Asia Market Quick Take – August 25, 2025

Asia Market Quick Take – August 25, 2025

Key points:

• Macro: Powell hints at possible rate cuts in September due to labour risks
• Equities: S&P 500 rose 1.5%; Russell outperformed, up 3.85% on Powell dovish tilt
• FX: USD fell after Powell's dovish Jackson Hole comments hinted September rate cut
• Commodities: Gold rallies as yield and dollar decline
• Fixed income: Treasuries rose and yield curve steepens

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Disclaimer: Past performance does not indicate future performance.

Macro:

• Powell indicated a probable interest rate cut next meeting due to inflation risks and a softening labor market, suggesting a 25bps cut in September. Markets anticipated further easing in Q4, with rate futures pointing to two cuts this year. A steepening yield curve and rising ISM and S&P PMIs highlight inflation concerns.
• Canada's retail sales are estimated to have fallen by 0.8% in July 2025, marking the second-largest decline in over a year due to volatile US trade policy impacts. This follows a 1.5% increase to C$70.2 billion in June, slightly below the 1.6% preliminary estimate.
• RBNZ proposed reducing the minimum capital requirement for deposit takers from NZ$30 million to NZ$5 million, aiming to lower entry barriers. Consultations have begun, with changes unlikely to significantly impact the economy, according to Reuters.
• Prime Minister Christopher Luxon criticized the Reserve Bank for not reducing the Official Cash Rate more aggressively. Last week, the bank cut the OCR by 25bps to 3%, with the committee voting 4-2 against a larger 50bps cut.
• Trump announced a major tariff investigation on US furniture imports, to be completed in 50 days, with the rate undetermined. US food groups seek tariff exemptions, arguing products like fish and cucumbers can't be affordably grown domestically, per FT.
• Ueda stated at Jackson Hole that the labor market is expected to stay tight, affecting wages unless there's a significant demand shock. He noted increased competition for workers and job-switching, emphasizing ongoing monitoring of labor market trends for monetary policy adjustments.

Equities: 

• US - US stocks surged Friday after Fed Chair Powell hinted at a possible September rate cut during his Jackson Hole speech, fueling the strongest cross-asset rally since April.
  The S&P 500 rose 1.5%, Nasdaq 1.9%, and the Dow jumped 846 points to a record intraday high. Powell said shifting economic risks “may warrant adjusting our policy stance,” while noting inflation remains a concern. Markets priced in a 91% chance of a 25 bps cut in September. Tech led gains: Tesla soared 6.2%, Meta, Alphabet, and Amazon climbed over 2%, Nvidia added 1.7%, and Intel jumped 5.5% on reports of a potential 10% U.S. government stake. The rally erased earlier weakness, leaving the Dow and S&P with weekly gains and trimming Nasdaq losses.
• HK - Hong Kong stocks rose 89 points (0.3%) to 25,191 in early trade Friday, rebounding from prior losses despite Wall Street weakness, as investors awaited Powell’s Jackson Hole speech. Sentiment improved on hopes of Beijing stimulus, including a one-year consumer loan subsidy starting September. Hong Kong inflation eased to a 4-year low of 1.0% in July, while unemployment climbed to 3.7%, the highest in 2.5 years. SMIC jumped 5.9%, Wuxi Biologics 2.9%, Kuaishou 2.8%, and Xiaomi 2.0%. The Hang Seng is still on track for its first weekly loss in three, down 0.4%.
• CN - Shanghai Composite reached a decade high, surging 1.45% to 3,826, and the Shenzhen Component rose 2.07% to 12,166, as fund rotations and retail buying fueled gains. Chinese stocks have climbed in recent weeks due to eased US-China trade tensions and efforts to curb competition, despite weak economic data. Investors awaited signals from Fed Chair Jerome Powell's upcoming speech. Notable stock gains included ZTE Corp at 9.4%, and Cambricon Technologies and Hygon Information both up 20%. For the week, the Shanghai Composite grew 3.49% and the Shenzhen Component 4.57%.