Fin-X Weekly 6th of October 2025

Global equities and bonds rose as markets looked through US political turmoil. The MSCI All Country World Index reached a record high.

The Reserve Bank of Australia kept rates on hold, citing persistent inflation risks, while household spending undershot expectations.

In the US, a federal government shutdown began after Congress failed to reach a funding agreement. Labour-market data softened, reinforcing expectations of further easing by the Federal Reserve.

Japan’s Sanae Takaichi won the LDP leadership, signalling continued fiscal stimulus, while OPEC+ debated output increases for November.

This week, attention turns to US budget negotiations, the release of FOMC minutes, and the Reserve Bank of New Zealand’s policy decision on Wednesday.

The MSCI All Country World Index closed at a new all-time high and bonds advanced last week as investors looked past political turbulence in the United States and a slightly firmer tone from the Reserve Bank of Australia.

The Board left the cash rate unchanged at 3.6% as expected, but the governor adopted a somewhat more hawkish tone in communications. The Bank noted that inflation risks had risen since August as the economy had shown greater resilience than anticipated. Updated forecasts and key data are due before the November meeting. However, market pricing implies only one further rate cut this cycle.

Australian household spending tested the RBA’s outlook. August data showed a rise of just +0.1%, below the +0.3% consensus forecast. Spending was up +5.0% yoy, slightly below expectations and down from +5.3% in July. Household spending per capita fell -0.1% month on month, indicating that population growth rather than increased consumption drove much of the gain.

Fiscal developments offered a mild positive surprise. The federal budget deficit for the last financial year came in almost $ -18 billion smaller than forecast, primarily reflecting stronger-than-expected employment and tax receipts. This could create room to adjust tax thresholds, though forward projections still show deficits widening over the next few years.

In the United States, attention centred on the federal government shutdown, the first since 2018, as Congress failed to pass a continuing resolution. Senate Republican leader John Thune said the chamber was “unlikely” to hold votes over the weekend, while the House would not return until this week.

The Congressional Budget Office estimated that the closure could furlough as many as 750k federal workers at a cost of about US$400 million per day. The shutdown has halted agency operations and delayed key data releases, including the September labour report. Treasury Secretary Scott Bessent warned that the impasse could weigh on growth, stating, “This isn’t the way to have a discussion, shutting down the government and lowering the GDP.”

President Donald Trump pressured the Democrats, saying he intended to fire “a lot” of federal workers, which he argued could generate “a lot of good.” The prospect of prolonged disruption added to uncertainty over the near-term economic outlook, though markets remained relatively calm.

Some labour-market indicators were released before the shutdown began. The Job Openings and Labour Turnover Survey (JOLTS) reported an increase in vacancies for August, contrary to expectations for a decline. However, slower hiring and a modest rise in unemployment suggested that the rebound in openings was not translating into faster job growth. The ADP employment survey showed private companies shed -32k jobs, the largest fall since March 2023.

The Conference Board’s consumer confidence index fell to 94.2 in September from 97.8 previously, below expectations. The assessment of current conditions dropped sharply, while expectations for the future held relatively steady.

Manufacturing activity remained subdued. The Institute for Supply Management’s manufacturing index rose +0.4 points to 49.1, marking a seventh consecutive month in contraction territory. Eleven industries reported weaker activity, while five expanded. But respondents noted some easing in input-cost pressures. The services sector slipped to 50.0, indicating stagnation, and the business activity sub-index contracted for the first time since May 2020. Employers cited hiring delays and shortages of qualified staff as ongoing challenges.

The figures reinforced expectations for another -0.25% rate cut by the Federal Reserve at the end of the month.

The Chinese PMIs were also close to neutral, but new orders remained subdued.

Treasury Secretary Bessent suggested that upcoming US-China trade talks could deliver a “pretty big breakthrough”, hinting at new measures to support American farmers. The Wall Street Journal reported that the administration was considering over US$10 billion in agricultural aid. China, meanwhile, called on Washington to declare that it “opposes” Taiwan independence, a stronger formulation than the long-standing position that the US “does not support” formal autonomy. The American administration has yet to respond.

In Japan, Sanae Takaichi’s victory in the Liberal Democratic Party leadership race is expected to reinforce a pro-stimulus stance in fiscal policy. She will succeed Shigeru Ishiba as LDP president and is poised to become Japan’s first female prime minister. Her pledges of cash handouts and tax rebates aimed at supporting households point to a potentially looser fiscal setting, which could pressure the yen while supporting equities. Although Takaichi has moderated her previous calls for large-scale fiscal expansion and opposition to Bank of Japan rate hikes, she remains inclined to prioritise growth-friendly policies.

In energy markets, OPEC+ members continued discussions on production adjustments for November. Options under consideration include maintaining this month’s modest increase of +137,000 barrels per day or implementing a larger rise. Divergence persists among major producers: Saudi Arabia and the United Arab Emirates favour expanding supply to regain market share, while Russia prefers a more cautious approach. Oil prices were broadly steady as markets awaited clarity from the group’s final decision.

Corporate and regulatory developments also featured prominently. The US Securities and Exchange Commission said it would fast-track Donald Trump’s proposal to allow most companies to switch from quarterly to semi-annual reporting. The plan would make quarterly updates optional. Supporters argue that it could reduce costs and discourage short-termism, while critics warn that it may lower transparency. Quarterly reporting has been mandatory since 1970.

Tesla reported quarterly sales up 7.4% yoy, well above forecasts, as US consumers brought forward purchases ahead of an expiring EV tax credit. The shares fell despite the strong figures, while Rivian declined after narrowing its delivery guidance toward the lower end of its range.

After recent doubts about the AI companies’ ability to monetise their capabilities, OpenAI announced new e-commerce functionality within ChatGPT, enabling users in the US to buy goods from Etsy and Shopify merchants directly through the chatbot via an “Instant Checkout” feature. The company also released an open-source “Agentic Commerce Protocol” to allow broader integration of merchant catalogues. Product lead Michelle Fradin said that over one in ten ChatGPT users express purchase intent, highlighting the potential for monetisation of its large free-user base. OpenAI will charge a small transaction fee, though details remain confidential.

The coming week is likely to be quieter, given limited data releases and public holidays in New South Wales and China. However, investors will monitor ongoing negotiations in the US Congress over the budget impasse and any signs of a compromise that could end the shutdown. The release of Federal Open Market Committee minutes will nevertheless attract attention following Stephen Miran’s dissent on behalf of the White House last month.

In New Zealand, the Reserve Bank is expected to cut its official cash rate on Wednesday, with most forecasts favouring a 25-basis-point reduction to 2.75%. A larger 50-basis-point move remains possible if policymakers choose to accelerate stimulus in response to weaker second-quarter growth.

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