Market navigator: week of 29 September 2025
New tariffs heighten trade tensions whilst tech stocks pull back from historic high. China PMI and US employment data drive market direction this week.
Summary
- What happened last week: US announced significant tariffs while facing government shutdown risks, with robust economic data supporting measured Fed policy.
- Markets in focus: US equities retreated from historic highs on valuation concerns, USD/JPY neared 150, and Bitcoin faced consolidation challenges.
- The week ahead: Focus on China's manufacturing PMI, Australia's RBA decision, and US employment data.
What happened last week
- New tariffs announced: The US will implement substantial levies effective 1 October, comprising 100% tariffs on branded pharmaceuticals, 25% on heavy trucks, 50% on kitchen cabinets, and 30% on upholstered furniture. Europe and Australia bear the primary impact on pharmaceutical exports, whilst Mexico and China represent the principal trading partners affected in trucks and furniture. This policy initiative may intensify US-China trade tensions ahead of the truce expiration on 10 November.
- US government shutdown: Congressional Democrats and Republicans face a 1 October deadline to avert a government shutdown, with challenging prospects as President Trump declined negotiations with Democrats, characterising their healthcare funding requirements as 'unreasonable'.
- Resilient US economy: Second-quarter gross domestic product (GDP) growth was revised upward from 3.3% to 3.8%, whilst durable goods orders expanded 2.9% month-on-month, significantly exceeding consensus of -0.5%. Initial jobless claims indicated corporate reluctance to implement redundancies. These indicators provide compelling evidence supporting Federal Open Market Committee (FOMC) members advocating measured approaches to interest rate adjustments.
- Russia-Ukraine conflict intensifies: The Kremlin declared 'no alternative' but to continue operations following Trump's policy shift supporting Ukraine's territorial recovery. Russia rejected this prospect while proposing tax increases for defence expenditure. Ukraine escalated drone strikes on Russian energy infrastructure, with Russia's NATO airspace violations heightening European security concerns.
Markets in focus
US equities retreat as valuation concerns mount
Major US equity indices retreated from historic peaks last week, driven by profit-taking activities and mounting concerns regarding elevated valuations. The S&P 500 declined 0.3%, whilst the technology-focused Nasdaq 100 fell 0.5% and the traditional blue-chip Dow Jones returned -0.1%.
Corporate developments featured NVIDIA's commitment of up to $100 billion in partnership with OpenAI to deploy artificial intelligence data centres with 10 gigawatts of capacity. This follows similar arrangements between technology companies, including OpenAI's investment commitment in Oracle, which propelled Oracle's share price close to 40% in a single trading session. Analysts are expressing increasing concern regarding a potential AI bubble, as these circular transactions may create misleading perceptions of industry growth and artificially inflate technology company valuations.
The US Tech 100 experienced a pullback from historical highs last week as the relative strength index (RSI) reached 78, indicating overbought conditions. The index found support at the lower boundary of the ascending channel established from mid-May levels, suggesting a favourable position to extend beyond 25,000 towards the channel's upper boundary as Wave 5 under Elliott Wave theory. The 20-day moving average (MA) provides immediate support for any retracements at approximately 24,200.
Figure 1: US Tech 100 index (daily) price chart
USD/JPY approaches 150 on divergent economic momentum
The USD/JPY currency pair briefly touched 149.95 on Friday, reaching its highest level in nearly two months, as the US dollar regained strength on resilient economic fundamentals. Second-quarter GDP growth, durable goods orders, and latest initial jobless claims data collectively demonstrate stronger-than-anticipated US economic performance.
Conversely, Japan's manufacturing sector contracted for the 14th consecutive month, with the September S&P Global Manufacturing Purchasing Managers' Index (PMI) declining to 48.4, below market expectations of 50.2. Consumer prices excluding fresh food in Tokyo, commonly utilised as a leading indicator of broader Japanese inflation trends, increased 2.5% year-on-year. Despite exceeding the Bank of Japan's (BoJ) 2% target, inflation has gradually decreased from May's peak of 3.6%, reducing urgency for a BoJ rate increase in October. Bond futures markets currently price a 35% probability for a rate hike, down from approximately 50% a week prior. The Japanese yen may experience heightened volatility ahead of the Liberal Democratic Party (LDP) presidential election on 4 October to nominate Japan's new Prime Minister.
USD/JPY finally breached resistance at 148.8 after multiple challenges since August. The currency pair now trades above all key moving averages, including the 200-day MA which significantly influences the pair's medium-term direction. For USD/JPY to confirm the reversal of the bearish trend established since start of the year, it must move back above the uptrend line established since April. Clearing this level may provide USD/JPY with substantial opportunity to challenge the recent peak of 150.9. Failure to clear this resistance would indicate resumption of range-bound trading between 146.8 and 148.8.
