Markets Today: UK Inflation Sticky, Gold Prices Retreat, FTSE 100 Hovers at 200-Day MA Ahead of FOMC Decision

[Ben Graham]

Asia Market Wrap - Asian Shares Take a Breath After Record Rally

Most Read: Fed (FOMC) Meeting Preview: 25 bps Cut Appears Baked In, Forward Guidance Is Key. Implications for the DXY, Dow Jones and S&P 500

Asian stocks had a mixed day, moving between small gains and losses. This happened as investors waited for the US Federal Reserve's policy decision, with many expecting the central bank to cut interest rates for the first time this year.

The MSCI Asia Pacific Index initially fell but then recovered to gain 0.1%. In Hong Kong, Chinese technology stocks soared to their highest level in four years, driven by growing excitement and demand related to artificial intelligence.

On Wednesday, China's main stock indexes ended the day higher. The blue-chip CSI300 Index rose by 0.6%, and the Shanghai Composite Index gained 0.4%. Hong Kong's Hang Seng Index also did well, climbing 1.8%.

Technology companies listed in Hong Kong saw a big jump of 4.2%, following a rally in their U.S. counterparts. Baidu's shares surged by almost 16% to their highest price since October 2023. Alibaba's shares also went up by 5%, reaching their strongest point since November 2022.

However, stocks of companies related to consumer spending didn't react much, even after China announced new measures on Tuesday to boost spending on services.

UK Inflation Remains Sticky, Holds at 3.8%

Based on official figures, British inflation stayed at 3.8% in August, which is the highest rate among major developed economies.

Source: ONS

This high number suggests to investors that the Bank of England is unlikely to cut interest rates again this year. I however think we could still get another rate cut as wage growth continues to cool and service inflation data has seen some progress. Time will tell.

Inflation for transportation slowed down, mostly because airfare prices dropped. Price increases were also lower for services, recreation and culture, and clothing and footwear, while housing and utilities prices stayed steady.

However, the prices of motor fuels had the biggest impact, pushing inflation up. Prices for restaurants and hotels, food (reaching its highest level since January 2024), and furniture also increased at a faster rate.

On a monthly basis, consumer prices rose by 0.3%, which was more than the previous month and matched predictions. On an annual basis, core inflation, which leaves out food and energy costs, slightly decreased from 3.8% to 3.6%.

The news from the Office for National Statistics (ONS) did not cause much change in the value of the British pound or in British interest rate futures.

European Open - European Shares Edge Higher

On Wednesday, European stocks went up slightly, recovering from their losses in the previous session. This happened as investors were waiting for the US Federal Reserve's decision on monetary policy later in the day.

The overall European STOXX 600 index rose by 0.1% to 551.56 points, after hitting a one-week low on Tuesday. Technology stocks led the gains, with shares of SAP and Prosus both increasing by about 2%.

Later, investors around the world will focus on the results of the Federal Reserve's two-day meeting. Markets are largely expecting the Fed to cut interest rates by a quarter of a percent to address the weakening US job market. However, investors will be paying especially close attention to what Chairman Jerome Powell says about the future policy plans.

In other company news, PostNL's shares rose by 7.5% after the company announced a new strategy, including dividing its Parcels business into two new segments, E-commerce and Platforms, starting in January 2026. Novo Nordisk's shares also increased by 1.8% after the brokerage firm Berenberg upgraded its rating on the Danish drugmaker from "Hold" to "Buy."

On the FX front, The euro dropped by 0.25% to 1.1838, after reaching a four-year high of 1.18785 on Tuesday.

The British pound fell by 0.13% to 1.3630, which is still close to its highest point in two and a half months, following British inflation data that met expectations. The U.S. dollar index, which compares the dollar to six other major currencies, was up 0.20% at 96.84, after hitting its lowest level since early July on Tuesday.

The index is down almost 11% this year, and investors are preparing for more losses after a recent pause. The Swiss franc eased by 0.22% to 0.7875 per US dollar, remaining near the decade-high it reached in the previous session. The Australian dollar hit an 11-month high and was last at 0.6674.

The Japanese yen strengthened to 146.22 per dollar, its strongest in a month. This happened ahead of the Bank of Japan's policy meeting on Friday, where the central bank is expected to keep rates unchanged. The yen was last down 0.10% at 146.63.

Currency Power Balance

Source: OANDA Labs

Oil prices went down slightly on Wednesday, after rising by more than 1% the day before. The ongoing political tensions around the world prevented prices from falling too far. Traders are also keeping a close eye on the US Federal Reserve, which is expected to cut interest rates later in the day.

Brent crude futures dropped by 33 cents, or 0.5%, to $68.14 per barrel, while US West Texas Intermediate crude futures fell by 32 cents, or 0.5%, to $64.20 per barrel.

For more information on Oil, please read WTI Oil Rallies 1% After Ukrainian Attacks on Russian Oil Facilities, Russia Sanction Calls Grow

Gold prices fell slightly on Wednesday. This was because the US dollar saw a small increase, and investors decided to sell their gold to secure the profits they made after gold reached a record high on Tuesday.

Spot gold fell by 0.5% to $3,671.61 per ounce, after hitting a record high of $3,702.95 the day before. US gold futures for December also dropped by 0.4% to $3,709.

For more information on Gold, read Gold (XAU/USD) Soars to Breach $3700/oz. FOMC Meeting Next, Will the Rally Continue?

Economic Data Releases and Final Thoughts

Looking at the economic calendar, the European session has had a busy morning thus far.

Markets attention will now turn to the US session where we will also get the Bank of Canada interest rate decision before the highly anticipated Federal Reserve decision and Fed Chair Powell speech.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Day - FTSE Index

From a technical standpoint, the FTSE has retreated and broken the bullish structure on the four-hour chart.

The four-hour candle close below the swing low at 9240 has seen a change in structure, which hints at further downside.

The index is now trading at the bottom end of the range which it broke earlier this week.

There is a possibility of a pullback though before the next leg low, with the swing high at 9285 now holding the key.

Before that though, resistance is being provided by the 100-day MA at 9236 and 9262 before that 9285 handle comes into focus.

Looking at support on the downside, immediate support rests at the 200-day MA at 9203 before the 9180 handle comes into focus.

FTSE 100 Four-Hour Chart, September 17. 2025

Source: TradingView.com (click to enlarge)

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