InvestMacro

At the close on Wednesday, the Dow Jones (US30) rose by 0.09%. The S&P 500 (US500) gained 0.34%. The technology-heavy Nasdaq (US100) closed 0.42% higher. Wall Street indices closed at record highs on Wednesday, driven by strong sectoral performance and optimism that the US government shutdown would be short-lived. The ADP report showed a contraction of 32,000 private-sector jobs in September, signaling a slowing labor market, while activity at American factories continued to contract for the seventh straight month. Overall, strong performance in specific sectors, particularly healthcare, and confidence that the economic impact of the shutdown would be limited, helped lift US equities to record levels.

The ISM Manufacturing PMI for the US rose to 49.1 in September 2025, up from 48.7 in August, slightly exceeding market expectations of 49.0. The reading marked the seventh consecutive month of contraction. Survey respondents cited tariffs, high costs, and weak demand as key issues, with many halting capital projects, cutting spending, and facing delayed orders, particularly in the machinery, metals, and semiconductor sectors.

In Canada, the Manufacturing PMI fell to 47.7 in September 2025 from 48.3 in August, continuing to reflect a contraction in activity at Canadian firms. This was the eighth consecutive month of decline in manufacturing, impacted by a series of US tariffs on Canadian goods and retaliatory domestic duties. Looking ahead, companies continued to cite uncertainty about prospects due to policy changes and tariffs, with business confidence easing from August’s seven-month high and remaining significantly below trend.

European equity markets rose strongly on Wednesday. The German DAX (DE40) climbed 0.98%, the French CAC 40 (FR40) closed 0.90% higher, the Spanish IBEX35 (ES35) gained 0.41%, and the UK FTSE 100 (UK100) closed up 1.03%. European indices extended their rally, closing higher on Wednesday, boosted by healthcare stocks, which received investor support related to tariffs. Shares of Merck jumped 10.1%, Bayer added 5%, Fresenius Medical Care gained 1.4%, and Siemens Healthineers rose 0.6%. This followed a deal between Pfizer and the Trump administration allowing patients to access discounted prescription drugs through a new federal platform. Nevertheless, broad market sentiment remained volatile amid ongoing concerns about the US government shutdown. Regarding data, Eurozone inflation rose to 2.2% in September, matching expectations and underpinning the European Central Bank’s (ECB) cautious approach to further rate cuts.

Brent crude oil prices fell below 66 per barrel on Wednesday, hitting their lowest in over three weeks, extending a three-day slide as OPEC+ considers a faster supply increase. The group meets on Sunday to discuss increasing output by 500,000 barrels per day per month for three months, despite projections warning that the market is already oversupplied. The IEA expects a record surplus next year, and TotalEnergies notes market saturation in the first quarter. Still, traders are skeptical that the full OPEC+ production increase will materialize, given Saudi Arabia’s cautious stance on capacity constraints.

Asian markets declined yesterday. Japan’s Nikkei 225 (JP225) fell by 0.85%, China’s FTSE China A50 (CHA50) and Hong Kong’s Hang Seng (HK50) did not trade due to holidays, and the Australian ASX 200 (AU200) posted a negative result of 0.04%.

Australia’s trade surplus fell to 1.83 billion AUD in August 2025, the lowest reading since June 2018 and well below market expectations of 6.2 billion AUD, compared to a downwardly revised 6.61 billion AUD in July. The sharp drop was driven by exports falling to a three-month low, stemming from reduced shipments to the US following new tariffs and a sharp decline in gold exports. Meanwhile, imports rebounded to a record high after falling in July. On the policy front, the Reserve Bank of Australia kept its cash rate at 3.6% earlier this week, with Governor Bullock noting that while some CPI components were slightly higher than anticipated, inflation remains contained.

The Dow Jones Index (US30) ended Tuesday up 0.18%. The S&P 500 Index (US500) gained 0.41%. The technology-heavy Nasdaq Index (US100) closed 0.30% higher. The US stocks closed slightly up on Tuesday, suggesting that investors are shrugging off concerns about a potential government closure.

