Market navigator: week of 22 September 2025
Federal Reserve's 25 basis point rate cut propels US stocks to fresh highs while Hang Seng challenges significant level. PCE and PMI data ahead.
Summary
- What happened last week: Central banks delivered mixed signals as the Federal Reserve cut rates by 25 basis points, the Bank of England held steady on inflation concerns, and the Bank of Japan signalled potential tightening.
- Markets in focus: US equities hit fresh highs following the Fed's rate cut, with technology and small-cap sectors outperforming, whilst the Hang Seng Index tested 27,000 amid continued southbound flows.
- The week ahead: Key economic data including flash PMI readings and Friday's core personal consumption expenditures release will shape monetary policy expectations and economic outlook assessments.
What happened last week
- The much-anticipated Fed rate cut: The Federal Open Market Committee (FOMC) reduced the target rate by 25 basis points (bp) to 4.00%-4.25%, the first cut since December. White House Economic Advisor Stephen Miran was the sole dissenter, advocating for a 50 bp cut. The dot plot indicates another 50 bp of cuts by year-end, while the committee revised 2026 growth and inflation forecasts upward by 0.2 percentage points. All major US indices reached new record highs.
- China announces consumption stimulus measures: Latest data reveals Chinese economic deceleration, with fixed asset investment growth slowing to 0.5% in August (five-year low) and retail sales expanding just 3.4% year-on-year (eight-month low). The government unveiled 19 measures to boost consumption, focusing on sporting events and tourism initiatives.
- BoE maintains restrictive stance: The Bank of England held the policy rate unchanged at 4.00% as the committee expressed concerns regarding medium-term inflationary pressures. The central bank projects inflation to accelerate to 4.0% next month, double the 2.0% target rate. Market participants widely anticipate rates to remain unchanged through the remainder of 2025. Sterling declined approximately 1% against the US dollar as the UK confronts stagflation risks.
- BoJ's hawkish inclination: The Bank of Japan maintained its policy rate at 0.50% in a 7-2 vote, with two board members advocating for an increase, suggesting potential rate action before year-end. The central bank announced plans to reduce its exchange-traded fund (ETF) holdings of Japanese equity indices at ¥620 billion annually (less than 1% of current holdings), signalling a reversal of ultra-accommodative monetary policy. JPY initially strengthened against USD before retracing gains.
Markets in focus
US equities establish fresh record highs following rate cut
Despite market fully pricing-in the 25 basis point rate cut, US equities continued their ascent following the Federal Reserve's (Fed) announcement. Interest rates-sensitive sectors, particularly technology and small to mid-capitalisation stocks, demonstrated outperformance. The Nasdaq 100 and Russell 2000 indices both surged 2.2% last week, whilst the S&P 500 and Dow Jones gained 1.2% and 1.1% respectively.
At the corporate level, Intel emerged as the top-performing S&P 500 constituent following NVIDIA's announcement of a $5 billion investment to establish a strategic chip development partnership. This collaboration enables Intel to enhance graphics capabilities in its PC processors while providing NVIDIA access to Intel's processing technology for data centre applications.
Following a rebound from critical support around 23,000 on 2 September, the US Tech 100 has maintained a steady ascent to establish new highs, positioning comfortably within the ascending channel established from mid-May levels. This price action suggests the corrective Wave 4 under Elliott Wave theory may have concluded, with Wave 5 demonstrating potential to extend beyond 25,000 toward the channel's upper boundary. However, the relative strength index (RSI) reading of 76 indicates overbought conditions. A period of technical consolidation appears likely before further advancement, with the 20-day moving average providing support for any retracements at approximately 23,970.
Figure 1: US Tech 100 index (daily) price chart
Hang Seng Index challenges 27,000 resistance level
The Hang Seng Index (HSI) extended its rally for a third consecutive week, advancing 0.6% as the index briefly crossed the psychologically significant 27,000 level on Thursday before retreating as investors secured profits. Southbound capital net inflows moderated from HK$60.8 billion in the previous week to HK$36.9 billion.
Chinese authorities reportedly instructed technology companies to discontinue NVIDIA AI chip usage, citing anti-monopoly law violations. Chinese technology firms have accelerated semiconductor design and manufacturing capabilities to reduce dependence on overseas suppliers in the artificial intelligence race. This development drove substantial gains in companies with promising semiconductor exposure, including SMIC (+11.1%), Baidu (+14.3%) and Alibaba (+5.3%).
