Asia Market Quick Take – October 15, 2025

Asia Market Quick Take – October 15, 2025 

Key points:  

• Macro: Powell notes a weakening a labour market 
• Equities: Bank earnings beat; S&P 500 falls 0.2% on trade escalation 
• FX: China actions impact USD; GBP pressured by rising unemployment 
• Commodities: Gold near record; silver retreated as historic squeeze eased 
• Fixed income: Front‑end Treasuries outperformed; Powell lifted cut hopes; Fed may halt runoff. 

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Disclaimer: Past performance does not indicate future performance.  

 Macro:  

• RBNZ Chief Economist Paul Conway said the bank doesn't plan to use additional monetary policy tools soon, as monetary or fiscal policies can't address every economic shock. After a surprise rate cut to 2.5%, inflation is forecast to hit the 2% target by mid-2026. New Zealand's GDP fell by 0.9% quarter-on-quarter in Q2 2025 and 0.6% year-on-year.
• Powell noted a weakening labor market, reinforcing expectations for an imminent rate cut. The federal government shutdown has restricted key economic data releases, leaving near-term growth signals unclear and shifting focus to policy developments.
• Trump is contemplating ending trade with China related to cooking oil and other goods in response to China's intentional avoidance of buying US soybeans. Despite noting a good but occasionally tense relationship with President Xi, Trump is reportedly discussing with officials ways to convey that the US seeks to ease trade tensions with China, according to WSJ sources.
• The IMF projects global growth to slow to 3.2% in 2025 and 3.1% in 2026 from 3.3% in 2024 amid rising protectionism. The 2025 forecast is 0.4 points higher than April's due to reduced tariff escalations. Expected growth: US at 2.0% in 2025, 2.1% in 2026; China at 4.8% and 4.2%; Euro Area at 1.2% and 1.1%; UK at 1.3% both years; Japan at 1.1% and 0.6%. Global inflation is expected to ease but stay above target in the US.
• The NFIB US Small Business Optimism Index dropped to 98.8 in September 2025 from 100.8 in August, below forecasts of 100.5. Optimism waned due to supply chain disruptions and inflation. Inflation was the main issue for 14% of owners, while 64% faced supply chain challenges. Earnings hit their highest since December 2021. Despite this, NFIB Chief Economist Bill Dunkelberg stated that businesses remain resilient amid inflation, sales, and labor market challenges. 

Equities:  

• US - Wall Street saw a turbulent Tuesday as investors weighed upbeat bank earnings, Federal Reserve signals, and persistent US-China trade strains. The S&P 500 slipped 0.2% after an early rebound, while the Nasdaq dropped 0.8% amid tech weakness led by Nvidia. The Dow gained 203 points, supported by strong financials, with Citigroup (+3.9%) and Wells Fargo (+7.1%) outperforming, though JPMorgan (-1.9%) and Goldman Sachs (-2%) retreated. Markets initially fell after China sanctioned five US-linked Hanwha Ocean units, escalating maritime tensions, while Trump threatened trade curbs on cooking oil exports. Fed Chair Powell’s comments fueled expectations of an October rate cut and a pause in balance sheet reductions.  
• EU - European equities fell Tuesday, with the Stoxx 50 and Stoxx 600 down about 0.3% as US-China trade tensions dampened sentiment. Autos and miners led declines after Beijing sanctioned US-linked Hanwha Ocean units and warned of further retaliation, stoking fears of renewed trade disruptions. Defensive sectors like telecom, real estate, and utilities outperformed as investors sought safety. Michelin plunged 8.9% after issuing a profit warning tied to weak North American demand, while Ericsson surged 16% on stronger-than-expected Q3 results, boosted by its Iconectiv sale. In France, caution deepened after PM Lecornu moved to suspend pension reform to maintain political stability. 
• HK - Hang Seng dropped 1.7%, to 25,441 on Tuesday, marking its seventh consecutive decline and hitting a five-week low. Early gains faded as renewed US-China trade tensions and uncertainty over a tariff deal weighed on sentiment. Losses deepened after Beijing sanctioned five US-linked Hanwha Ocean subsidiaries and both nations imposed new port fees, escalating shipping disputes. Investors also turned cautious ahead of China’s September CPI and PPI data amid deflation concerns. All sectors fell, led by tech, consumer, and property, with SMIC (-9.2%) and Kuaishou (-6.7%) among major laggards. Car sales data and hopes of a Trump-Xi meeting offered limited support. 

Earnings this week: 

• Wednesday: HDFC Asset; Bank of Queensland; Bank of America; Morgan Stanley; ASML
• Thursday: Infosys; ABB, TSMC
• Friday: Tokyo Steel; American Express; Interactive Brokers; Volvo 

FX: 

• China's moves against US tariffs caused the USD and equities to fluctuate, with the DXY trading around 99. USTR Greer's call for potential 100% tariffs on China saw little effect. Fed Chair Powell hinted at ending balance sheet contraction, mildly affecting Treasuries, while Vice Chair Bowman reiterated expectations for two more rate cuts this year. 
• JPY, EUR, and CHF gained against the USD, while AUD remained under pressure due to ongoing US-China tensions. Germany's ZEW economic data missed expectations as the ECB leaned toward rate cuts.  
•  Rising UK unemployment pressured GBP, but wage growth limited BoE easing prospects. Markets now predict a BoE rate cut by March 2026, with GBPUSD steady at 1.3330 due to overall USD weakness 

Commodities: 

• Oil steadied after a five‑month low as investors weighed an IEA projection of a record 4 million b/d surplus in 2026 against escalating US–China trade tensions. WTI hovered near $59 after Tuesday’s drop to the lowest since May, with Brent around $62. 
• Gold edged towards a record, buoyed by escalating US–China tensions and expectations of two further Fed rate cuts this year. It traded near $4,165 an ounce after setting a fresh high at $4,179.70 and closing up 0.8% in the prior session. Spot silver firmed after a whipsaw Tuesday, surging above $53.54 before retreating as the historic squeeze showed signs of easing. 

Fixed income:  

• Treasuries in the front end and belly were well bid through the US afternoon, outperforming the long end after Fed Chair Powell’s comments kept rate‑cut expectations intact. His balance‑sheet remarks spurred a late‑session widening in dollar swap spreads; 10‑ and 30‑year tenors were about 3bp wider, a move initially triggered by Powell’s prepared text signalling the Fed may halt balance‑sheet runoff in the coming months. 

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