Trading update : 17 September 2025

Rate cut fever is turning up the temperature on US markets, which continued to notch up fresh record highs. The S&P 500 smashed through 6,600 while Alphabet joined the $3 trillion club, all riding the wave of Fed rate cut expectations and China trade optimism. But beneath the euphoria, warning bells are ringing. JP Morgan’s strategists called markets “frothy” and questioned whether easing now could backfire. China is also wielding Nvidia as a trade weapon, while Moody’s delivers a sobering reality check on SA’s growth prospects.

Record run

Records continue to tumble as the US gears up for a rate cut and hopes of a tariff compromise with China boost sentiment. The S&P 500 Index (VOO-NASQ) and the Nasdaq 100 Index both rose to all-time highs, with the S&P 500 topping 6,600, as a key measure of bond market volatility fell to the lowest since 2022. Tesla (TSLA-NASQ) erased its 2025 drop as CEO Elon Musk purchased $1 billion in stock, and Alphabet (GOOG-NASQ) hit a $3 trillion market cap. 

Frothy markets

While widely welcomed by the market, the Federal Reserve’s expected interest rate cut will increase risks for stocks and the dollar if it’s perceived to be driven by political pressure, according to David Kelly, Chief Global Strategist and Head of the Global Market Insights Strategy Team for J.P. Morgan Asset Management. Quoted by Bloomberg, Kelly said that “markets are frothy” and easing now is more likely to weaken demand than increase it and will “ultimately be negative for stocks, bonds and the dollar”. Kelly sees little evidence in the Fed’s own forecasts for growth and inflation to justify the decision to cut interest rates, and questions why the Fed should cut at all, given their outlook.

Balanced risks

According to comments by Governing Council member Martin Kocher carried by Bloomberg, inflation risks are “quite balanced” and the European Central Bank (ECB) is ready to respond to changes in economic data. The new Austrian central bank chief replaced arch-hawk Robert Holzmann.

Diverging and converging

Global inflation is diverging, but the direction of interest rates is converging, down. Bloomberg explained that in the US, inflation remains above target, but the Fed is still poised to cut this week. Euro-area inflation is near target, with a rate cut likely in December. China’s deflationary pressures may prompt its central bank to act soon. Bloomberg Economics’ forecasts show global inflation continuing to slow to 3% in 4Q25, about in line with the pre-pandemic pace. That would be down from a GDP-weighted average of 3.4% in 2Q25 and less than half the 6.8% rate seen as recently as 2Q24. Advanced economies are expected to see inflation hover around 2.5% through year-end. That’s slightly above most central bank targets, while still down from 2.8% a year ago.

Bargaining chip 

Chinese semiconductor stocks rose after Beijing ruled that Nvidia (NVDA-NASQ) violated anti-monopoly laws with a high-profile 2020 deal. Quoting Vey-Sern Ling, MD at Union Bancaire Privee, Bloomberg explained that, apart from the primary purpose of using Nvidia as a pawn in US-China trade negotiations, any action from China on Nvidia can be interpreted as an effort to promote localisation and self-sufficiency in chip tech. The deal becomes a bargaining chip for trade negotiations between China and the US, giving the timing. The reality is that Nvidia chips are still much more advanced than anything the Chinese can make themselves, so they would clearly benefit from having access, but would like to avoid looking desperate.

Risk-on EM flows

Traders ploughed cash into exchange-traded funds (ETFs) that buy emerging market stocks last week amid increased appetite for risk ahead of the US Federal Reserve’s highly anticipated rate decision. According to Bloomberg, fund flows into US-listed emerging market ETFs totalled $2.17 billion in the week ended Sept. 12, compared with $1.02 billion the week before. The MSCI Emerging Markets ETF (EEM-NASQ) is trading at its highest since 2021, with China being a big beneficiary as the country is at the epicentre of the AI development boom.

Copper pact

Anglo American Plc (AALL-TRQX) will sign a definitive agreement with Chile’s state copper company Codelco to jointly develop their adjacent mines near Santiago in a bid to boost production without major investments, reports Bloomberg. The two companies will join forces at the Los Bronces and Andina mines. When announcing the initial agreement in February, Anglo and Codelco said they hoped to squeeze out an additional 120,000 tons a year and at least $5 billion in value to be shared equally.

Split decision

Naspers (NPN-JSE) is busy finalising the proposed subdivision of its shares approved at the AGM of shareholders in August 2025. From 6 October 2025, every Naspers shareholder will own five Naspers shares for every one they currently hold.

Stymied growth

Ratings agency Moody’s has warned that South Africa is mired in a negative cycle, with subdued growth and weak investor confidence, which should push the South African Reserve Bank (SARB) to keep interest rates high to attract capital inflows. Those high rates, in turn, stifle domestic investment, further weighing on growth and perpetuating the conditions that keep borrowing costs elevated.