World Bank Upgrades China’s 2025 Growth Forecast to 4.8% Despite U.S. Trade Tensions

Economic

Summary:

The World Bank has raised its forecast for China's 2025 economic growth to 4.8%, up from a previous 4%. Despite ongoing U.S. trade tensions and a global economic slowdown...

China's Economic Resilience Amid Global Trade Tensions

The World Bank has upgraded its growth forecast for China, predicting a 4.8% expansion in 2025, up from 4% previously forecast in April. This marks a positive outlook for the country, aligning more closely with China's official target of around 5% GDP growth for the year. While the upgrade comes after a summer of heightened trade tensions with the U.S., which saw tariffs on Chinese goods temporarily escalate, the World Bank has acknowledged that China’s economy has benefitted from significant government support.

Despite facing persistent trade issues, including a high tariff environment with the U.S., China’s exports have held strong, supported by increased shipments to Southeast Asia and Europe. The World Bank credits the country's stimulus measures, particularly targeted consumer programs, as key to sustaining retail sales and supporting export growth. However, with exports expected to ease in the coming years, a slowdown is anticipated.

Challenges Remain for Domestic Consumption and Real Estate

While the external sector has been a bright spot, domestic consumption has remained weak. Retail sales growth in August was only 3.4%, missing expectations, and real estate investment continued its downward trajectory with a 12.9% drop in the first eight months of the year. Despite strong tourism numbers during the “Golden Week” holiday, consumer spending showed signs of sluggishness, and economists warn that consumption growth could be weaker than official figures suggest.

Further compounding domestic challenges, youth unemployment remains high, with one in seven young people out of work. Additionally, China faces structural issues, including an aging population and the pressures of technological disruption, which could hinder long-term growth. A key factor differentiating China from the U.S. is the limited job creation by startups, which are less effective in China compared to their U.S. counterparts.

Outlook for 2026 and Beyond

Looking ahead, the World Bank forecasts China’s GDP growth will slow further to 4.2% in 2026. This expected dip reflects a combination of lower export growth and a gradual reduction in government stimulus to prevent public debt from spiraling. As a result, China’s role in driving regional growth will diminish slightly, impacting other developing economies in East Asia.

However, despite these challenges, the broader East Asia and Pacific region, buoyed by China's expected growth, is set to expand by 4.8% in 2025, according to the World Bank's updated projections. This represents a slight increase from the earlier forecast of 4%.

In summary, while China’s short-term economic prospects are improved by strong export performance and government stimulus, long-term growth may face pressures from both domestic and international challenges, including the ongoing trade war with the U.S. and internal structural shifts.

Source: CNBC

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Gerik

Economic

OpenAI and AMD Forge Stronger Ties

In a significant development for the AI industry, OpenAI has announced a partnership with AMD to deploy 6 gigawatts of the company’s Instinct graphics processing units (GPUs) to support OpenAI’s expanding AI infrastructure. The deal also includes an option for OpenAI to acquire up to 10% of AMD, further cementing their collaboration in the AI space. This deal comes on the heels of OpenAI’s previous partnership with Nvidia, creating a tightly-knit ecosystem of companies that supply capital, technology, and computing power essential for AI growth.

This deepening alliance among the industry’s key players – OpenAI, AMD, Nvidia, and Oracle – has led to what analysts describe as a “circular economy” in AI. While this approach has spurred rapid technological advancement, concerns are growing about the potential risks if any one of these crucial players falters.

Figma and AI Sentiment Push Stock Prices Higher

Following OpenAI’s announcement, Figma’s stock surged, fueled by CEO Sam Altman’s onstage promotion of the design software. This move highlights the continued optimism surrounding AI, with significant institutional and retail investments flowing into AI-related companies.

Despite concerns about potentially overheated valuations, AI continues to capture the attention of investors, particularly as companies across sectors look to integrate artificial intelligence into their operations.

The AI Arms Race and Its Impact on the Market

As the AI arms race accelerates, analysts are closely monitoring whether the current “band of brothers” in the industry can meet the high expectations surrounding AI’s potential. With strong earnings anticipated from AI-focused companies, the industry’s rapid development may continue to push market sentiment.