Evolving US-China relations may influence near-term risk sentiment. President Trump and President Xi discussed TikTok's US operations and agreed to meet at the Asia-Pacific Economic Cooperation (APEC) summit in South Korea, commencing 31 October.
From a technical perspective, the HSI's ascending channel established since mid-April remains intact, though the trend line connecting local peaks from October 2024 and March 2025 presents resistance at approximately 26,800. A decisive breakthrough would unlock additional upside potential toward 27,400, representing the channel's upper boundary. Any retracement would likely find support at the 20-day moving average at 25,834.
Figure 2: Hang Seng Index (daily) price chart
Bitcoin encounters technical consolidation challenges
The leading cryptocurrency has remained range-bound between $110,000 and $118,000 for nearly four weeks. While equity markets responded positively to the Fed's rate cut, this optimism failed to extend to Bitcoin.
The technical outlook appears increasingly challenging as the relative strength index retreats toward the neutral 50 level, with the moving average convergence divergence (MACD) indicator suggesting a potential negative crossover. The critical level to monitor remains the 20-day moving average at approximately $113,900. Failure to maintain this level may indicate Bitcoin is entering Wave C under Elliott Wave theory, potentially testing support at $107,232. Conversely, a breach above the recent high of $117,877 would signal a reversal of the current bearish trend.
Figure 3: Bitcoin (daily) price chart
The week ahead
Flash purchasing managers' index (PMI) readings from the UK and US will offer comprehensive perspectives on manufacturing and services sector health, with particular focus on whether US services can maintain their robust 54.5 reading amid economic uncertainties.
Federal Reserve Chair Powell's speech on Wednesday provides additional policy guidance following the recent rate cut, whilst the final Q2 gross domestic product (GDP) revision and existing home sales data will complete assessments of US economic resilience.
The Fed's preferred inflation gauge takes centre stage this Friday as the personal consumption expenditures (PCE) price index provides critical input for monetary policy trajectory amid ongoing concerns regarding increasing price pressures from tariffs. The core PCE index rose 2.9% year-on-year in July, the highest reading since February. Markets will scrutinise for signs of inflation acceleration that could impede additional rate reductions this year.
On the corporate front, memory chip manufacturer Micron reports quarterly results for the period ending August, providing crucial insights into semiconductor demand trends.
Figure 4: US year-on-year core PCE price index trend
Key macro events this week
Tuesday 23 September 2025
- 4.00pm (HK time) — Euro Area HCOB Composite PMI Flash (September): previous 51, consensus 51.1
- 4.30pm (HK time) — UK S&P Global Manufacturing PMI Flash (September): previous 47.0, consensus 47.2
- 4.30pm (HK time) — UK S&P Global Services PMI Flash (September): previous 54.2, consensus 53.6
- 9.45pm (HK time) — US S&P Global Manufacturing PMI Flash (September): previous 53.0, consensus 51.6
- 9.45pm (HK time) — US S&P Global Services PMI Flash (September): previous 54.5, consensus 53
Wednesday 24 September 2025
- 12.35am (HK time) — US Fed Chair Powell Speech
- 9.30am (HK time) — Australia Monthly CPI Indicator (August): previous 2.8%, consensus 2.8%
Thursday 25 September 2025
- 7.50am (HK time) — Japan BoJ Monetary Policy Meeting Minutes
- 8.30pm (HK time) — US Durable Goods Orders MoM (August): previous -2.8%, consensus -0.4%
- 8.30pm (HK time) — US GDP Growth Rate QoQ Final (Q2): previous -0.5%, consensus 3.3%
- 10.00pm (HK time) — US Existing Home Sales (August): previous 4.01M, consensus 3.98M
Friday 26 September 2025
- 8.30pm (HK time) — US Core PCE Price Index MoM (August): previous 0.3%, consensus 0.2%
- 8.30pm (HK time) — US Personal Income MoM (August): previous 0.4%, consensus 0.3%
- 8.30pm (HK time) — US Personal Spending MoM (August): previous 0.5%, consensus 0.5%
Key corporate earnings
(in local exchange time)
Tuesday 23 September 2025
Thursday 25 September 2025
Source: Trading Economics, Nasdaq, LSEG (as of 22 September 2025)
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
See an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
- Forex
- Shares
- Indices
