Weekly Market Update (Oct 05, 2025)
HIGHLIGHTS
There is no critical data roll out this week because of US government shutdown. Eyes are on Japan’s Prime Minister election and potential ceasefire in Gaza.
- Government Shutdown: It is unlikely to have significant market impact from government shutdown historically. However, although macroeconomic fallout from a short-lived shutdown is limited, it may intensify if it is prolonged. Besides, as the official data is on hold, markets continue to expect Fed to be on course for another 25bps cut.
- Japan: The likelihood of a rate hike increased. Japanese officials are monitoring the unemployment data closely. They are also anticipating the impact of tariffs. Market are expecting the next rate hike will happen in January next year.
- Gold: Gold is around its all-time high, and has recorded a 40% year-to-date appreciation. Historically, gold is not a good long-term investment. It underperformed stocks and bonds over the last 45 years. The value of gold usually keeps pace with inflation, while lacking earnings or income.
MARKETS
| Nasdaq | 22,780.51 | +1.32% |
| S&P 500 | 6,715.79 | +1.09% |
| Dow | 46,758.28 | +1.10% |
| 10-Year | 4.12% | -7bps |
| Brent | 64.53 | -7.99% |
| DXY | 97.71 | -0.48% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
Goldman Sachs: Tariff is likely to be a larger headwind in Q3 than Q2, partly because of its implementation lags.
Standard Chartered: In a prolonged shutdown scenario, the uncertainty will lead to higher volatility and risk of consumer weakness. That could potentially lead to equity pullback.
Fixed Income
Goldman Sachs: We believe belly of the yield curve is underperforming. Market already priced in the dot plot and the recent government shutdown would be a headwind for the front-end curve right now.
Morgan Stanley: Bond markets are fully discounting toward 3% by next December. The risk of repricing the front-end curve is increasing, leading to downward pressure on small caps, cyclical and rate-sensitive sectors.
Economy
Bank of America: US economy hinges on domestic consumers as they account for 70% of GDP. The consumption is increasingly concentrated in higher-income group. Although inflation is sticky and job market is weakening, spending remains resilient.
UBS: Hiring dropped, and job-to-jobless ratio decreased to lowest level since 2021. We expect Fed to continue to cut rate despite the temporary hold on the economic data.