8th September 2025

U.S.

• Equities and market sentiment:

• Most U.S. equity indexes ended the holiday-shortened week higher.

• Stock indexes generally gained through Thursday and opened higher on Friday morning after weaker-than-expected labour market data increased hopes that the Federal Reserve would cut short-term interest rates at its next meeting.

• Later on Friday, sentiment shifted and stocks surrendered earlier gains due to concerns that rate cuts might not be sufficient to boost economic growth.

• The Nasdaq Composite rose 1.14% over the week, supported by Apple and Alphabet shares, which climbed after an antitrust ruling was perceived as less severe than expected.

• Smaller-cap stocks, typically more sensitive to interest rate movements, also advanced during the week.

• The S&P 500 Index gained 0.33%, while the Dow Jones Industrial Average declined 0.32%.

• September rate cut probability rises on weak labour market data:

• Friday’s U.S. Labour Department nonfarm payrolls report revealed that employers added only 22,000 jobs in August, far below July’s revised figure of 79,000 and expectations of around 77,000.

• June’s employment figures were also revised down from a 14,000 gain to a 13,000 loss, marking the first negative monthly reading since December 2020.

• The unemployment rate rose to 4.3% in August, its highest level since 2021.

• Private payrolls firm ADP reported that private employers added 54,000 jobs in August, down from 106,000 in July and below expectations of 80,000.

• Labour Department data showed job openings fell in July to 7.18 million, the lowest since September 2024, with the number of unemployed Americans surpassing available job openings for the first time since 2021.

• Futures markets tracked by the CME FedWatch tool priced in a 100% chance of at least a 25-basis-point (0.25 percentage point) rate cut at the Fed’s next meeting, with the probability of a 50-basis-point cut rising from 0% to 10% after Friday’s jobs data.

• Treasury yields trended lower during the week and fell sharply on Friday, pushing the 10-year U.S. Treasury yield to its lowest level since early April.

• Manufacturing activity shrinks for sixth straight month; services sector expands:

• The Institute for Supply Management (ISM) reported that U.S. manufacturing contracted for the sixth consecutive month in August, although at a slower pace than in July.

• The ISM Manufacturing PMI registered 48.7% in August, up from July’s 48% but below forecasts of 49.1% (a reading below 50% signals contraction).

• Growth in new orders supported the improvement, with the New Orders Index rising 4.3 percentage points to 51.4%.

• The ISM Services PMI indicated expansion in August, rising to 52% from 50.1% in July.

• The services sector expansion was driven by faster growth in business activity and new orders, while price growth moderated slightly but remained elevated in both manufacturing and services.

Europe

• Equities and markets:

• The pan-European STOXX Europe 600 Index declined 0.17% in local currency terms due to concerns about global growth following weak U.S. jobs data and a stronger euro.

• Major stock markets were mixed: Italy’s FTSE MIB fell 1.39%, France’s CAC 40 slipped 0.38%, and Germany’s DAX lost 1.28%.

• The UK’s FTSE 100 rose 0.23%.

• Euro area inflation stays close to target:

• Eurozone headline inflation increased slightly to 2.1% in August, remaining near the ECB’s 2% medium-term target.

• Core inflation, excluding food, energy, alcohol, and tobacco, remained unchanged at 2.3%, matching expectations.

• Services price inflation slowed marginally to 3.1% from 3.2% in July.

• ECB policymakers suggested that interest rates would remain unchanged in September and for some time, with most economists believing policy easing has ended given the stable inflation outlook and resilient economy.

• Eurozone labour market resilient; retail sales softer:

• The eurozone unemployment rate fell to 6.2% in July, down from 6.3% and matching the low last reached in November 2024.

• Retail sales volumes declined 0.5% month on month in July, although June’s figure was revised up to a 0.6% increase from 0.3%.

• UK housing market settling down; BoE’s Bailey: “doubts” about more rate cuts:

• UK banks and building societies approved 65,352 mortgages in July, exceeding forecasts.

• House price data showed mixed results: the Nationwide Building Society index fell 0.1% in August after a 0.5% rise in July, while Halifax reported a 0.3% increase in August compared with 0.4% in July.

