall Street were broadly forecasting.

In the past, a stronger-than-expected number could have hurt the stock market by fanning worries about upward pressure on inflation. Now, though, it would likely be welcomed as a signal that a recession shouldn’t be as big a worry.

Interest rates and the strength of the economy are usually the two main levers that set prices for stocks. In Asia, the levers were pulling in opposite directions.

Japan’s Nikkei 225 slumped 4.8 per cent on worries the country’s incoming prime minister will support higher interest rates and other policies that investors see as less market-friendly. Shigeru Ishiba is set to take over on Tuesday.

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Ishiba has expressed support for the Bank of Japan’s move to pull interest rates away from their near-zero level, which puts upward pressure on the value of the Japanese yen. A stronger yen can hurt profits for Japanese exporters, which make sales in other currencies and then convert them back into yen.

Toyota Motor’s stock fell 7.6 per cent in Tokyo, while Honda Motor’s dropped 7 per cent. Monday.

Stellantis, the company that owns the Jeep brand and others, tumbled 14.7 per cent in Milan after cutting its forecast for upcoming profit. It cited investments to turn around its US operations and increased Chinese competition.

That in turn helped drag down automakers Ford Motor and General Motors on Wall Street. Ford fell 2 per cent, and GM dropped 3.5 per cent.

A 2.3 per cent rise for Apple helped offset such losses and was the strongest force lifting the S&P 500 to its latest record. After weakening in late July with other Big Tech stocks amid worries their prices had shot too high, Apple’s stock has been climbing back toward its all-time closing high of $US234.82. It finished Monday at $US233.00.

All told, the S&P 500 rose 24.31 points to 5,762.48. The Dow added 17.15 to 42,330.15, and the Nasdaq gained 69.58 to 18,189.17.

In China, meanwhile, indexes soared 8.1 per cent in Shanghai and 2.4 per cent in Hong Kong following the latest announcements of stimulus for the world’s second-largest economy. It was the best day for Shanghai stocks in nearly 16 years.

China’s central bank announced moves on Sunday to ease mortgage rates for existing home loans by October 31. That followed a flurry of announcements last week from China’s central bank and government intended to prop up the Chinese economy, whose growth has been flagging in part because of the weight of a struggling real-estate sector.

Markets in mainland China will be closed Tuesday through October 7 for a holiday marking 75 years of communist rule.

AP

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