Global financial markets experienced mixed results last week, with significant gains in precious metals like Silver, while major US stock indices saw slight declines. Key economic data released across the US, Germany, and the UK provided insights into underlying economic strength and potential slowdowns, influencing investor sentiment.
Key Takeaways
- Silver recorded a substantial gain of 6.87%, reaching a 14-year high.
- US stock indices, S&P 500 and NASDAQ 100, saw minor dips despite reaching new record highs earlier in the week.
- US GDP was revised upwards to 3.8%, indicating stronger economic activity.
- Concerns about US inflation and potential geopolitical events continue to influence market sentiment.
- The US Dollar showed increased strength, while the Canadian and New Zealand Dollars weakened.
Last Week's Market Performance and Economic Data
The week ending September 28 saw varied movements across asset classes. Precious metals stood out, with Silver achieving a remarkable 6.87% increase. Gold also rose by 0.36% after closing above $3,700 early in the week. In contrast, the S&P 500 Index declined by 0.31%, and the NASDAQ 100 Index fell by 0.39%.
These figures show a net gain of 6.53% across the selected trades, averaging 1.63% per asset. This performance was largely driven by the strong showing in the metals market.
Key Economic Data Highlights
- US Core PCE Price Index: Increased by 0.2% month-on-month, meeting expectations.
- US Final GDP: Revised upwards significantly to 3.8% from an initial 3.3%, boosting US stock markets.
- Flash Services & Manufacturing PMI: Data for the US, Germany, and the UK were mostly disappointing, except for German Services data. This contributed to concerns about an economic slowdown in G7 economies.
- Australian CPI: Inflation was slightly higher than anticipated at 3.0%.
- Swiss National Bank: Maintained its policy rate at zero and issued a warning about the impact of new US tariffs on Swiss non-financial services.
- US Unemployment Claims: Slightly better than expected, but with minimal market impact.
- Canadian GDP: Rose by 0.2% month-on-month, a tick higher than forecast, yet failed to support the weakening Canadian Dollar.
The primary takeaway from the week's data was the continued strength in the US economy, particularly evidenced by the upward revision of GDP. However, this strength was tempered by renewed fears. These concerns included persistent US inflation, potential geopolitical tensions, and ongoing discussions about stock market valuations.
Precious Metals and US Equities Reach Milestones
Despite the slight weekly decline, both the S&P 500 and NASDAQ 100 indices reached new all-time highs during the week. Gold also achieved a new record high. Silver's performance was particularly notable, reaching a 14-year high, trading above $47 and approaching its 2011 all-time peak.
The strong performance of Silver indicates significant investor interest. Its price action suggests a robust bullish trend, outperforming Gold and other precious metals.
"Silver really stands out as a strong performer, with the price trading above $47, very close to the all-time high in 2011," noted a market analyst.
Federal Reserve Outlook
Market expectations for Federal Reserve rate cuts have shifted. Currently, there is a 65% chance of two further rate cuts in 2025, down from 78% last week. Only one additional rate cut is anticipated in 2026. This implies the US interest rate is likely to remain around 3.50% more than a year from now, which could continue to support the US Dollar despite its long-term bearish trend.
Currency Market Dynamics
The US Dollar was the strongest major currency last week. This firmness can be attributed to the revised expectations regarding the pace of future rate cuts. The Canadian Dollar, in contrast, was the weakest major currency, despite its GDP data being slightly better than expected. The New Zealand Dollar also continued its decline, driven by fears of an impending recession in New Zealand.
New Zealand's quarterly GDP showed a significant decline of 0.9%, worse than the consensus forecast of 0.3%. This raises concerns about a potential recession, which could lead to a series of rapid interest rate cuts by the Reserve Bank of New Zealand.
Technical Analysis of Key Currency Pairs
- US Dollar Index: Exhibited a bullish candlestick, indicating the end of its long-term bearish trend. The price is now above its level from 13 weeks ago.
- EUR/USD: Declined last week, but a long-term bullish trend remains valid. The Euro has shown relative strength against other currencies recently.
- NZD/USD: Fell for the second consecutive week, printing bearish candlesticks. The price is now at a pivotal area that could offer support, but the New Zealand Dollar has a history of easy reversals.
- USD/CAD: The daily chart shows a higher low, forming a triple bottom, which could be a bullish signal. However, significant resistance levels near $1.4000 might limit further advances.
Outlook for the Week Ahead: September 29 – October 3
The coming week is expected to bring increased market activity, largely due to the release of key US employment data. The Volatility Index (VIX) remains at a low level, suggesting the long-term bullish trend in the stock market may continue.
The most important data points to watch, in order of likely impact, include:
- US Non-Farm Employment Change
- US JOLTS Job Openings
- US Average Hourly Earnings
- US ISM Services PMI
- US ISM Manufacturing PMI
- US Unemployment Rate
- US Unemployment Claims
- Reserve Bank of Australia Cash Rate & Rate Statement
- Swiss CPI (inflation)
- Chinese Manufacturing PMI
Public holidays will affect trading in China (Wednesday, Thursday, Friday), Germany (Friday), and Canada (Tuesday).
For the month of September 2025, a forecast for the EUR/USD currency pair indicated a rise in value if a daily close above $1.1806 occurred, a condition met two weeks prior. No specific weekly forecast was made for the previous week due to a lack of unusually large currency movements.
Volatility was lower last week, with only 15% of major pairs and crosses changing by more than 1%. Volatility is expected to remain similar or increase slightly in the upcoming week.
Investment Opportunities and Strategic Considerations
Given the current market conditions, with Silver's strong performance and Gold and major US stock indices near record highs, this period may offer good trading and investment opportunities. However, caution is advised, especially for new long positions in assets that have seen significant extended moves.
For instance, while Silver remains highly bullish, its rapid ascent suggests a smaller position size might be prudent for new entries to account for potential high-volatility pullbacks. Similarly, for Gold, waiting for a daily close above $3,800 is recommended for new long positions, potentially with a smaller size compared to Silver.
For US stock indices like the S&P 500 and NASDAQ 100, remaining bullish is a common stance, but waiting for a new record high closing price before initiating fresh long trades could be a strategic move. Betting against new record highs in the US stock market is generally considered risky unless specific underperforming stocks are targeted cautiously.
Best Trades for the Week Ahead
Based on current market analysis, the following trades are identified as having strong potential:
- Long of the S&P 500 Index: After a daily (New York) close above 6,703.
- Long of the NASDAQ 100 Index: After a daily (New York) close above 24,794.
- Long of Silver: Continued bullish outlook.
- Long of Gold: After a daily (New York) close above $3,800.
Investors should consider these insights in conjunction with their own risk assessments and market research.
