Asian equity markets displayed mixed performance on Monday as investors adopted a wait-and-see approach ahead of the Federal Reserve’s highly anticipated interest rate decision scheduled for Wednesday, September 17, 2025.
Mixed Performance Across Regional Markets
Trading was subdued across Asia-Pacific markets, with Japan closed for a national holiday. Hong Kong’s Hang Seng index gained 0.4% to reach 26,505.18, while Singapore also posted modest gains. However, Shanghai slipped 0.2% after disappointing economic data showed weaker-than-expected growth in retail sales and industrial production.
South Korea bucked the regional trend, with the Kospi index hitting another record high after climbing 0.4% to 3,409.94. The rally came after the government abandoned plans to raise capital gains tax on stock investors, providing relief to market participants.
Australia’s S&P/ASX 200 declined 0.6% to 8,150, while losses were also recorded in Taipei, Manila, and Wellington. Australian lender ANZ contributed to the decline after agreeing to pay a record A$240 million fine over misconduct.
Federal Reserve Decision Takes Center Stage
Markets are fully pricing in a 25-basis-point rate cut by the Federal Reserve, which would bring the federal funds rate to 4.0-4.25%. According to Reuters, futures trading suggests the possibility of up to 125 basis points of easing over the coming months.
The anticipated rate cut comes after recent data showed cooling US inflation and softer employment figures, giving the Fed room to resume its easing cycle. Chair Jerome Powell is expected to provide guidance on the pace of further rate reductions during his post-meeting press conference.
“After cutting policy rates 25bp, Chair Powell is likely to guide toward a series of further rate cuts,” said Andrew Hollenhorst, chief US economist at Citi.
Trump Pressures Fed for Aggressive Action
US President Donald Trump continued his public pressure campaign on the Federal Reserve, stating on Sunday that “I think you have a big cut. It’s perfect for cutting”. The comments underscore the political attention surrounding the central bank’s decision-making process.
China’s Economic Struggles Continue
Chinese economic data released Monday showed continued weakness, with retail sales growing 3.4% and industrial production rising 5.2% – both figures falling short of analyst expectations. The disappointing data has intensified concerns about China’s economic trajectory amid ongoing trade tensions.
“The fundamental dynamics are changing. For many years, Beijing relied on exports as the primary driver of growth, even as the property market faced challenges. However, with Trump’s tariffs disrupting supply chains, that support has diminished,” said the managing partner at SPI Asset.
Oil Markets Steady Despite Geopolitical Tensions
Crude oil prices held steady in early trading, with Brent crude adding 0.4% to $67.28 per barrel and West Texas Intermediate rising 0.5% to $63.01. The stability came despite Ukrainian drone strikes on major Russian energy infrastructure, including the Primorsk terminal and Kirishi refinery.
JPMorgan analysts warned the attacks “suggest a growing willingness to disrupt international oil markets, which has the potential to add upside pressure on oil prices”.
Broader Market Context
The MSCI Asia Pacific Index has climbed more than 21% in 2025, outperforming the S&P 500 Index by about 10 percentage points. This strong performance has been driven by easing concerns over US tariffs and optimism about potential Fed rate cuts.
“The Asian market’s rally has turned into a bullet train — fueled by AI euphoria, liquidity, and sheer momentum,” said Hebe Chen, an analyst at Vantage Markets.
As the week progresses, investors will closely monitor not only the Fed’s decision but also policy announcements from other central banks, including the Bank of Canada and Bank of England, which are also scheduled to meet this week.
