General Market Analysis – 29/08/25

US Stocks Push Higher After Strong GDP Number – Nasdaq up 0.5%

US stock indices again hit fresh highs in trading yesterday after GDP data came in stronger than expected. The Dow and S&P both closed at new record highs, the Dow up 0.16% to 45,636, the S&P up 0.32% to 6,501, and the Nasdaq adding 0.53% to 21,705. The dollar took another step lower as markets continued to strongly price in a September rate cut, with the DXY down 0.36% to 97.87. Treasury yields, however, had a mixed day, with the 2-year up 2.1 basis points to 3.629%, while the benchmark 10-year fell 3.1 basis points to 4.203%. Oil prices climbed again as traders looked for a fresh update on Ukraine from President Trump, with Brent up 0.41% to $68.33 and WTI up 0.70% to $64.60. Gold rose to 5-week highs on haven flows, up 0.58% to $3,417.08 on the NY close.

Fundamentals Rising in Investor Focus

Fundamental updates are starting to have a much bigger influence on market reactions as we move into the second half of the trading year. Without doubt, geopolitical considerations dominated market moves in the first half of the year, with US tariff plans in particular playing a major role. Central banks made it clear that they were hesitant to make interest rate decisions with the uncertainty of tariff impacts looming in the market. But now that we have more clarity on tariff size and a better idea of their impact, fundamental data is having a more meaningful effect on rate calls and, therefore, on fundamental trading decisions. Recent data from the US is pointing to an interest rate cut in September, and tonight’s Core PCE number could be the final nail in the coffin if it comes in near expectations. However, a miss in tonight’s numbers should see big moves in the market, and traders are expecting this pattern to increase in the coming months as big data releases become more influential on market direction.

Inflation Data in Focus for Traders Today

Inflation numbers are in focus across all three trading sessions today, and traders are expecting volatility around all events as the updates will have a strong impact on interest rate moves in the coming months. We have already seen the Tokyo Core CPI data come in on expectations, with a 2.5% increase year-on-year, and even though it is a lower print than last month’s 2.9%, we have seen some yen appreciation with expectations still high for a hike from the Bank of Japan in the coming months. The European session will see the German Preliminary CPI data (exp 0.0%) released on a state-by-state basis throughout the morning, and the Spanish Flash CPI (exp +2.8% y/y) data, and both could have a significant impact on the Euro. However, the main event is undoubtedly the Fed’s favoured inflation indicator, the Core PCE Price Index number (exp +0.3% m/m), due out early in the New York session. Canadian GDP data is due at the same time, and University of Michigan Consumer Sentiment and Inflation Expectations numbers are out later in the day, but expect the PCE numbers to dominate sentiment, especially if we have a surprise print.

Source: IC Markets