The US government work stoppage began on Wednesday after the Senate rejected a short-term spending measure, forcing agencies to suspend all but the most essential operations. This move threatens to disrupt air travel, federal services, and the release of key economic data, including the monthly unemployment report. The White House Office of Management and Budget issued a memo confirming that the government would indeed shut down, blaming Democrats for the impasse. Previous shutdowns have cost the US billions of dollars in lost productivity, with federal employees facing unpaid leave or delayed paychecks.

Analysts say the stalemate reflects deep partisan divisions over spending priorities, with no clear way out yet, causing concern for investors and global markets watching the world’s largest economy. Investors also remain cautious amid a slowing labor market, weak consumer confidence, and high stock valuations. The number of job openings in the US increased by 19,000 to 7.227 million in August 2025, compared to an upwardly revised 7.208 million in July, matching market expectations.

The Mexican peso strengthened to 18.3 per US dollar, nearing its strongest level since July 2024 – the 18.29 mark recorded on September 16. Last week, the Bank of Mexico cut its key interest rate by 25 basis points (bps) to 7.50% and termed the move calibrated and conditional, stressing data-dependence and gradual easing, which reassured investors: inflationary risks remain under watch and policy will not sharply change. Mexico’s unemployment rate rose to 2.9% in August, indicating a moderate slowdown but not a deep deterioration.

European equity markets grew solidly on Tuesday. The German DAX (DE40) climbed 0.57%, the French CAC 40 (FR40) closed 0.19% higher, the Spanish IBEX35 (ES35) gained 1.04%, and the UK’s FTSE 100 (UK100) closed up 0.54%. Overnight, the US government was due to shut down, with President Trump threatening massive public sector job cuts amid existing labor market pressure, which led to a worldwide decline in yields in the third quarter. The ECB, by contrast, is set to hold rates until the year-end, as fresh CPI data from Germany, France, and Spain point towards increasing inflation.

On Wednesday, the price of silver climbed above $47 per ounce, hitting a new 14-year high, as the US government shutdown fueled demand for the precious metal as a safe haven after lawmakers failed to reach a temporary funding agreement. The closure will furlough hundreds of thousands of federal employees and halt key services, and traders are now focused on its duration, as a prolonged shutdown could delay the release of critical economic data ahead of the Federal Reserve’s meeting in late October, including Friday’s Nonfarm Payrolls data. The broader adoption of solar energy has further boosted the metal’s appeal, alongside growing demand from consumer electronics and data center manufacturers.

Asian markets traded mixed yesterday. Japan’s Nikkei 225 (JP225) fell by 0.25%, China’s FTSE China A50 (CHA50) declined 0.31% and went on holiday until the end of the week, Hong Kong’s Hang Seng (HK50) gained 0.87%, and Australia’s ASX 200 (AU200) closed down 0.16%.

The Reserve Bank of India (RBI), as expected, left the key repo rate unchanged at 5.50% at its October 2025 meeting. This decision came amid moderating inflation, though concerns intensified after the US introduced 50% tariffs on Indian exports and increased visa fees, sparking fears of broader punitive measures against the services sector. On the economic outlook, the RBI revised its GDP growth expectations for the 2025/26 fiscal year upward to 6.8% from a previous 6.5% projection. Concurrently, projections for headline inflation were lowered from 3.1% to 2.6%.

Indonesia’s annual inflation rate accelerated to 2.65% in September 2025, up from 2.31% in August. This was the highest inflation rate since May 2024, but it remained within the Central Bank’s target range of 1.5% to 3.5%. Core inflation, which excludes regulated and volatile food prices, slightly accelerated to 2.19% in September from August’s 11-month low of 2.17%. On a monthly basis, the Consumer Price Index (CPI) rose by 0.21%.

On Monday, the Dow Jones (US30) Index rose by 0.15%. The S&P 500 (US500) gained 0.26%. The technology-heavy Nasdaq (US100) closed 0.48% higher. The US stocks closed up on Monday, driven by gains in technology and AI company stocks like Nvidia (+2.1%), AMD (+1.2%), and Micron Technology (+4.2%). Shares of the video game company Electronic Arts (EA) jumped 4.5% following the announcement of a $55 billion stock buyback deal by a Saudi Arabian company. Market participants are closely monitoring the risk of a US government shutdown, which could delay the release of key economic data, including Friday’s Non-Farm Payrolls report, increasing uncertainty about the Federal Reserve’s rate-cut decisions.

