Markets Today: BoJ Deliver Hawkish Hold, UK Retail Sales Beat, DAX Prints Morningstar Candle Pattern. Trump-Xi Phone Call Ahead

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Asia Market Wrap - BoJ Deliver Hawkish Hold

Most Read: USD/JPY Technical: USD strength capped (again) below 148.95 range resistance, BoJ keeps rate hike hopes alive

A record-breaking global stock rally was slowed down after the Bank of Japan (BoJ) announced its intention to sell off its large holdings of exchange-traded funds (ETFs).

This decision negatively impacted Asian markets, causing the MSCI Asia Pacific Index to slip by 0.4% and the Nikkei-225 Stock Average to drop about 0.7%. These declines reversed earlier gains that had been fueled by four key U.S. stock benchmarks all closing at all-time highs in unison for the first time since November 2021.

Japanese stocks, in particular, saw their earlier gains erased after the BoJ revealed its plan to sell ETFs on a scale similar to its disposal of stocks bought from banks in the 2000s. The central bank's policy rate was, however, kept at 0.5% after a 7-2 vote.

Despite this, Asian shares were headed for a weekly gain.

Leading up to a phone call between President Donald Trump and his Chinese counterpart Xi Jinping, Chinese blue chips CSI300 saw a small increase of 0.6% while Hong Kong's Hang Seng experienced a slight dip of 0.1%.

Investors were carefully considering several key issues that could be discussed during the call. These included a potential deal regarding the popular social media app TikTok, Chinese tech giant Huawei's recent announcement about its chip plans, and an order from Beijing telling Chinese tech companies not to buy AI chips from Nvidia.

UK Retail Sales Beat Estimates

British retail sales grew by 0.5% in August 2025 compared to the previous month, which was the same rate of growth as July's revised figure. This was better than the expected 0.3% increase. The main drivers of this growth were strong sales at clothing stores, online retailers, and specialty food shops. Retailers noted that good weather was a major reason for the increased spending.

However, the overall growth was slightly held back by a 2% drop in car fuel sales, as the prices for petrol and diesel were higher.

Looking at a longer timeframe, sales over the three months leading up to August fell by only 0.1%, which is a much smaller decline than the 0.6% drop seen in the three months to July.

Compared to August of last year, sales were up 0.7%, but this was a slower rate of increase than the 1.8% rise in July. When looking at the three months compared to the same period in 2024, sales were up 0.8%, but they are still 2.1% below the levels seen before the pandemic.

Online sales also showed positive momentum, rising by 0.4% from the previous month and by 4.7% compared to the same time last year. This marked the seventh consecutive month of growth for online shopping.

Source: UK ONS

European Open - Shares Steady After Busy Week

European stock markets were quiet on Friday, and they are likely to end a busy week slightly down. This week included important decisions from major central banks, particularly the US Federal Reserve.

The main European stock index, the STOXX 600, was mostly unchanged at 554.89.

Technology stocks took a break from their recent rally, with companies like BE Semiconductor and ASML both seeing a drop of about 0.9%.

Despite earlier gains, the STOXX index is still heading for a small weekly loss. This is due to ongoing concerns about high levels of government debt in the region and the potential negative impact of US tariffs on company profits in the coming months.

In addition to the US Fed, the central bank of Norway also lowered its interest rates by 0.25%, while the Bank of England chose to keep its rates unchanged this week.

In company news, Stabilus, a supplier for the industrial and automotive sectors, saw its shares fall by 2.8% after it announced a plan to cut 450 jobs globally as part of a cost-saving effort.

Kuehne+Nagel shares dropped by 5.3% after Deutsche Bank lowered its rating on the Swiss logistics company from "Buy" to "Hold."

Finally, the UK's Close Brothers saw a 6.7% slide in its shares after the lender announced it would postpone the release of its preliminary 2025 financial results by one week.

On the FX front, On Friday, the Japanese yen strengthened against the U.S. dollar. This happened because, even though the Bank of Japan decided to keep interest rates unchanged, two of its board members voted in favor of a rate increase. At the same time, the central bank also announced plans to sell off its holdings of exchange-traded funds and real estate trusts.

Meanwhile, the euro weakened slightly, falling by 0.1% to $1.1773. It gave back some of its weekly gains after hundreds of thousands of people in France participated in protests against government spending cuts on Thursday.

The British pound dropped by 0.3% to $1.3512. This decline followed news that Britain's government borrowing had increased much more than official predictions, which are used to create the government's tax and spending budget. A day earlier, the Bank of England had kept its interest rates the same and decided to slow down the pace at which it sells off its government bonds.

The New Zealand dollar, also known as the kiwi, fell by 0.4% to $0.5861. This extended its losses after experiencing its largest one-day drop since April, following the release of disappointing economic growth data for the second quarter.

The offshore Chinese yuan was largely stable at 7.1111 per dollar, while the Australian dollar slipped by 0.3% to $0.6594.

Currency Power Balance

Source: OANDA Labs

On Friday, oil prices dropped slightly. This happened because of concerns that people in the United States might not be using as much fuel. These worries overshadowed the hope that the Federal Reserve's first interest rate cut of the year would lead to more economic activity and, therefore, more fuel consumption.

Specifically, the price of Brent crude oil futures fell by 17 cents to $67.27 per barrel, and U.S. West Texas Intermediate futures dropped by 19 cents to $63.38 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 remained unchanged on Friday as investors waited for more information about the future direction of U.S. monetary policy. This pause came after the Federal Reserve's recent decision to lower its interest rate by 0.25%, a move that did not fully satisfy investors who were hoping for more aggressive rate cuts in the coming months.

The price of spot gold was nearly flat at $3,646.29 per ounce. This is after the price had reached a record high of $3,707.40 just two days earlier on Wednesday.

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

Economic Calendar and Final Thoughts

Looking at the economic calendar, the European session is a quiet one.

The main event for the day will be a potential call between Donald Trump and Xi Jinping which may shed further light on US-China relations.

Beyond that we will also hear the first comments from new Federal Reserve policymaker Stephen Miran which could stoke some volatility.

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

Chart of the Day - DAX Index

From a technical standpoint, the DAX bounced yesterday printing a bullish engulfing daily candle close.

This also resulted in a morningstar candlestick pattern being formed which hints at further upside.

There is significant resistance just up ahead with the 20,50 and 100-day MAs all resting within a 200 point range between the 23800 and 24032 mark.

The DAX will need to gain acceptance above these levels if the rally higher is to continue.

The RSI period-14 is also attempting to break above the 50 level which would signal a shift in momentum in favor of bulls. A rejection here could be a sign that bulls are not yet in control and could lead to a retest of the recent lows at 23284 and potentially support at 23471.

DAX Index Daily Chart, September 19. 2025

Source: TradingView.com (click to enlarge)

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