Japan’s Nikkei 225 hit a new high, while other Asian markets had mixed results. Investors are paying close attention to the European Central Bank’s upcoming decision and the US Consumer Price Index release. In central bank news, Christian Hawkesby, Governor of New Zealand’s Reserve Bank, confirmed that the Official Cash Rate is expected to drop by 50 basis points by the year’s end. In Japan, wholesale inflation rose to 2.7% compared to last year, mainly due to soaring food prices. This situation puts pressure on the Bank of Japan to take further action.

Asia Pacific Market Performance

In the Asia-Pacific region, the Nikkei 225 rose by 1.14%. Meanwhile, Hong Kong’s Hang Seng fell by 0.34%, the Shanghai Composite gained 0.92%, and Australia’s S&P/ASX 200 dipped by 0.34%. In the United States, conservative activist Charlie Kirk has passed away, and his killer remains unidentified. President Trump released a statement about the tragedy, highlighting the importance of American values. Kirk leaves behind his wife and two young children. The ongoing political turmoil in the United States may lead to increased market volatility. The assassination of a key political figure brings uncertainty not felt since early 2021, which could overshadow today’s CPI data. It may be wise to consider options for protection through VIX calls or puts on the S&P 500, as implied volatility for October options has already risen by 15% in overnight trading.

Economic Indicators

In Japan, even though the Nikkei’s record-breaking performance is positive, the rising wholesale inflation rate of 2.7% serves as a warning for the equity markets. This data makes it more likely that the Bank of Japan will raise rates again before the year ends, a move that could strengthen the yen and slow down the stock rally. The shift away from negative interest rates that began in 2024 appears to be ongoing. The Reserve Bank of New Zealand’s guidance indicates a clear difference in monetary policy. With Governor Hawkesby signaling a rate cut of 50 basis points ahead, the New Zealand dollar may struggle against currencies from central banks that are taking a more aggressive stance. Shorting the NZD/JPY pair could be a smart strategy, aligning with the RBNZ’s softer approach and the potential tightening from the Bank of Japan. The varied performance in China and Australia points to a lack of consensus in the region. Shanghai’s gains likely come from specific domestic stimulus efforts aimed at supporting the property sector. Therefore, cautious investing in Asian indices is advisable, with a focus on targeted, country-specific opportunities instead. Create your live VT Markets account and start trading now.

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