Fin-X Weekly 22nd September 2025

Global equities set fresh record highs as the Federal Reserve cut rates, though Chair Powell warned of a challenging balance between employment and inflation risks.

After progress in US-China trade talks, a TikTok ownership deal and Nvidia’s investment in Intel dominated corporate news.

Chinese data indicated a continued slowdown, but the Australian dollar firmed with the unemployment rate remaining steady.

The coming week will see releases of Australian monthly CPI and US PCE inflation figures, the global flash PMIs, several central bank updates, and the OECD’s updated economic outlook.

Global equity markets advanced to fresh highs last week, with the Russell 2000 and MSCI World Small Cap indices also making records after the Federal Reserve’s widely anticipated decision to cut interest rates provided support.

Markets were initially buoyed early in the week by signs of progress in US-China trade negotiations. President Trump said discussions were “going well”, and the White House later indicated that an agreement had been struck over the future of TikTok. Under the deal, Oracle, Silver Lake, and Andreessen Horowitz will acquire approximately 80% of TikTok’s American operations, thereby gaining a controlling interest. Oracle has played a particularly prominent role, given its existing cloud services relationship with TikTok.

Nvidia announced it would invest $5 billion in Intel as part of a plan to co-develop data centre and PC chips. The move follows the Trump administration’s brokering of a 10% stake in Intel in August. However, the new deal, subject to regulatory approval, does not involve Intel manufacturing Nvidia products through its foundry.

American industrial production slowed to +0.9% year on year in August, but retail sales rose by +5.0%, beating expectations. Gains were broad-based, led by e-commerce, clothing and restaurants, with support from autos and gasoline. The control group, which strips out volatile categories, advanced by +0.7%, suggesting that underlying consumer demand remained firm.

As the Fed Funds rate was lowered to 4.0% - 4.25% on Wednesday, Chair Jerome Powell characterised the -0.25% rate cut as a “risk management” adjustment. “In the near term, risks to inflation are tilted to the upside and risks to employment to the downside - a challenging situation. When our goals are in tension like this, our framework calls for us to balance both sides of our dual mandate. With downside risks to employment having increased, the balance of risks has shifted. Accordingly, we judged it appropriate at this meeting to take another step toward a more neutral policy stance.”

Due out on Friday, the Fed’s preferred inflation measure, the personal consumption expenditures (PCE) index, is expected to have risen further in August, from +2.6% yoy in July to +2.7%. Continued overshoots of the 2% target could limit scope for additional cuts, underscoring the challenge for policymakers as they seek to satisfy both political and economic pressures.

Although most members supported the -0.25% reduction, White House appointee Stephen Miran dissented, favouring a larger -0.5% cut. The so-called “dot plots” also revealed notably wide dispersion in future policy expectations. The divergence reflected both uncertainty about the economic outlook and growing influence from the administration’s calls for faster rate cuts. President Trump has signalled his intention to appoint more dovish policymakers where possible, and embattled Governor Lisa Cook was only able to participate in last week’s meeting due to court rulings.

Outside the US, other central banks diverged in their actions. The Bank of Canada and Norges Bank both trimmed policy rates by -0.25% to 2.5% and 4.0%, respectively, while the Bank of England left its policy rate unchanged at 4.0%. The UK’s monetary policy committee voted 7-2 to hold rates, citing sticky inflation and a fragile labour market.

Meanwhile, the Bank of Japan maintained its rate at 0.5% by a 7-2 vote, although two members called for an increase to 0.75% despite the slowing CPI inflation, which fell from +3.1% yoy in July to +2.7% yoy in August. In a notable development, the Bank also announced plans to gradually sell down its ETF and J-REIT holdings, though the scale and pace implied the process could take more than a century to complete. The TOPIX index slipped -0.4% on Friday as markets absorbed the news.

The Australian dollar strengthened despite Chinese economic data indicating that China’s economy is continuing to slow. China’s August industrial output slowed to +5.2% year on year from +5.7%, its weakest pace since last August. Fixed-asset investment rose only +0.5% year to date, down sharply from +1.6% in the prior period, while retail sales increased +3.4% but fell short of expectations. The urban unemployment rate edged higher by +0.1% to 5.3%.

By contrast, Australian labour market data remained stable. The unemployment rate held steady at 4.2% in August, supporting expectations that the Reserve Bank will keep policy unchanged at its September 30th meeting. The RBA governor is scheduled to appear in Canberra this week.

Australian investors also digested significant policy, corporate and regulatory developments last week. The federal government released a detailed analysis highlighting climate risks to northern and remote communities, as well as outer metropolitan suburbs, warning of potential property losses in the hundreds of billions of dollars by 2050. The findings will inform the development of a new 2035 emissions reduction target.

ADNOC abandoned its proposed $36.4 billion acquisition of Santos, just days before a binding agreement was due. Santos shares closed the week down -10.9%. Separately, ASIC announced it would seek $240 million in penalties against ANZ after the bank admitted to widespread misconduct across both institutional and retail divisions. The penalties, subject to Federal Court approval, would be the largest sought against a single entity to date.

On the geopolitical front, Prime Minister Anthony Albanese travelled to New York to address the United Nations General Assembly. He will outline Australia’s positions at a time when Republicans have warned Australia, France, Canada and the UK against recognising a Palestinian state, threatening “punitive measures” if such recognition proceeds.

Security risks in Europe also remained in focus. Russia continued to test NATO’s responses, including air incursions into Estonian territory and missile and drone strikes near Ukraine’s western regions, close to Poland’s border. NATO forces scrambled jets to secure airspace following last week’s drone landings in Poland, underscoring heightened risks along the alliance’s eastern flank.

Looking to the week ahead, Australian monthly CPI data and global flash PMIs are due to be released this week. Chinese prime loan rates are expected to remain steady, as well as the policy rates in Sweden and Switzerland. Several Fed officials are scheduled to speak, including Jerome Powell and Stephen Miran, while the OECD will release its Interim Economic Outlook Report.

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