• BoE Governor Andrew Bailey stated at a Parliamentary hearing that there was “considerably more doubt” about further interest rate cuts, citing rising inflation risks and concerns about labour market weakness.

• BoE Deputy Governor Clare Lombardelli noted that the key rate might only need to settle slightly below its current level of 4% due to persistent inflationary pressures.

Japan

• Equities, trade and markets:

• Japan’s Nikkei 225 Index rose 0.70% and the TOPIX Index gained 0.98% over the week.

• Japanese auto stocks advanced after the U.S. implemented a July trade deal that caps tariffs on most Japanese goods, including autos, at 15%.

• In exchange, Japan agreed to invest USD 550 billion in the U.S. and provide greater market access for U.S. producers, including in agriculture.

• The 10-year Japanese government bond yield fell to 1.57% from 1.61% the previous week, having earlier touched 17-year highs amid political uncertainty.

• Prime Minister Shigeru Ishiba faced calls to resign during the week.

• The yen weakened to around JPY 148 per U.S. dollar, compared with JPY 147 the previous week.

• Real wage growth turns positive:

• Economists speculated about a potential Bank of Japan rate hike as early as October following stronger wage data.

• Nominal wages grew 4.1% year on year in July, above expectations of 3.0% and higher than June’s 3.1%.

• Real (inflation-adjusted) wage growth turned positive for the first time in 2025.

• BoJ Deputy Governor Ryozo Himino reiterated that rates would rise if the economy and inflation develop as forecast, with expectations that positive wage-price dynamics would eventually push inflation to the 2% target.

China

• Equities and markets:

• Mainland Chinese equity markets declined as investors locked in profits following recent gains.

• The CSI 300 Index fell 0.81% and the Shanghai Composite Index dropped 1.18% in local terms.

• Hong Kong’s Hang Seng Index rose 1.36%.

• Chinese markets have rallied strongly since April, largely fuelled by domestic liquidity rather than earnings or economic strength.

• The CSI 300 surged 10% in August, its best performance since September 2024, and has risen more than 20% from this year’s low.

• Turnover volume and margin trades both hit record highs in August, reflecting strong retail investor risk appetite.

• Optimism has been supported by advances in artificial intelligence and the government’s “anti-involution” campaign, which aims to reduce overcapacity and discourage destructive price wars.

• Retail investors have also been deploying cash reserves due to low interest rates and a lack of attractive alternatives.

• Despite equity gains, economic data continued to show broad weakness, with headwinds including potential higher U.S. tariffs, a prolonged property slump, and ongoing deflationary pressures.

• Economists expect growth data in the coming months to confirm the slowdown, likely prompting further government stimulus measures.

Other Key Markets

Malaysia

• Rates on hold amid contained inflation:

• The Malaysian central bank kept the Overnight Policy Rate (OPR) at 2.75% at its latest meeting.

• Policymakers expect global growth to continue but cautioned that trade policy uncertainty remains a risk.

• Malaysia’s economy expanded 4.4% in the first half of 2025 and is projected to grow between 4.0% and 4.8% for the full year.

• Growth is expected to be supported by resilient domestic demand.

• Inflation remains contained, with headline inflation averaging 1.4% and core inflation averaging 1.9% in the first seven months of 2025.

• Policymakers expect headline inflation to remain moderate and core inflation stable, reflecting limited demand pressures.

Poland

• Policymakers reduce rates again as inflation decelerates:

• Poland’s central bank cut the reference rate by 25 basis points to 4.75%, along with other key rates, following an earlier surprise cut in July.

• Economic growth accelerated from 3.2% year on year in Q1 to 3.4% in Q2, mainly due to stronger consumption.

• Annual CPI inflation fell from 3.1% in July to 2.8% in August, while core inflation (excluding food and energy) also declined.

• The central bank cited easing inflation as justification for the rate cut.

PLEASE NOTE:

This content is for informational purposes only and should not be construed as investment advice or a specific recommendation to act on any investment. It is importnat to assess your own circumstances before making investment decisions. The views expressed are as of the date indicated and whilst we believe the information is from reliable sources, we do not guarantee it’s accuracy. Past performance is not indicative of future results, and all investments carry market risks, including the potential loss of the principal.