Weekly market report: September 18, 2025

USA

The week hinged on August inflation and labor data: headline CPI rose 2.9% y/y and 0.4% m/m (SA), while core was +3.1% y/y, reinforcing a “cooling-but-sticky” inflation mix. Producer prices surprised softer (PPI −0.1% m/m; +2.6% y/y). Meanwhile, labor market signals weakened as initial jobless claims jumped to 263k (week ended Sept 6), the highest since Oct-2021, and University of Michigan preliminary sentiment fell to 55.4, with 5-yr inflation expectations up to 3.9%. Equities largely cheered rising odds of a Fed cut: for the week, the S&P 500 +1.6%, Nasdaq +2.0%, Dow +~1%, helped by AI/semis leadership; August PMIs (Mfg 53.0, Svcs 54.5) framed a still-expanding backdrop.

Europe

The ECB kept rates unchanged on Sept 11, reiterating data-dependence as euro-area inflation hovers near target. In the UK, July GDP was flat m/m (services +0.1%, construction +0.2%, production −0.9%), underscoring a sluggish Q3 start. Risk appetite improved into week-end: the STOXX Europe 600 posted its first weekly gain in three weeks (defense outperformed on geopolitics), while FTSE 100, DAX 40, CAC 40 and IBEX 35 were broadly firmer alongside the global “Fed-cut soon” impulse.

Japan 

  Macro prints supported the reflation narrative: the Cabinet Office revised Q2 GDP up to +0.5% q/q (annualized +2.2%), and August wholesale inflation (CGPI) accelerated to +2.7% y/y even as prices dipped −0.2% m/m. Equities stayed buoyant—on Sept 9 the Nikkei 225 crossed 44,000 for the first time before modest profit-taking; TOPIX tracked higher—helped by trade/stimulus optimism and firm services PMI momentum. Net-net, Japanese stocks ended the week higher, with tech and exporters in focus.

China

August activity disappointed: industrial output +5.2% y/y, retail sales +3.4% y/y, and surveyed unemployment 5.3%, while property prices fell—keeping pressure on policymakers. Price data showed CPI −0.4% y/y and PPI −2.9% y/y, consistent with lingering disinflation; credit improved from July yet remained soft versus expectations, and trade headlines were mixed even as authorities highlighted a 3.5% y/y rise in August goods trade value. Equities took the weak data as stimulus-supportive: the Hang Seng and Shanghai Composite firmed into week-end on positioning and tech strength.

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