Weekly market report: September 30, 2025

Weekly market report: September 30, 2025

USA

Economic data released during the week of September 22–26, 2025, reinforced the picture of a soft landing. Initial jobless claims fell to 218k, a two-month low, suggesting resilience in the labor market despite signs of cooling. Flash PMI data showed the composite index easing to 53.6 from 54.6, reflecting softer manufacturing activity balanced by still-solid services. The August PCE report confirmed inflation moderating, with headline prices up 2.7% year-over-year and the core measure at 2.9%, while consumption remained firm at +0.4% m/m. Equity markets responded with caution: the S&P 500 fell 0.3% on the week, the Nasdaq declined 0.7%, and the Dow edged lower by 0.1%. Tariff headlines on pharmaceuticals and industrial goods added sector-specific volatility but did not fundamentally alter sentiment.

Europe

The euro area showed mixed signals as September flash PMIs pointed to gradual stabilization, led by Germany. The eurozone composite PMI rose to 51.2, its highest in 16 months, supported by a rebound in German services, though German manufacturing fell further into contraction at 48.5. France’s composite slipped to 48.4, signaling renewed weakness. In the UK, the composite PMI cooled to 51.0 while manufacturing fell to 46.2, highlighting fragile momentum. European equity markets stabilized after prior volatility: the STOXX 600 ended nearly flat for the week, Germany’s DAX traded sideways, and Spain’s IBEX 35 outperformed modestly. London’s FTSE 100 gained 0.7% on strength in travel, leisure, and financials, though overall investor sentiment stayed cautious amid uneven regional growth.

Japan

Japan’s flash PMI data revealed further divergence between sectors. Manufacturing contracted more sharply at 48.4, reflecting subdued global demand and weaker factory output, while services expanded at 53.0, supporting a composite reading of 51.1 that still pointed to overall growth. Inflation momentum cooled slightly, with Tokyo’s September core CPI holding near 2.5% year-over-year, consistent with gradual disinflation but still above the Bank of Japan’s 2% target. Equity markets were subdued as the Nikkei 225 drifted lower, weighed by manufacturing concerns and cautious global risk sentiment, while the broader TOPIX index mirrored this softer tone. Investors remained focused on the sustainability of Japan’s services-led recovery in the face of external trade headwinds.

China

August industrial profit data showed a 20.4% year-over-year increase, lifting year-to-date profits into positive territory (+0.9% for January–August) for the first time in 2025. Authorities nonetheless highlighted persistent challenges, including weak domestic demand and ongoing property sector stress. The People’s Bank of China continued to provide liquidity support ahead of Golden Week holidays, conducting 14-day reverse repos as part of its broader September easing stance. Equity markets were less optimistic: the Shanghai Composite slipped modestly on the week, and the Hang Seng posted larger losses as investors weighed the industrial profit rebound against structural risks in real estate and trade. Overall, sentiment remained fragile despite evidence of improvement in corporate profitability.

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