However, with AI driving much of the growth, questions remain about how long the trend can continue and whether the sector can manage the immense financial pressure. Wells Fargo’s chief equity strategist, Ohsung Kwon, noted that AI will dominate the third-quarter earnings season, underscoring the industry’s current impact.

Global Implications: Japan and China

Meanwhile, Japan’s bond market faces a potential shift as new Prime Minister Sanae Takaichi, with a pro-growth agenda, is expected to test the country’s fiscal policy and bond market stability. The markets are betting that Takaichi will maintain Japan’s dovish stance while increasing fiscal activity, which could push long-term yields higher.

On the global stage, the World Bank raised its growth forecast for China, as the country’s economy is poised to benefit from AI investments and the overall global demand for technology-driven growth.

OpenAI’s ongoing partnerships and the growing dominance of AI in the market are reshaping the technological landscape. With companies like OpenAI, AMD, and Figma at the forefront, the industry’s future appears promising, but risks remain. Investors are keeping a close eye on these developments as AI sentiment continues to dominate financial markets.

Source: CNBC

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Economic

Stocks

Political Crisis in France Weighs on European Markets

European stocks edged lower on Tuesday, reflecting growing concerns following the resignation of French Prime Minister Sebastien Lecornu, which triggered political instability in France. The CAC 40 index fell by about 1.3% on Monday, with French banks, such as Societe Generale and BNP Paribas, facing significant losses. However, luxury stocks showed some resilience, with companies like Renault, Kering, and LVMH rebounding in early trading.

Lecornu’s sudden resignation, just a day after appointing a new cabinet, has left markets uncertain about the future direction of French politics. Despite a call from President Emmanuel Macron for Lecornu to have further discussions with rival parties, the political chaos has created a ripple effect on investor sentiment. The resignation comes after a series of failed attempts to address France's mounting fiscal issues, which have contributed to the market downturn.

Weak German Data and Corporate Updates Add to Market Caution

In addition to France’s political drama, disappointing economic data from Germany exacerbated investor concerns. German factory orders for August fell by 0.8% compared to July, a significant miss from the expected 1.1% increase. This slowdown in the manufacturing sector has raised doubts about the strength of the Eurozone's largest economy.

In corporate news, energy utility Naturgy saw its stock drop by 3.11% after announcing the sale of about 3.5% of its shares. The company is looking to join the MSCI indexes, a move that added to the negative sentiment surrounding the market.

On a more positive note, Shell’s shares rose by 1.7% after the British oil giant reported that its trading in the gas division was expected to be significantly higher in Q3, despite a $600 million hit from the cancellation of its biofuels project in Rotterdam.

Global Market Trends: U.S. Futures and Japan’s Record Highs

Meanwhile, U.S. stock futures showed slight declines on Tuesday after Wall Street reached new highs, buoyed by optimism around potential mergers and acquisitions and expectations of a Federal Reserve rate cut. Despite concerns about the ongoing U.S. government shutdown, which has delayed key economic data, investor sentiment in the U.S. remained strong.

In Asia, Japan’s Nikkei 225 hit another record high on Tuesday, following the positive momentum from the tech sector on Wall Street.

The political instability in France, compounded by disappointing economic data from Germany, contributed to the overall decline in European markets on Tuesday. While luxury stocks showed resilience, the broader market sentiment remained cautious. The ongoing U.S. government shutdown and uncertainty surrounding the global economy continue to weigh on investor confidence across markets.

Source: CNBC

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Economic

Commodity

Gold Prices Surge as Global Uncertainties Propel Demand

Gold prices reached a new all-time high, pushing toward the $4,000 per ounce mark, as the ongoing US government shutdown and political instability in France added uncertainty to global markets. On Monday, gold surged 1.9%, reaching $3,977.44 an ounce. The extended US government shutdown, which has halted key economic data releases, has left investors in a state of uncertainty about the US economy's health, further driving demand for safe-haven assets like gold.

