- After a highly nervous start to the week, US equity markets came under pressure. Markets are concerned about further tightening by the Federal Reserve and worsening macroeconomic prospects. The S&P 500, Nasdaq, and Dow closed lower on Monday, with risk-off sentiment dominating equity markets.
- Market attention focused on signals from the Fed. Christopher Waller stated that a weakening labor market justifies another rate cut in December. He supported a 25 basis point cut at the December 9–10 meeting but noted that any improvement in the labor market could reduce the need for further easing.
- Although these comments were dovish, they did not ease investor concerns. Combined with a strong dollar, this led to sell-offs in risk-sensitive assets.
- The US dollar strengthened against most major currencies, while the Japanese yen remained weak above 155 against the dollar due to rising government bond yields and geopolitical tensions with China. Pacific region currencies, including the Australian and New Zealand dollars, stayed under pressure amid risk aversion and the possibility of RBA policy easing.
- Asia-Pacific markets started the week with a notably negative tone, affected by both global macroeconomic worries and escalating geopolitical tensions. Indices saw sharp declines with Japan’s Nikkei 225 down 2.25 percent, Hong Kong’s Hang Seng down 1.11 percent, China’s Shanghai Composite down 0.5 percent, and Australia’s S&P/ASX 200 down 1.8 percent.
- Bank of Japan Governor Ueda is meeting today with Prime Minister Takaichi at 3:30 p.m. Tokyo time. The discussions focus on yen weakness and potential changes to monetary policy. Prime Minister Takaichi urges caution regarding rate hikes, while Ueda signals the possibility of near-term action.
- Tensions toward Japan persist in China. Beijing has imposed travel bans for state-owned enterprise employees and canceled events and projects involving Japan. These measures are a response to Tokyo’s comments on a possible military reaction in case of a Chinese attack on Taiwan.
- The People’s Bank of China set the USD/CNY reference rate at 7.0856, significantly below market forecasts, strengthening the yuan and confirming active currency stabilization efforts. Meanwhile, China is issuing four billion euros in eurobonds to diversify offshore financing sources.
- In Australia, the Reserve Bank of Australia minutes highlighted that monetary policy remains only slightly restrictive. Inflation is expected to stay above the bank’s target until mid-2026. The RBA may keep rates on hold longer but is also considering possible policy easing.
- Gold is hovering around 4,000 USD per ounce, while Goldman Sachs projects a target of 4,900 USD per ounce by the end of 2026, citing strong central bank demand.
- Bitcoin has weakened significantly, falling below 90 to 91 thousand USD, its lowest level since April. Rising risk aversion and uncertainty over future Fed decisions, including potential rate cuts, have negatively impacted the cryptocurrency market.
Daily summary: Risk assets keep sliding on US rate cut jitters (17.11.2025)
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Chart of the day: USDJPY (17.11.2025)
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