The Canadian dollar recovered to the 1.39 level against the US dollar as a weaker USD following the August PCE data release and stronger domestic economic activity reduced both external and internal pressure on the Canadian currency. Statistics Canada revised July GDP up to 0.2% month-over-month and reported that economic activity was virtually flat in August, easing concerns about a Canadian economic recession and shifting market focus back to growth data. The Bank of Canada’s 25-basis-point rate cut to 2.5% on September 17 was widely anticipated. Therefore, it did not trigger unexpected capital outflows.

European stock markets were mostly higher on Monday. Germany’s DAX (DE40) rose by 0.02%, France’s CAC 40 (FR40) closed up by 0.13%, Spain’s IBEX35 (ES35) declined by 0.22%, and the UK’s FTSE 100 (UK100) closed 0.16% higher.

WTI oil prices fell by more than 3% to $63.4 a barrel after Iraq’s Kurdish region resumed oil exports on Saturday following a two-and-a-half-year hiatus, and as OPEC+ plans another output increase this week, compounding oversupply fears. The agreement between Iraq’s federal government, the Kurdistan Regional Government, and international oil companies operating in the region will initially allow 180,000-190,000 barrels per day to flow to the Turkish port of Ceyhan. This follows pressure from the US to get Kurdish oil back on international markets, with volumes eventually expected to rise to approximately 230,000 barrels per day. The return of Kurdish oil coincides with efforts by OPEC+ to increase output to further win market share. The group is reportedly likely to approve an increase in production of at least 137,000 barrels per day for November at its meeting this week.

The US natural gas prices (XNG/USD) held firm around $3.20/MMBtu, a ten-week high, driven by lower production. Output in the US 48 states declined to 107.4 billion cubic feet per day in September from a record 108.3 billion cubic feet per day in August. Earlier supply surges led to a significant increase in inventories, which are 6% above the five-year average and 1% higher than last year.

Asian markets were mostly higher yesterday. Japan’s Nikkei 225 (JP225) fell by 0.69%, China’s FTSE China A50 (CHA50) rose by 1.07%, Hong Kong’s Hang Seng (HK50) gained 1.89%, and Australia’s ASX 200 (AU200) closed positive 0.85%.

The Reserve Bank of Australia (RBA) left the cash rate unchanged at 3.6%, in line with market expectations. The Board noted that headline and trimmed mean inflation remained in the 2-3% range in the second quarter of 2025, though partial and volatile data suggest third-quarter inflation may be higher than anticipated. Meanwhile, uncertainty remains around domestic economic activity and inflation amid elevated global risks. The status of US tariffs and the retaliatory actions by other countries is becoming clearer, reducing the probability of extreme outcomes, but the expected evolution of trade is still anticipated to weigh on global growth.

China’s Manufacturing Purchasing Managers’ Index (PMI) rose to 51.2 in September 2025, surpassing both the August reading of 50.5 and the market consensus expectations of 50.3. This was the highest reading since March. Production grew at the fastest pace in three months, and new export orders rose for the first time in six months.

The US stocks closed higher on Friday as investors reacted positively to a PCE inflation report that met expectations, yet factored in President Trump’s new wave of tariffs and softening consumer sentiment. The Dow Jones (US30) rose by 0.65% (+0.09% for the week), the S&P 500 (US500) gained 0.59% (-0.16% for the week), and the tech-heavy Nasdaq (US100) closed 0.44% higher (-0.34% for the week). The August PCE Index, the Fed’s preferred inflation gauge, showed core inflation at 2.9% year-over-year, supporting expectations for a quarter-point rate cut at upcoming meetings. However, new tariffs on pharmaceuticals, heavy trucks, and furniture announced by President Trump added uncertainty, alongside fears of a potential government shutdown.