In addition to US political drama, the resignation of French Prime Minister Sebastien Lecornu and the potential rise of Japan's first female prime minister, Sanae Takaichi, have increased concerns about fiscal stability, further contributing to the surge in gold prices. Gold’s upward trajectory has been supported by continued institutional and retail investments, especially in Europe and Japan, as traders seek refuge from volatile markets.

The US Federal Reserve's decision to lower interest rates, paired with ongoing gold-buying by central banks, has further bolstered gold’s appeal. The People’s Bank of China extended its gold-buying streak for an 11th consecutive month in September, adding to the bullish sentiment.

Investor Sentiment and the Future Outlook for Gold

Goldman Sachs has raised its gold price forecast for December 2026 to $4,900 per ounce, citing ETF inflows and central bank buying as major drivers of this growth. With gold becoming an increasingly attractive hedge against the US dollar and global economic shocks, experts suggest a 5% portfolio allocation to gold as a prudent move.

Gold’s rally is not only driven by geopolitical events but also by a shift in investor sentiment, with many now viewing gold as a safer asset than the US dollar. As central banks continue to purchase gold and institutional investors increasingly allocate funds to the precious metal, the outlook for gold remains positive. Analysts expect gold’s price to continue rising, with many predicting a significant upside in the coming years.

Source: Bloomberg

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IC Markets

Economic

Commodity

Forex

What happened in the U.S. session?

Shutdown-driven data blackout kept traders focused on Fed communications while haven demand pushed gold above $3,900, oil firmed on a small OPEC+ hike, Treasury yields nudged up, and equity futures stayed positive; the biggest movers were gold, WTI, U.S. Treasuries, U.S. stock futures, and Bitcoin under the same macro narrative.

What does it mean for the Asia Session?

Tuesday’s Asian market trading will be guided by macro events such as the RBNZ rate decision, ongoing Japanese political changes, and updates from the ECB’s Lagarde later in the day. The US government shutdown continues to delay major economic releases, sustaining a cautious yet volatile trading environment across risk assets and major FX pairs.

The Dollar Index (DXY)

The US Dollar starts the week consolidating after robust gains, with global risk sentiment, Fed policy outlook, and geopolitical uncertainties all playing major roles. The balance of strong data, slowing labor momentum, and persistent inflation will dictate the Dollar’s performance, with an eye on upcoming Fed statements and global event risks.

Central Bank Notes:

● The Federal Open Market Committee (FOMC) voted, by majority, to lower the federal funds rate target range by 25 basis points to 4.00%–4.25% at its September 16–17, 2025, meeting, marking the first policy rate adjustment since December 2024 after five consecutive holds.

● The Committee maintained its long-term objective of achieving maximum employment and 2% inflation, acknowledging recent labor market softening and continued tariff-driven price pressures.

● Policymakers expressed elevated concern about downside risks to growth, citing a stalling labor market, modest job creation, and an unemployment rate drifting up toward 4.4%. At the same time, inflation remains above target, with CPI at 3.2% and core inflation at 3.1% as of August 2025; higher energy and food prices, largely attributable to tariffs, continue to weigh on headline measures.

● Although economic activity expanded at a moderate pace in the third quarter, the growth outlook has weakened. Q3 GDP growth is estimated near 1.0% (annualized), with full-year 2025 GDP growth guidance revised to 1.2%, reflecting slowing household consumption and tighter financial conditions.

● In the updated Summary of Economic Projections, the unemployment rate is projected to average 4.5% for the year, with headline PCE inflation revised up slightly to 3.1% for 2025. The Committee anticipates core PCE inflation to remain stubborn, requiring sustained vigilance and a flexible approach to risk management.

● The Committee reiterated its data-dependent approach and openness to further adjustments should employment or inflation deviate meaningfully from current forecasts. Several members dissented, either advocating a larger 50-basis-point cut or preferring no adjustment at this meeting, revealing heightened divergence within the Committee.

● Balance sheet reduction continues at a measured pace. The monthly Treasury redemption cap remains at $5B and the agency MBS cap at $35B, as the Board aims to support orderly market conditions in the face of evolving global and domestic uncertainty.

