Market navigator: week of 6 October 2025
US government shutdown delays critical employment data whilst equity markets reach fresh highs. Gold surges 12% in September and Hang Seng breaks 27,000 on technology gains.
Summary
- What happened last week: US government shutdown delayed critical economic data, whilst weakening labour market indicators heightened Fed rate cut expectations.
- Markets in focus: US equities and gold reached fresh highs while Hang Seng rallied 3.9% last week.
- The week ahead: Delayed US employment data awaits shutdown resolution; FOMC minutes and Powell's speech will guide policy expectations; Australian business indicators ahead.
What happened last week
- Government shutdown disrupts data: The Congress failed to agree before the deadline, triggering the US government's 15th shutdown since 1980 on 1 October. Equity markets demonstrated resilience, consistent with historical patterns. However, federal department suspension delayed critical indicators including weekly jobless claims, September's non-farm payrolls and unemployment rate, potentially complicating Federal Reserve (Fed) policy deliberations.
- Labour market signals deceleration: With official employment statistics unavailable, market participants scrutinised private surveys. The ADP employment report registered a 32,000 decline in private payrolls, while Challenger, Gray & Christmas data revealed concurrent declines in recruitment and redundancies. Short-dated Treasury securities rallied as markets elevated October rate cut probabilities.
- China's PMI presents mixed signals: September's purchasing managers' index revealed manufacturing improvement alongside services deceleration. Export order demand demonstrated recovery, though sustainability remains questionable as the US-China trade truce deadline approaches. Corporate margins face pressure as output price deflation persists but input costs rise.
- Japan's race for prime minister: USD/JPY encountered resistance at 150 before declining to 146.6 ahead of the Liberal Democratic Party's presidential election. Should Sanae Takaichi secure victory, she would become Japan's first female prime minister, though her loose monetary policy stance may steepen the JGB yield curve and weaken yen. Shinjiro Koizumi and Yoshimasa Hayashi remain prominent contenders.
Markets in focus
US equities resilient amid government shutdown
Major US equity indices continued their upward trajectory last week, establishing fresh historic highs following the previous week's consolidation. Market reactions to tariff announcements on lumber and furniture imports, alongside the government shutdown, proved muted. Conversely, deteriorating labour market indicators strengthened anticipation of Fed rate reductions, with markets now pricing 98% probability of a 25 basis point cut in October—more dovish than many Fed governors have indicated.
Tesla reported record quarterly electric vehicle (EV) sales, though the 7.4% year-on-year increase appeared modest compared to competitors. General Motors registered EV sales growth exceeding 100%, whilst Ford achieved 30% expansion. The widespread uptake reflected consumers' efforts to secure purchases before the $7,500 electric vehicle tax credit elimination. Tesla shares declined 6% since Thursday, reversing earlier gains from investors' optimism regarding future offerings including robotaxi services and humanoid robotics.
The technical charts of the US Tech 100 reveal recent price movements have been dominated by the ascending channel established from mid-May. However, a bearish relative strength index (RSI) divergence pattern has emerged, indicating possible downward momentum shift in the near future. Should the index fail to find support from the channel's lower boundary at around 24,500, this opens the possibility of testing previous support at 23,000. Conversely, upside is likely to encounter resistance from the channel's upper boundary at 25,500.
Figure 1: US Tech 100 index (daily) price chart
Hang Seng re-attempts 27,000 challenge
The Hang Seng Index (HSI) outperformed most major global equity indices, delivering 3.9% weekly gains. The index retested the 27,000 level last week after briefly reaching this threshold in mid-September. Sustained momentum above 27,000 remains uncertain as trading volumes have diminished during the National Day Golden Week holiday, when mainland Chinese investors remain inactive. Southbound flows have accounted for approximately 25% of Hong Kong equity market turnover in recent months.
Technology sector leadership drove last week's rally. SMIC advanced 25% following multiple sell-side analyst target price upgrades reflecting robust artificial intelligence (AI) growth prospects. Kuaishou surged 17% after the video platform launched its Kling AI 2.5 Turbo Video Model, generating optimism regarding new AI-generated content revenue streams.
