Markets Today: Alibaba (BABA) Surge, Japan Manufacturing Shrinks, FTSE Eyes Break of 200-day MA

[Ben Graham]

Asia Market Wrap - Alibaba Inspires Recovery

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Asian stocks recovered some of their losses after Chinese technology companies saw a boost. This was sparked by Alibaba Group Holding Ltd., which announced its plan to increase investments in artificial intelligence (AI).

Source: LSEG

Chinese semiconductor stocks also joined the rally. This was a result of two key developments: Morgan Stanley upgraded its outlook on the sector, and Huawei Technologies Co. revealed its plans to compete with and eventually surpass Nvidia Corp. in the AI chip market.

In Hong Kong, where trading was slow due to a major typhoon, Alibaba's shares surged by as much as 7.2%, reaching their highest level in nearly four years. The company's CEO, Eddie Wu, stated that he believes global investment in AI is accelerating rapidly and that Alibaba needs to keep up. He added that the company plans to increase its spending on AI infrastructure beyond its previous commitment of over 380 billion yuan (about $53 billion) over three years.

Overall, the MSCI gauge of Asian shares was down by only 0.1%, an improvement from its earlier, lower position. There was no cash trading of U.S. government bonds because Tokyo was closed for a public holiday.

Japan PMI Shrinks Most in the Last 6 Months

According to preliminary data, Japan's manufacturing sector continued to shrink in September, with the S&P Global Japan Manufacturing PMI dropping to 48.4. This was a worse-than-expected result, as analysts had predicted a reading of 50.2.

A score below 50 indicates that a sector is contracting, and this marks the 14th time in the last 15 months that Japanese factory activity has shrunk. This recent decline was the sharpest since March, with the rate of new orders and overall production falling at the fastest pace in months. Some companies reported that their clients were being cautious with their inventory due to difficult market conditions, which contributed to the drop in new orders. Foreign sales also continued to fall.

On the cost side, expenses for manufacturers increased due to higher prices for labor, raw materials, and fuel. As a result, companies continued to raise their own prices. Looking forward, the mood among businesses has weakened.

European Open - Defence Stocks Attempt to Limit Downside

On Wednesday, European stock markets fell, following a decline on Wall Street. Financial and bank stocks were the main drivers of the losses, although gains in some defense-related stocks helped to limit the overall drop.

The main pan-European STOXX 600 index was down 0.5%, and most regional markets also ticked lower, with the Italian stock market experiencing the largest decline.

Major banks saw their shares fall by 0.9%, with well-known banks like Deutsche Bank, Barclays, Societe Generale, and Sydbank all dropping by more than 1% each. The financial services sub-index also dipped by 1.1%.

However, an index that tracks defense stocks gained 0.8%. This was a reaction to U.S. President Donald Trump's comment that he believes Ukraine can retake all of its land occupied by Russia and that Kyiv should act now.

On the FX front, the US dollar slightly recovered on Wednesday from its lowest level in nearly a week. This shift came after Federal Reserve Chair Jerome Powell gave a cautious speech about the possibility of more interest rate cuts. Despite his remarks, traders are still betting that the Fed will cut rates two more times this year.

The US dollar index, which measures the dollar's value against six other major currencies, rose by 0.1%. This move helped the dollar regain some ground after it had dropped for two straight days, hitting its lowest point since last Thursday.

In Australia, the dollar strengthened after new data showed that consumer inflation was higher than expected. This release comes less than a week before the Reserve Bank of Australia (RBA) is scheduled to make its next policy decision.

Meanwhile, the New Zealand dollar remained stable following the appointment of a new head for its central bank.

The euro and the British pound both lost 0.1% against the dollar. The Australian dollar, however, gained 0.3% and reversed its earlier losses. This was a direct result of the consumer price index (CPI) rising by 3% in August compared to a year ago, which was an increase from July's 2.8% and slightly above the forecasted 2.9%.

Read More: AUD/USD: Bullish reversal towards 0.6700 major resistance as Australia's monthly CPI rose to a 13-month high

Currency Power Balance

Source: OANDA Labs

In oil markets, the price of Brent crude oil rose slightly to $67.71 per barrel. This gain came after a deal to resume oil exports from Iraq's Kurdistan region stalled, which calmed some investor fears that the new supply would add to a global oversupply problem.

Meanwhile, gold's price was also up slightly, continuing its momentum after hitting a record high on Tuesday. The price of spot gold was last at $3,773.36 per ounce.

Economic Calendar and Final Thoughts

Looking at the economic calendar, the European session will bring German IFO and Swiss Zew data before markets eye the US session.

The US session is also scheduled to be a quiet one with Fed policymakers speaking a highlight. Beyond this, developments around Russia/Ukraine and a meeting between Iranian and European leaders around the snapback mechanism could stoke volatility.

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

Chart of the Day - FTSE/UK100 Index

From a technical standpoint, the FTSE 100 is eyeing a break below the 200-day MA which could lead to further downside.

This of course is not given after a most recent candle close below the 200-day MA was followed by a bullish rally to the upside.

Support also rests just below the current price at 9180 before the9155 and 9100 handles come into focus.

Looking at the upside, there is now a key confluence area around the 9218-9234 range. A break above this will face resistance at 9280, which is yesterday's swing high.

FTSE 100 Four-Hour Chart, September 24. 2025

Source: TradingView.com (click to enlarge)

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