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WTF Dailies September 18, 2025

US stock futures rose after the Federal Reserve cut interest rates for the first time this year. Policymakers lowered rates by a quarter percentage point, bringing its benchmark interest rate to a range of 4%-4.25%.

Sage Kakkat

17 Sep 2025 — 7 min read

US stock futures rose after the Federal Reserve cut interest rates for the first time this year. Policymakers lowered rates by a quarter percentage point, bringing its benchmark interest rate to a range of 4%-4.25%.
Stocks wobbled on Wednesday following the widely anticipated decision. In addition to lowering rates, the Fed indicated via its "dot plot" release that policymakers expect two more interest cuts to land this year. However, Fed Chair Jerome Powell's comment that high inflation and a weak labor market leave "no risk-free path" shook confidence that the central bank can deliver additional cuts smoothly.
Most Asian stock markets advanced on Thursday, with Japan rallying to a fresh record high after the U.S. Federal Reserve reduced interest rates and signaled further cuts.
Bucking the regional trend, shares in Australia and New Zealand fell. Australia’s energy sector losses dragged the benchmark lower despite a soft jobs report supporting RBA interest rate cut bets. New Zealand equities declined after a weak economic growth print.
In Tokyo, the Nikkei 225 jumped 1.2% to a fresh record peak of 45,296.21 points, having jumped nearly 15% this year despite U.S. tariff pressures.
The broader TOPIX index rose 0.6%. Technology and energy shares led the advance, while a weaker yen also supported exporters.
In Seoul, the KOSPI surged 1%, climbing back near record highs touched earlier this week.
The benchmark drew strength from heavyweight chipmakers SK Hynix Inc (KS:000660) and Samsung Electronics (KS:005930) amid renewed AI optimism in the U.S.
Chinese tech stocks paused their rally as investors assessed the fragile trade relations with the U.S. after talks in Madrid earlier this week.
A Financial Times report stated that China’s internet regulator has instructed domestic technology firms to stop buying all of Nvidia’s artificial intelligence chips and terminate their existing orders.
Hong Kong’s Hang Seng edged 0.3% lower on Thursday, but Chinese chipmaking stocks surged on optimism around domestic demand.
Hong Kong-listed Baidu (HK:9888) shares advanced 6% after surging 16% in the previous session, extending their stellar rally amid reports that Baidu has begun using its internally developed Kunlun P800 chip to train its AI models.
China’s Shanghai Shenzhen CSI 300 edged 0.3% higher, while the Shanghai Composite index gained 0.5%, hitting a fresh decade-high level.
Singapore’s Straits Times Index gained 0.2%, while India’s Nifty 50 opened 0.4% higher on Thursday.
Australian shares bucked the regional trend, with the S&P/ASX 200 slipping 0.6%, dragged by the energy sub-index dropping over 5% on lower oil prices.
Data on Thursday showed that employment unexpectedly fell in August. The economy shed about 5,400 jobs, including a 41,000 drop in full-time roles, even as part-time positions increased.
The unemployment rate held at 4.2% but hours worked fell 0.4%, pointing to a softer labour market.
The report suggested that the labor market may be softening gradually, which could encourage the Reserve Bank of Australia to cut rates again this year.
In New Zealand, the NZX 50 index retreated nearly 1% after data showed gross domestic product shrank 0.9% in the second quarter, far weaker than forecasts for a 0.3% decline.
Annual GDP contracted by 0.6%, underscoring broad weakness in domestic demand. The release increased pressure on the Reserve Bank of New Zealand to accelerate monetary easing.

Market Close

Equity markets rallied on Thursday as investors continue to digest the signals from yesterday's Fed meeting. Interest-rate-sensitive small-cap stocks continue to be the best performers after a rate cut from the central bank and signals that more easing could be on the way, with the Russell 2000 index hitting a new all-time high for the first time since November 2021.
Meanwhile, the technology-focused Nasdaq, which struggled immediately after the Fed meeting, rebounded today, helped by a large gain in NVIDIA amid reports of investment in Intel to co-develop chips for PCs and data centers.
The tone in international equities overnight was also upbeat, with major European indexes and the Nikkei all moving higher, although Chinese equity markets were soft. The modest sell-off in government bonds after the Fed meeting continued today, with the yield on the 10-year U.S. Treasury note up 5 basis points (0.05%) to 4.12%, compared with a low of 4.03% earlier this week. The dollar rallied against a basket of trade-weighted currencies, but remains down around 10% over the year so far, while oil prices are sitting in the $60-$65 dollar range seen over recent weeks.
Initial unemployment insurance claims fell to 231,000 last week, fully reversing the surge to 264,000 seen the preceding week, which had predominately reflected higher claims in Texas. Continuing claims, a measure of people claiming benefits for multiple weeks, also dipped last week, and at 1.92 million are well below the high of 1.97 million seen earlier this year. Both indicators should provide some encouragement, in our view, that while hiring remains weak, as illustrated by anemic payroll gains, firms are seemingly not cutting back on their workforce for the time being.
The Fed is highly attuned to risks in the labor market at present, and Chair Powell highlighted these as the key justification for yesterday's interest-rate cut. The fear, in our view, is that amid very weak hiring rates, it would only take a modest uptick in layoffs to drive a spike in unemployment, which could prove damaging to the business cycle.
Uncertainty around the outlook, and the appropriate monetary-policy response, was the dominant theme of the FOMC meeting yesterday. Individual FOMC members were split on how much easing would be appropriate in coming months, with a narrow majority forecasting three 25 basis point (0.25%) cuts, but a large minority preferring just one or two moves. Fed Chair Powell echoed this ambiguity at his press conference after the meeting, arguing that all scenarios were possible, and that the data will determine what the central bank does next.
The lack of strong guidance could lead to volatility over coming weeks and months, in our view, as markets digest what labor-market, inflation and activity indicators mean for the Fed's next steps. At present, investors are pricing in a high (80%-90%) probability that the Fed cuts rates by 25 basis points in both October and December. Weak data could cement these expectations, but signs of an improvement in labor-market indicators could prompt investors to trim these bets.

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