Asian Pacific indices are generally firmer

David Morrison

SENIOR MARKET ANALYST

22 Sep 2025

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Asian Pacific stock indices ended generally firmer on Monday, led by a 1.0% gain in the Japanese Nikkei 225. This kept the index back above 45,000 and close to all-time highs.

Japanese Government Bonds were also in focus, with 10-year yields rising to 1.65%, their highest level since 2007. Last week, the Bank of Japan (BOJ) kept interest rates unchanged, as expected, but analysts expect a rate hike at the next monetary policy meeting at the end of October.

The People’s Bank of China (PBOC) held both the one-year and five-year Loan Prime Rates unchanged at 3.0% and 3.5% respectively, as expected. The Shanghai Composite gained 0.2%, while Hong Kong’s Hang Seng Index lost 0.8%, largely due to softness across the tech space.

There were also sharp losses across India’s tech sector after a late announcement on Friday from US President Trump introducing a $100,000 visa fee for high-skilled foreign workers. This disproportionately targets skilled Indian IT professionals. Meanwhile, Australia’s ASX 200 added 0.4% overnight.

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US stocks hit fresh records

US stock indices ended Friday with another round of record highs, extending the strong momentum seen throughout the week. The gains were driven by hopes of further rate cuts this year after the Federal Reserve dropped its Fed Funds rate by 25 basis points on Wednesday - its first reduction in rates since last December. According to the CME’s FedWatch Tool, the market now anticipates another 50 basis points-worth of easing before year-end.

On Friday, the Dow, S&P 500 and NASDAQ posted gains of 0.4%, 0.5% and 0.7% respectively, to all close at fresh record highs. The Russell 2000 put a dent in the bullish sentiment by closing down 0.8%. But for the week, all the majors posted decent gains, led by the NASDAQ and Russell 2000, which both added 2.2%.

Source: TN Trader

But US stock index futures began the new week on the backfoot. All the majors pulled back from their best levels as investors look for additional clarity over the Fed’s next moves. To that end, this week sees a host of Fed speakers, with Chair Jerome Powell scheduled to talk tomorrow afternoon.

Today brings updates from FOMC members John Williams, Alberto Musalem, Thomas Barkin and Beth Hammack. But the attention looks likely to focus on Stephen Miran, President Trump’s preferred and controversial candidate as Fed governor, replacing Adriana Kugler, who resigned in August. Mr Miran, who voted for a 50 basis point rate cut at last week’s meeting, will have to address critics who question his independence, given his existing role at the White House.

Investors will also turn their attention to this week’s macroeconomic data, particularly the PCE inflation print due on Friday. Thursday's weekly Unemployment Claims will also be watched closely, particularly as the US central bank signalled that recent weakness in the labour market has overtaken stubbornly high inflation as its chief concern.

Europe pulls back from highs

European stock indices were lower across the board in early trade on Monday, taking their lead from softness in US stock index futures. Investors were also responding to Friday’s surprise announcement from President Trump of a sharp increase in H-1B visa fees, effective from Sunday night.

Source: TN Trader

The move could have meaningful implications for global hiring strategies. India has already warned of humanitarian consequences tied to major disruption for families. The sudden nature of the policy implementation has left multinational companies scrambling to gauge the impact on recruitment plans, especially in sectors like technology, where the US reliance on overseas skilled workers is heavy.

US dollar drifts lower

In FX, the US dollar was a touch weaker in early trade on Monday. Last Wednesday, the Dollar Index briefly broke below 96.00 to hit its lowest level since February 2022. But it recovered quickly, despite the Fed’s 25 basis point rate cut, along with current expectations of an additional 50 basis points-worth of easing prior to the year-end.

Monday’s overnight moves were relatively muted as traders opted to wait and hear speeches from a clutch of Fed speakers today and throughout this week. The Dollar Index was hovering above 97.00, and other currencies were a touch firmer across the board.

While last week’s rate cut has introduced expectations of further easing, the dollar’s relatively firm tone shows that the market is not yet prepared to lean aggressively in either direction until more data, particularly on inflation, provides clarity.

Gold extends rally

Gold was firmer as Asian Pacific markets opened overnight. But it surged above $3,700 on the European open, and momentum took it to yet another fresh all-time high. The move reflects continued safe-haven demand, with investors keen to increase their exposure to bullion as global equities stretch further to their own record highs.

Source: TN Trader

Gold’s sustained upward trajectory has been reinforced by the perception that most major central banks (the Bank of Japan being a notable exception) remain committed to loosening monetary policy further.

Last week’s Fed meeting made it clear that the US central bank was focusing on one plank of its dual mandate, maximising employment, rather than the other, inflation or price stability, even though the latter remains stubbornly above the Fed’s 2% target.

This is not to suggest that this Friday’s PCE inflation report won’t be significant in determining whether this upside momentum continues. But investors should also watch for any signs that the labour market is deteriorating.

Silver extended recent gains, and this morning it hit its highest level in over fourteen years. Investors are already eyeing April 2011’s all-time high just south of $50 as a long-term target. But this being the case, investors should be prepared for an increase in volatility in what is historically one of the most volatile markets out there.

Source: TN Trader

Gold and silver have daily MACDs which suggest that both metals are trading at overbought levels. This is not to say that a sell-off is imminent. Markets can continue to be overbought or oversold for extended periods. By the same token, bullish investors shouldn’t be surprised to see sharp pullbacks from time to time.

Oil firmer, but rangebound

Crude oil was firmer overnight but started to give back these gains as the European session progressed.  Oil prices firmed up in the early part of last week, as investors responded to an escalation in Ukrainian attacks on Russian energy infrastructure. This raised concerns of supply constriction and saw front-month WTI peak out just below $64.50 before turning lower again.

Source: TN Trader

Despite a strong macro backdrop from equities and other assets, crude has struggled to break free from the gravitational pull of supply and demand conditions. Supply remains plentiful, and that should continue to be the case unless oil falls to such levels that production becomes unprofitable.

Meanwhile, questions remain over the strength of global demand growth, which has come under pressure for a year or so now. Oil analysts cite evidence of rising inventories in both the US and China that oil output is being stockpiled currently, rather than used.

Cryptos slump

Cryptocurrency markets opened the week lower. Bitcoin was down around 2.5% in early trade on Monday, while Ether lost around 7%. The pullback lacked a clear catalyst, although some traders suggested that fears of a tighter regulatory environment could be to blame.

Despite the losses, both cryptos remain inside established ranges. But sentiment has been dented by the scale of the declines, and much now depends on whether these markets can bounce back quickly, or head lower to test more significant support levels.

VIX edges higher

The VIX continues to edge higher, making back a significant chunk of Wednesday’s sell-off. This was when the index plunged in the aftermath of the US Federal Reserve rate cut, along with its forecast for an additional 50 basis points-worth of interest rate reduction before year-end.

Despite this, the VIX remains at relatively muted levels, suggesting that risk appetite remains intact, with investors reluctant to bid up protection despite elevated valuations in equities.

However, with key inflation data due at the end of the week and frequent Fed commentary on tap, the index could see renewed activity should market conditions shift quickly.

Market outlook

Record highs remain the dominant theme across global equities, with US indices continuing to post fresh gains. Precious metals have joined the rally, with both gold and silver extending higher, while crypto marked a clear divergence with sharp declines.

The dollar is steady, waiting for confirmation from incoming data. With little on the immediate calendar today, attention shifts to Fed commentary, which could refine expectations for policy, and to Friday’s PCE inflation data, which will be pivotal in validating the Fed’s latest move.


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