Zijin Gold International, the overseas business spin-off from Zijin Mining, raised $3.2 billion through its Hong Kong initial public offering (IPO). The share price surged over 60% on debut, supported by record gold prices and investor enthusiasm for newly listed securities.
From a technical perspective, the HSI's ascending channel established since mid-April continues to govern price movement. Following the breach above the trend line connecting local peaks from October 2024 and March 2025, upside potential extends towards 27,600, represented by the channel's upper boundary. Retracements would likely find support at the 20-day moving average (MA) at 26,404.
Figure 2: Hang Seng Index (daily) price chart
Gold eyes $3900 level
Gold delivered exceptional performance of 12% in September, representing the strongest monthly return since 2011. Prices briefly touched $3895 on 1 October before retreating to current levels, registering impressive year-to-date gains of 47%.
The recent rally stems from multiple catalysts: market expectations of rate reductions, heightened geopolitical risks in Ukraine and the Middle East, and most recently, uncertainties surrounding the US government shutdown. Demand from central banks and investors remained robust, with physically-backed gold exchange traded funds (ETFs) attracting $13.6 billion net inflows over the past four weeks, establishing September as the record month for net inflows.
Gold's technical momentum aligns with Elliott Wave theory's Wave 5, with a 100% Fibonacci extension of Wave 1 from November 2024 establishing a target near $3,979. However, the RSI of 82 signals overbought conditions for traders. While this does not necessarily mean the rally is over, it does suggest a period of consolidation could develop. Recent rejection just below the $3900 psychological resistance level confirms this assessment. Retracements should find support at the 20-day MA around $3555.
Figure 3: Spot gold (daily) price chart
The week ahead
This week delivers critical insights into US labour market resilience and consumer confidence, alongside corporate earnings that will test economic narratives around consumer spending and business investment. However, the release schedule remains contingent on resolution of the US federal government shutdown, which suspended last week's critical employment data. September's non-farm payrolls and unemployment rate await publication once normal operations resume, while this week's scheduled releases including initial jobless claims similarly depend on the shutdown's conclusion.
The Federal Open Market Committee (FOMC) minutes on Thursday morning (HK time) will provide essential detail on policymakers' September deliberations, particularly regarding the pace and magnitude of future rate adjustments. Fed Chair Powell's speech later that evening assumes heightened significance, as investors seek clarity on whether recent economic data warrants recalibrating the central bank's easing trajectory.
Should the government shutdown end, US initial jobless claims data on Thursday will offer a timely assessment of labour market conditions. The delayed September non-farm payrolls figure, for which consensus expects 50,000 following the disappointing 22,000 August reading, will prove particularly consequential for October's monetary policy decision. Any material deviation from expectations could reshape rate cut probability and intensify market volatility.
Australia's economic sentiment indicators will shape Reserve Bank of Australia (RBA) policy considerations, following the central bank's decision to maintain the cash rate at 3.6%. The Board noted signs that private demand is recovering and indications that inflation may persist in some areas. Tuesday's Westpac consumer confidence reading will reveal whether recent economic headwinds are dampening sentiment, potentially influencing the RBA's assessment of whether its gradual easing path remains appropriate.
Key macro events this week
Potential data release from last week's delay due to the US government shutdown
- US Continuous Jobless Claims (week ending 20 September): previous 1.926 million, consensus 1.932 million
- US Non-Farm Payrolls (September): previous 22,000, consensus 50,000
- US Unemployment Rate (September): previous 4.3%, consensus 4.3%
Tuesday 7 October 2025
- 7.30am (HK time) – AU Westpac Consumer Confidence Change (October): previous -3.1%
- 8.30pm (HK time) – US Trade Balance (August): previous -$78.3 billion, consensus -$61.0 billion
Thursday 9 October 2025
- 3.00am (HK time) – US FOMC Minutes
- 2.00pm (HK time) – Germany Trade Balance (August): previous €14.7 billion
- 8.30pm (HK time) – US Fed Chair Powell Speech
- 8.30pm (HK time) – US Initial Jobless Claims (week ending 4 October)
Friday 10 October 2025
- 10.00pm (HK time) – US Michigan Consumer Sentiment Preliminary (October): previous 55.1, consensus 55
Source: Trading Economics, Nasdaq, LSEG (as of 4 October 2025)
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