Figure 2: USD/JPY (daily) price chart
Bitcoin faces pressure amid $3.2bn liquidation wave
Bitcoin continued its decline last week, driven by US dollar strength, diminished risk appetite, and significant liquidations of long positions.
Bitcoin spot exchange-traded funds recorded $897 million in net outflows between 22 and 26 September according to Coinglass. The cryptocurrency data analysis platform revealed liquidations of long positions exceeding $3.2 billion during the same period, indicating substantial market deleveraging. Options worth $22 billion expiring on 26 September contributed additional price volatility.
The options market lacks clear directional consensus, with open interest on the most popular call option expiring 3 October targeting the $122,000 level, whilst bearish positioning anticipates the cryptocurrency declining below either $105,000 or $100,000 on Deribit.
Following the breach below the 100-day MA, Bitcoin's technical momentum further deteriorated, with the moving average convergence divergence (MACD) indicator crossing into negative territory. This movement confirms our previous analysis identifying Bitcoin's entry into Wave C under Elliott Wave theory, with $107,232 serving as critical support. A rebound above this support level could potentially return Bitcoin to the recent high of $117,877. Conversely, failure to maintain support opens the possibility of testing the 200-day MA at around $104,300.
Figure 3: Bitcoin (daily) price chart
The week ahead
The forthcoming week presents an exceptionally active economic calendar, with particular emphasis on Chinese manufacturing activity, US labour market dynamics, and Australian monetary policy decisions.
China's dual purchasing managers' index (PMI) readings on Tuesday assume critical importance as markets scrutinise whether manufacturing activity is able to sustain its recovery. The official National Bureau of Statistics (NBS) manufacturing PMI slightly improved to 49.4 in August, but remains in contractionary territory for the fifth consecutive month. Markets will closely examine whether recent stimulus measures and improving export conditions can propel the index above 50, signalling meaningful recovery in industrial activity. Failure to achieve expansion would intensify concerns regarding China's economic trajectory and potentially prompt additional policy support measures.
Australia's Reserve Bank of Australia (RBA) interest rate decision on Tuesday is expected to maintain rates unchanged at 3.6% following recent above-consensus headline inflation data and Governor Bullock's commentary on robust economic conditions. However, accompanying policy statements will be scrutinised for signals regarding future policy direction. Hawkish rhetoric suggesting prolonged restrictive policy could strengthen the Australian dollar, whilst dovish indications of potential future cuts might weaken the currency and support equities.
US employment data dominates the week's calendar. Wednesday's ADP employment change and JOLTS job openings data will provide preliminary insights into labour market conditions, whilst Friday's non-farm payrolls are expected to demonstrate modest recovery to 39,000 new positions after August's disappointing 22,000 reading. The unemployment rate is anticipated to remain steady at 4.3%, though any deterioration could reinforce expectations of at least two additional quarter-point Federal Reserve cuts. However, the release of key US economic data remains contingent upon avoiding a government shutdown on 1 October.
Figure 4: US employment data
Key macro events this week
Tuesday 30 September 2025
- 9.30am (HK time) — China NBS Manufacturing PMI (September): previous 49.4, consensus 49.6
- 9.30am (HK time) — China NBS Non-Manufacturing PMI (September): previous 50.3, consensus 50.3
- 9.45am (HK time) — China RatingDog Manufacturing PMI (September): previous 50.5, consensus 50.3
- 9.45am (HK time) — China RatingDog Services PMI (September): previous 53.0, consensus 52.3
- 12.30pm (HK time) — Australia RBA Interest Rate Decision: previous 3.6%, consensus 3.6%
- 10.00pm (HK time) — US JOLTS Job Openings (August): previous 7.181M, consensus 7.1M
Wednesday 1 October 2025
- 7.50am (HK time) — Japan Tankan Large Manufacturers Index (Q3): previous 13, consensus 15
- 5.00pm (HK time) — Euro Area Inflation Rate YoY Flash (September): previous 2%, consensus 2.3%
- 8.15pm (HK time) — US ADP Employment Change (September): previous 54K, consensus 30K
- 10.00pm (HK time) — US ISM Manufacturing PMI (September): previous 48.7, consensus 49.2
Thursday 2 October 2025
- 9.30am (HK time) — Australia Balance of Trade (August): previous A$7.310B, consensus A$6.5B
- 1.00pm (HK time) — Japan Consumer Confidence (September): previous 34.9, consensus 35.2
Friday 3 October 2025
- 8.30pm (HK time) — US Non-Farm Payrolls (September): previous 22K, consensus 39K
- 8.30pm (HK time) — US Unemployment Rate (September): previous 4.3%, consensus 4.3%
- 10.00pm (HK time) — US ISM Services PMI (September): previous 52.0, consensus 52
Source: Trading Economics, Nasdaq, LSEG (as of 28 September 2025)
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