Kapital Market Brief | September 10 2025

Top news

·     In China, consumer inflation slipped back into negative territory in August, while producer price deflation showed signs of moderation.

·     In the United States, producer prices came in lower than expected in August 2025.

·     A U.S. court temporarily halted the dismissal of Federal Reserve Governor Lisa Cook, ordered by Trump, in a case that could redefine the central bank’s autonomy.

·     U.S. Treasury Secretary Scott Bessent urged the Federal Reserve to adjust its strategy following weaker labor market data, warning of the risks of maintaining overly restrictive conditions.

·     President Trump’s administration announced stricter rules for drug advertising, requiring greater transparency on costs and side effects, aiming to protect consumers.

Economic outlook

In China, consumer inflation slipped back into negative territory in August, while producer price deflation showed signs of moderation. In the eighth month of the year, annual consumer inflation stood at -0.4%, the sharpest drop in six months, after holding steady at 0.0% in July. On a monthly basis, the CPI was flat, following a 0.4% increase the previous month. Meanwhile, producer inflation fell by -2.9% y/y in August, less severe than the -3.6% decline in July, suggesting that official measures to curb price competition in industrial sectors are starting to take effect. However, the indicator has remained negative for nearly three consecutive years, reflecting persistent weakness in domestic demand and the impact of slowing exports amid rising trade tensions with the United States. Overall, while moderation in producer inflation suggests an initial easing of industrial deflationary pressures, the drop in consumer inflation confirms that China’s economy continues to face weak demand risks, keeping the door open for additional consumption support in the coming months.

In the United States, producer prices came in lower than expected in August 2025. The Bureau of Labor Statistics (BLS) reported that producer inflation fell -0.1% m/m (seasonally adjusted), after a 0.7% m/m increase in July and against consensus expectations of a 0.3% m/m gain. In detail, final demand services prices fell -0.2% m/m in August, while goods prices inched up 0.1% m/m. Core PPI, which excludes food, energy, and trade services, rose 0.3% m/m (seasonally adjusted). On a 12-month basis, headline PPI inflation stood at 2.6%, while the core measure was at 2.8%.

Markets and stocks

U.S. equity futures traded higher this morning after August’s PPI report showed an unexpected decline, reinforcing expectations of a Fed rate cut. At the same time, demand for tech stocks remained strong, especially after Oracle’s surprise announcement of growth in its AI-driven cloud business. In Europe, market sentiment was supported by corporate results. Inditex reported weaker-than-expected Q2 sales but highlighted a strong recovery with the launch of its Fall/Winter collection, improving forward outlook. In Asia, Japanese and South Korean markets hit highs, while China’s inflation data confirmed weak consumption, fueling expectations of further policy support from Beijing.

In commodities, oil prices advanced after Israel targeted Hamas leaders in Qatar and the U.S. called for sanctions on Russian crude buyers. However, oversupply concerns—amid higher U.S. inventories and rising OPEC production—capped gains. Gold, meanwhile, held near record levels, supported by expectations of Fed rate cuts and the downward revision of U.S. employment data.

In fixed income, Treasury yields remained contained, with the 10-year yield at 4.07% and the 2-year yield at 3.53%.

Corporate news

Oracle reported quarterly results with revenue and earnings below expectations, though it highlighted strong growth in its multicloud database business, driven by AI infrastructure demand.

GameStop posted quarterly earnings of $0.25 per share and sales of $972 million, both above expectations. The company also revealed it holds a bitcoin portfolio valued at more than $500 million.

Novo Nordisk announced the elimination of 9,000 jobs, equivalent to 11.5% of its global workforce, as part of a plan to streamline its organization and reallocate resources toward its obesity treatment business.