Breakfast Bites: Muted start to the week

US and Chinese Equities remain lower; Nikkei soars back higher; Government shutdown looms

Sep 22, 2025

Rise and shine everyone

US equities ended last week on a softer note, with the S&P 500 down 0.3%, the Dow off 0.2%, and the Nasdaq slipping 0.4% as investors digested the Fed’s steady policy stance and awaited clarity from Washington on a looming government shutdown. This will likely be a non-issue, and perhaps buying the dip on this news would be something to look for.

Early Monday trading is seeing US futures slightly lower, gold firmer, oil steady, and crypto under pressure.

Asian trading to start the week was mixed, with Japanese equities leading the way. The Nikkei 225 rose 1.5% back toward 46,000 as markets shrugged off Friday’s initial BOJ shock reaction. While the central bank confirmed it would begin unwinding ETF holdings, the timeline was seen as so protracted that the impact looked negligible. The Kospi added 1.4% to a fresh record high above 3,600, and Taiwan’s Taiex also set a new high, but the Hang Seng lagged with a 1% loss, and Shanghai ended flat.

On rates, the Japanese yield curve shifted higher, with 40-year yields moving the most ahead of this week’s auction. OIS markets now price a 55% chance of an October BOJ hike and nearly 78% by December.

Chinese equities traded lower this morning, with both the Hang Seng and Shanghai Composite under pressure as investors focused on the PBOC’s policy stance and mixed growth signals. The central bank left its monthly Loan Prime Rate unchanged, keeping the 1-year at 3.00% and the 5-year at 3.50%, while adding liquidity through 14-day reverse repos for the first time since January to ensure stability ahead of Golden Week. At the same time, Beijing announced a steel stabilization plan aimed at stricter capacity controls and approved Fujian’s first Arctic shipping route to Europe, expected to cut transit times significantly compared to traditional routes.

Trump’s call with Xi produced diverging narratives: Trump claimed approval of a deal for TikTok’s US operations, but Chinese state media emphasized only broad principles, leaving key questions unresolved. Both leaders will meet at the APEC summit in South Korea next month.

In Europe, airline stocks slid after a cyberattack on RTX’s Collins Aerospace system disrupted major airports, leading to cancellations and delays. Autos also underperformed as Porsche cut guidance again, delaying EV launches, and VW lowered its return outlook on tariff and demand headwinds. NATO convened on fresh Russian airspace violations, while the UK looked ahead to its Nov 26 budget after the BOE slowed QT.

Interesting development over the weekend. Trump signed a proclamation raising fees on new H-1B petitions to $100,000 from $1,000, though renewals and existing visa holders are exempt. The sharp hike hits multinationals from Google to Siemens and BNP Paribas, with analysts warning it could delay cross-border transfers, create shortages in AI, finance, and engineering, and push firms to consider EU relocations. Tech groups say the move risks offshoring innovation and undermining US competitiveness.

Still, there’s another side to the argument: while the policy could have been more nuanced, it comes at a time when the domestic job market is cooling. With layoffs across the tech sector over the past two years, leaving many skilled workers on the sidelines, the measure may help absorb existing talent already in the country.