Last week, the Bank of Canada cut its key interest rate by 25 basis points to 2.5% for the first time since March, citing a weak labor market. The Central Bank stated it would be prepared for another cut if the economy continues to face risks in the coming months. However, economists believe this month’s rate cut is not enough to eliminate the “slack” in Canada’s labor market. Many are confident the next cut should occur in October and should bring the rate to the lower end of the two percent target range to address Canada’s persistent economic weakness and low business investment, which have been exacerbated by the trade conflict.

European stock markets were mostly higher on Friday. Germany’s DAX (DE40) rose by 0.87% (+0.73% for the week), France’s CAC 40 (FR40) gained 0.97% (+0.29% for the week), Spain’s IBEX35 (ES35) advanced 1.30% (+0.82% for the week), and the UK’s FTSE 100 (UK100) closed 0.77% higher (+0.74% for the week).

The UK faces 100% tariffs on pharmaceutical products imported into the US. Late last week, Trump announced the 100% tariffs on pharmaceutical imports, which will apply to companies unless they establish a manufacturing presence in the US. The EU and Japan are exempt from this new tariff threat as both countries have secured trade deals capping pharmaceutical duties at 15%. According to US trade data, pharmaceutical imports from the UK represented about 3.3% of total US drug imports in 2024.

WTI crude oil gained 1.1% on Friday to settle at $65.70 a barrel, marking its largest weekly gain in three months, up over 4%. The rally was fueled by escalating geopolitical tensions, as Ukrainian drone strikes on Russian energy infrastructure prompted Moscow to restrict diesel and gasoline exports, leading to supply deficits in several regions. Further support came from increasing pressure from the US and NATO, including threats of sanctions and calls for allies to cut Russian oil purchases.

Silver climbed over 1% on Monday to top $46.5 per ounce, hitting a new 14-year high amid a weakening dollar due to mounting risks of a US government shutdown. Friday’s PCE report showed stable inflationary pressures, strengthening expectations that the Fed has room for further rate cuts this year. Markets are now pricing in about a 90% chance of a rate cut next month and about 65% in December. Supply-demand imbalances added support, with the Silver Institute expecting a fifth consecutive annual deficit in 2025 as demand outpaces supply by over 100 million ounces, leading to further stock depletion.

Asian markets traded mixed last week. Japan’s Nikkei 225 (JP225) fell by 0.61%, China’s FTSE China A50 (CHA50) gained 0.06%, Hong Kong’s Hang Seng (HK50) dropped 1.25%, and Australia’s ASX 200 (AU200) ended the week down 0.13%.

The Reserve Bank of Australia (RBA) will hold its meeting tomorrow. Investors largely expect the RBA to keep the official cash rate (OCR) at 3.60%, while a 25 basis point cut is widely anticipated at the November meeting. The RBA has already cut the rate three times in 2025. Despite the easing, Governor Michele Bullock continues to emphasize a cautious, data-dependent approach, reaffirming the bank’s commitment to the 2-3% inflation target. Second-quarter CPI data confirmed that inflation continues to ease, with headline inflation slowing from 2.4% to 2.1% and trimmed mean CPI falling from 2.9% to 2.7%. However, the August monthly CPI surprised some by rising slightly from 2.8% to 3.0%.

The New Zealand dollar remains pressured by expectations of further monetary easing from the Reserve Bank of New Zealand (RBNZ). Markets are mostly pricing in a quarter-point rate cut to 2.75% next week, with some even suggesting a slight possibility of a larger half-percent reduction. These expectations have been reinforced by a series of weak economic data, including a Q2 GDP contraction, though comments from new RBNZ Governor Adrian Orr, who stressed a commitment to low and stable inflation, have added uncertainty to the policy outlook.