● The next meeting is scheduled for 28 to 29 October 2025.

Next 24 Hours Bias

Weak Bullish

Gold (XAU)

Gold’s record-setting rally is backed by safe-haven flows and dovish monetary policy expectations, but extreme overbought signals suggest caution for traders as volatility could increase if economic or policy surprises occur. Gold prices have surged to record highs, trading just under $4,000 per ounce amid global economic and political uncertainty, strong safe-haven demand, and expectations of further U.S. interest rate cuts.Next 24 Hours BiasMedium Bullish

The Australian Dollar (AUD)

The Australian Dollar (AUD) is experiencing a mixture of stabilizing domestic factors and shifting global sentiment. The AUD/USD pair traded near 0.6593 on October 6, reflecting a marginal decline of 0.16% from the previous session and a 0.07% weakening over the past month. The currency remains range-bound, with technical resistance around 0.6610 and near-term targets above 0.6700 if global risk appetite holds.

Central Bank Notes:

● The RBA held its cash rate steady at 3.60% at its October meeting on 29–30 September 2025, marking a second consecutive pause after August’s 25 basis point cut. The move affirms the Bank’s data-dependent approach as inflation continues to trend within the target range.

● Inflation indicators remained stable through September, with headline CPI likely anchoring near 2.2%—comfortably within the 2–3% band. Insurance and housing costs remain sticky but are increasingly offset by moderation in discretionary goods.

● Trimmed mean inflation is estimated at around 2.8%, signaling underlying pressures remain contained. The Board continues to flag food and energy price volatility as short-term risks, though the broader disinflation narrative holds.

● Global conditions remain a source of uncertainty. U.S. policy expectations and uneven growth in China continue to weigh on commodities, even as trade disruptions have eased marginally since mid-year.

● Domestic growth shows resilience in the housing and services sectors, though manufacturing remains subdued. Household incomes have stabilized, but consumption remains only modest, capped by high borrowing costs.

● The labor market maintains relative tightness, though job growth has slowed notably since the first half of the year. Underutilization has ticked higher, but overall employment conditions remain supportive.

● Wage growth is plateauing, reflecting softer labour demand. Weak productivity continues to keep unit labour costs elevated, underscoring a medium-term concern highlighted repeatedly by the RBA.

● Household consumption prospects remain fragile. The combination of high rents and weak discretionary appetite suggests risks of a consumer-led slowdown in Q4 if confidence fails to rebound.

● The Board reiterated that subdued household spending poses risks to business sentiment and may dampen investment and job creation in the coming quarters.

● Monetary policy remains mildly restrictive. The RBA balanced confidence in inflation progress with caution around global and domestic demand risks, keeping further adjustments conditional on incoming data.

● The Bank reaffirmed its dual commitment to price stability and full employment, noting its readiness to act should conditions shift markedly.

● The next meeting is on 5 to 6 November 2025.

Next 24 Hours Bias

Weak Bullish

The Kiwi Dollar (NZD)

The New Zealand Dollar is likely to remain muted today, focused on upcoming policy action and further economic releases, with traders watching for signs of either a confirmed breakout or deeper downside if sentiment sours further. The NZD remains under pressure as markets widely expect the Reserve Bank of New Zealand (RBNZ) to cut rates at its next meeting, with consensus predicting a reduction from 3.00% to 2.75%. This expectation has weighed on the currency, as cuts typically diminish investor appeal.Central Bank Notes:

● The Monetary Policy Committee (MPC) agreed to cut the Official Cash Rate (OCR) by 25 basis points to 3.00% on 20 August 2025, marking a three-year low and continuing the easing cycle after July’s pause. The vote was split 4-2, with two members advocating a 50-basis-point cut, highlighting diverging views within the Committee.

● Policymakers indicated that significant uncertainty and a stalling economic recovery prompted this move, leaving the door open for further rate cuts later in the year, with a possible trough around 2.5% by December.

● Annual consumer price index inflation rose to 2.7% in the June quarter and is expected to reach 3% for the September quarter—at the upper end of the MPC’s 1 to 3% target band—but medium-term expectations remain anchored near the 2% midpoint.

