Here’s the Friday Week‑in‑Review Report for the week ending Friday, 12 September 2025:
Markets & Economic Data
- Global equity funds saw their first weekly outflow in five weeks (≈ US$3.06B) as investors booked profits and reacted to stretched valuations and geopolitical risks.
- U.S. job market data disappointed: only 22,000 jobs added in August vs. estimates of ~75,000, unemployment rose to 4.3%, triggering heavier expectations of imminent Fed rate cuts.
- Treasury yields fell (notably 2‑ and 10‑year), as weak labour data pushed markets toward a dovish Fed pivot.
- Inflation trends remain under close watch, especially those that affect the Fed’s preferred core measures. Softer inflation components in recent reports bolstered hopes of easing pressure.
Central Banks & Policy
- The U.S. Federal Reserve is widely expected to deliver a 25 bps cut at its 16‑17 September meeting. Some markets are still pricing in the possibility of a 50 bps cut if inflation surprises on the downside.
- The European Central Bank (ECB) held rates steady this week, signalling that it may be done with rate cuts for 2025 barring unexpected inflationary pressures.
- Bank of England: expectations remain that rates will be held steady at the upcoming meeting, with little to nothing extra priced in for cuts before year‑end given persistent inflation in the UK and tight labour markets.
Sectors & Regions
- Tech & semiconductors rallied: Broadcom posted a strong beat and raised forecasts, helping lift AI‑/cloud‑exposed names.
- Consumer discretionary under pressure: Lululemon dropped significantly after cutting profit guidance, which also weighed on peers like Nike.
- Asia led gains globally: Japan’s Nikkei hit record highs; stocks across South Korea, Taiwan, and China performed well amid rate‑cut optimism.
- Gold & precious metals saw inflows, bolstered by investor caution and expectations of easing by the Fed.
Geopolitics
- Trade tensions remain a drag: U.S. tariff policy continues to introduce uncertainty, especially with threats of wider tariffs on China and India, and the legal challenges around current measures.
- Emerging markets show mixed signals: India’s rupee appreciated slightly, helped by Fed cut expectations, but remains under pressure from trade/tariff headwinds.
- Inflation‐driven policy risk: countries with high inflation (UK, some in Europe) struggle to balance growth vs inflation containment.
Sentiment & Indicators
- Investor sentiment moved toward cautious optimism: equity indices near highs, but fund outflows and rotation away from risky names indicate a risk‑aware tone.
- Rate cut expectations are increasingly central: markets are now pricing a Fed cut as highly likely in September.
- Valuations remain elevated, especially in U.S. equity markets; any data disappointments (inflation, labour, earnings) could prompt downside risk.
Summary Box
| Theme | Key Point |
|---|---|
| Softening labour market | U.S. jobs miss pulls Fed expectations forward; unemployment creeping up |
| Fed easing likely | Rate cut in September now broadly expected; magnitude still under debate |
| Geopolitical & trade risk | Tariffs, policy uncertainty remain a drag, especially for trade‑exposed sectors |
| Sector rotation | From discretionary toward higher quality / defensive; tech benefits via AI/cloud but risk remains |
| Valuations & risk awareness | Elevated markets + cautious inflows suggest fragility if surprises arrive |
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