The US indices fell for a third consecutive session on Thursday as investors weighed strong economic data against expectations for future Federal Reserve rate cuts. The Dow Jones (US30) dropped by 0.38%, the S&P 500 (US500) declined by 0.50%, and the tech-heavy Nasdaq (US100) closed 0.50% lower. Data showed the labor market remains resilient, with initial jobless claims falling to 218,000 for the week ending September 20. Furthermore, Q2 GDP growth was revised higher to an annual rate of 3.8%, supported by robust consumer spending and business investment. Market participants are now repricing the Fed’s next moves, with investor bets on an additional 25 basis point (bp) rate cut in October falling sharply. Technology stocks were hit the hardest, with Oracle tumbling 5% and Tesla dropping 4%. Meanwhile, Intel jumped 9% on news it approached Apple with an investment proposal. Investors are now awaiting Friday’s release of the Fed’s preferred inflation gauge, the PCE Index, for clues on the Central Bank’s path.

Mexico’s Central Bank, Banxico, cut its benchmark interest rate by 25 basis points to 7.5% on Thursday. In its statement, the Central Bank noted that global economic activity expanded at a slower pace in the third quarter of 2025 compared to the previous quarter. The bank pointed to persistent trade tensions, which are expected to cause an economic slowdown both globally and in the United States this year and in 2026. The Central Bank still projects headline inflation to reach its 3% target by the third quarter of 2026.

European equity markets declined yesterday. Germany’s DAX (DE40) fell by 0.56%, France’s CAC 40 (FR40) closed down 0.41%, Spain’s IBEX35 (ES35) dropped 0.27%, and the UK’s FTSE 100 (UK100) closed 0.39% lower. The GfK Consumer Climate Index in Germany surprisingly improved slightly for October, though it remained in negative territory. Shares of German company Siemens Healthineers fell approximately 3.5% after the US Administration announced a new national security investigation into imports of robotics, medical devices, and industrial machinery. The European Commission plans to impose tariffs of 25% to 50% on Chinese steel and related products in the coming weeks to protect domestic producers, as the global overcapacity continues to pressure profits and constrain investment in the decarbonization of the European steel industry. Analysts expect China’s steel exports to reach a record high this year, increasing by 4-9% to an estimated 115-120 million tonnes.

The US natural gas prices (XNG/USD) surged over 3% to $2.94 per million British thermal units (mmBTU), reaching a one-week high and continuing a three-session rally. The EIA reported a storage build of 75 billion cubic feet (bcf) for the week ending September 19, which matched expectations. Meanwhile, projections point to warmer-than-normal weather in early October. Feedgas flows to LNG facilities averaged 15.7 bcf/d in September, a slight reduction from August.

Silver (XAG/USD) climbed above $45 per ounce on Thursday, hitting a new 14-year high. Increased industrial demand and tight physical supply outweighed stronger-than-expected US macroeconomic data, which typically pushes up yields and the dollar. On the demand side, greater shipments of photovoltaic panels and electronics, where silver is difficult to substitute, are supporting near-term consumption. Regarding supply, most silver is produced as a byproduct of base metal mining and cannot be quickly ramped up; recent disruptions at smelting and processing facilities in key refining hubs have reduced refining availability, lowered delivery promptness, and increased near-term metal premiums.

Asian markets were mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by .27%, China’s FTSE China A50 (CHA50) gained 0.59%, while the Australian ASX 200 (AU200) finished 0.09% higher. Hong Kong’s Hang Seng (HK50) fell by 0.13%. Weak economic data in New Zealand prompted traders to price in greater policy easing by the Reserve Bank of New Zealand (RBNZ). Markets are now fully pricing in a 25 bp rate cut to 2.75% in October, with a 30% probability of a larger 50 bp cut. The ANZ-Roy Morgan survey, meanwhile, showed that New Zealand consumer confidence improved in September, suggesting that earlier rate cuts are starting to take effect. The New Zealand dollar lost over 1% for the week, marking its second consecutive weekly decline.

The offshore Yuan stabilized at 7.14 per dollar on Friday but still showed a significant weekly drop amid a strengthening US dollar. The dollar continued to gain as traders revised expectations for aggressive Fed rate cuts following a series of better-than-expected economic releases. Adding further pressure on the Yuan was President Donald Trump’s announcement of a new round of punitive tariffs. Effective October 1, a 100% tariff will be placed on branded and proprietary pharmaceutical imports, except for companies that establish manufacturing capacity in the US.