● Despite the near-term uptick, headline inflation is projected to return toward 2% by mid-2026, as tradables inflation pressures ease and significant spare capacity continues to dampen domestic price momentum.

● Domestic financial conditions are broadly aligning with MPC expectations, as lower wholesale rates have translated into reduced borrowing costs for households. However, declining consumption and investment demand, higher unemployment, and subdued wage growth reflect ongoing economic slack.

● GDP growth stalled in the second quarter of 2025, contrasting with earlier projections. High-frequency indicators point to continued weakness driven by rising prices for essentials, weakening household savings, and constrained business lending.

● The MPC cautioned that ongoing global tariff uncertainties and policy shifts, especially recent changes in US trade regulations, could amplify market volatility and present both upside and downside risks to New Zealand’s recovery.

● Subject to medium-term inflation pressures continuing to ease as projected, the MPC signaled scope for further OCR cuts, possibly down to 2.5% by year-end, consistent with the latest Monetary Policy Statement outlook.

● The next meeting is on 22 October 2025.

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

The Japanese Yen is under strong selling pressure entering primarily driven by political developments with the new LDP leader Sanae Takaichi, who is seen as favoring fiscal stimulus and looser monetary policy. This has led to expectations that the Bank of Japan will hold back on interest rate hikes, contributing to yen depreciation against major currencies, especially the US dollar. The yen’s weakness is coupled with cautious bets on incoming monetary policy changes and a mixed outlook on USD/JPY movements with potential short-term rebounds but overall downward pressure in the coming days.Central Bank Notes:

● The Policy Board of the Bank of Japan decided on 17 September, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:

● The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.

● The BOJ will continue its gradual reduction of monthly outright purchases of Japanese Government Bonds (JGBs). The scheduled amount of long-term government bond purchases remains unchanged from the prior decision, with a quarterly reduction pace of about ¥400 billion through March 2026 and about ¥200 billion per quarter from April to June 2026 onward, aiming for a purchase level near ¥2 trillion in January to March 2027.

● Japan’s economy continues to show a moderate recovery, with household consumption supported by rising incomes, although corporate activity has softened somewhat. Overseas economies remain on a moderate growth path, with the impact of global trade policies still weighing on Japan’s export and industrial production outlook.

● On the price front, the year-on-year rate of change in consumer prices (excluding fresh food) remains in the mid-3% range. Inflationary pressures remain broad-based, with persistent cost-push factors in food and energy, alongside solid wage pass-through. However, input cost pressures from past import surges are showing early signs of easing.

● Short-term inflation momentum may moderate as cost-push effects diminish, though rent increases and service-related price gains tied to labor shortages are likely to provide support. Inflation expectations among firms and households continue a gradual upward drift.

● Looking ahead, the economy is projected to grow at a slower-than-trend pace in the near term due to external demand softness and cautious corporate investment plans. However, accommodative financial conditions and steady increases in real labor income are expected to underpin domestic demand.

● In the medium term, as overseas economies recover and global trade stabilizes, Japan’s growth potential is likely to improve. With persistent labor market tightness and rising medium- to long-term inflation expectations, core inflation is projected to remain on a gradual upward trend, converging toward the 2% price stability target in the latter half of the projection horizon.

● The next meeting is scheduled for 30 to 31 October 2025.

Next 24 Hours Bias

Strong Bearish

Oil

The latest developments for the oil market on Tuesday, October 7, 2025, revolve around OPEC+ announcing a modest increase in oil production by 137,000 barrels per day starting in November, the same increase as in October. This cautious move helped oil prices rise about 1-1.5% on Monday after some concerns over a potential supply glut. Brent crude oil was trading around $65.30 per barrel, and U.S. West Texas Intermediate crude around $61.59 per barrel.Next 24 Hours BiasWeak Bullish

Source: IC Markets

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Samantha Luan

Economic

Forex

Blizzard traps at least 550 trekkers near Everest in Tibet
Since Sunday, about 350 hikers have been led to safety
Snowstorms also hit Xinjiang, Qinghai, Gansu in western China

Efforts to evacuate more than 200 trekkers still stranded near the eastern face of Mount Everest in Tibet are expected to wrap up on Tuesday, a source familiar with the situation said, after snowstorms tore across western China.Outdoor enthusiasts have flocked to China's rugged interior since an eight-day holiday began on October 1, but a sudden blizzard over the weekend caught offguard hundreds of hikers hoping to catch a glimpse of Everest's Kangshung face.Their evacuation, which began on Monday, should be completed by Tuesday, said the source, who spoke on condition of anonymity in the absence of authorisation to speak to media on the matter. Tibet's regional government had no immediate comment.

Snow fell through Saturday in the Karma valley at an average altitude of 4,200 m (13,800 feet). On Sunday, rescuers guided to safety some 350 other hikers stranded in Tibet's remote Karma valley."Thankfully, some people ahead of us were breaking trail, leaving footprints we could follow - that made it a little easier," said Eric Wen, 41, adding that he trudged through 19 km (12 miles), most of it heavy snow, to leave the valley.

"Otherwise, it would've been impossible for us to make it out on our own."Regional authorities helped Wen and others on his expedition reach the Tibetan capital of Lhasa by Monday.First explored by Western travellers a century ago, the valley is relatively pristine. In contrast to the arid north face of the world's highest mountain, it is swathed in lush vegetation and untouched alpine forests fed by glacier melt.

North of Tibet, one trekker died of hypothermia and acute mountain sickness after being stranded by snowstorms on Sunday in a gully in the Qilian Mountains on the border of the western provinces of Qinghai and Gansu.By Monday evening, 213 in the Qilian area were pulled to safety, China Central Television (CCTV) said on Tuesday.On Tuesday, authorities further west in Xinjiang suspended hiking and camping in the lake district of Kanas in the Altai mountains.

On Sunday, police patrolling the area had encountered a group of 16 hikers, one of whom, showing symptoms of hypothermia and unable to move, was taken to hospital and is now in stable condition, CCTV said.Police have so far convinced more than 300 hikers heading for the area to turn back. On Tuesday, the broadcaster said highways had been cleared of dangerous ice and snow that had blanketed them over the weekend, stranding tourist vehicles.

Source: Reuters

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Blue River

Forex

Economic

Technical Analysis

As the USD/JPY chart shows, the Japanese yen has weakened sharply at the start of this week. Trading opened with a bullish gap, and today the exchange rate has risen to ¥150.65 per US dollar.

The yen’s decline followed the recent election, during which Japan’s ruling Liberal Democratic Party elected Sanae Takaichi as its new leader, paving the way for her to become the next prime minister. According to Reuters, Takaichi supports the late former Prime Minister Shinzo Abe’s “Abenomics” strategy, which focuses on stimulating the economy through aggressive spending and ultra-loose monetary policy.

Technical Analysis of the USD/JPY Chart

The political factor has led to a sequence of higher highs and higher lows (A→B→C→D) on the chart – and it is already evident that the next peak, E, will form above the previous one. This suggests that the USD/JPY market has entered an upward trend following a flat phase that was particularly pronounced in August.

At the same time:
→ The A low has a long lower shadow, and the D low shows signs of a double-bottom pattern, indicating strong demand.
→ The ¥149 level may serve as support going forward, marking the edge of the gap.
→ The price has broken above the key psychological level of ¥150 per dollar.
→ These reversal points justify constructing an ascending channel (shown in blue).

The chart highlights the dominance of demand, as the price remains:
→ In the upper half of the channel;
→ Above a curved support line – trajectories of this kind often appear after strong market impulses.

Given the above, it is reasonable to assume that:
→ The USD/JPY rate may continue its upward movement;
→ However, bullish momentum is weakening, as suggested by the potential bearish divergence on the RSI indicator.

It is worth noting that in February and March, the price reversed several times near ¥151 per dollar, which may act as significant resistance – adding weight to the possibility of a corrective move in USD/JPY, perhaps towards the median of the current channel.