U.S. inflation was the main focus last week. September CPI rose 3.7% year over year, above the expected 3.6%, while PPI increased 6.3%, well above forecasts of 5.4%. Fed Chair Kevin Warsh gave little guidance on the October meeting. The chance of a rate hike stayed near 17%, little changed from the previous week, helping explain why the dollar did not rise against the yen.
Oil climbed to around $100 on Friday as attacks on Saudi infrastructure and shipping near the Strait of Hormuz increased. Concerns about possible U.S. strikes against Iran over the weekend also pushed prices higher. Meanwhile, UK GDP grew 0.1% in August, beating forecasts of a 0.1% fall and supporting the pound.
The Nasdaq 100 fell more than 4%, its biggest weekly drop since April 2025, as investors questioned whether heavy AI spending would pay off. Unconfirmed rumors of large losses at an AI-focused fund added to concerns. The Dow rose as investors moved toward more established companies. Japan’s Nikkei fell more than 5%, led by losses in AI and chip shares, while high U.S. inflation also weighed on confidence.
Markets This Week
U.S. Stocks
The Dow continued its recent recovery as investors moved away from technology stocks and looked for other places to invest. Possible U.S. rate hikes already appear to be reflected in prices, helping the market hold its gains. The 10-day moving average has turned higher and is now providing support. With few major economic reports this week, look to buy on dips near this average while the short-term trend remains upward. Resistance is at 52,000, 52,700, 53,000, 53,750, 54,000 and 54,500. Support is seen at 51,000, 50,000 and 49,000.
Japanese Stocks
The Nikkei fell sharply as AI-related stocks suffered heavy losses. High WTI oil prices also raised concerns that inflation could weaken consumer spending and hurt Japan’s economy. After the sharp fall, the market looks oversold in the short term. Look for short-term buying opportunities early this week, as long as the index holds above 63,000. Resistance is at 66,000, 67,000, 68,000, 69,000 and 70,000. Support is at 63,000, 62,000, 60,500 and 60,000.
USD/JPY
USDJPY stayed close to the key 158 level. It briefly tested 159 after U.S. inflation came in higher than expected, but the rise did not last. There is talk that falling AI stocks are weighing on the dollar as investors take less risk and reduce investment in the U.S. With the recent short-term uptrend now broken, trading the range around 158 looks best this week. Resistance is at 158.50, 159.00 and 160.00 while support is at 157.50, 157.00, 156.00, 155.00, 153.00, 152.50 and 152.00.
Gold
Gold tested recent lows midweek after U.S. CPI came in higher than expected. Support held as the chance of a U.S. rate hike at the next Fed meeting remained low. The recovery from support near this month’s earlier lows is a positive sign. However, the 10-day moving average is moving sideways, suggesting a large rise is unlikely in the short term. Resistance is at $4,400, $4,220, $4,250, $4,400, $4,500 and $4,600, while support is at $4,150, $4,125, $4,100 and $4,065.
Crude Oil
WTI crude oil ended the week strongly, touching $100 again as buyers reacted to possible U.S. military strikes against Iran over the weekend and continued supply concerns. The uptrend looks strong, but buying near $100 may be difficult after the sharp rise. In the short term, look for support around $95 as a possible buying opportunity. Resistance is at $100, $105, $110 and $115, while support is at $95, $90, $85, $80, $75, and $67.50.
Bitcoin
Bitcoin had a quiet week as concerns about possible U.S. rate hikes and falling AI stocks made investors more cautious. Support at $80,000 held again, suggesting the medium-term outlook remains positive. Range trading looks best in the short term, while buying on dips may offer opportunities over the medium term. Resistance is at $88,000, $90,000, $95,000 and $100,000, while support is at $80,000, $75,000, $65,000, $62,000, $60,000, $55,000 and $50,000.
This Week’s Focus
- Monday: China GDP
- Tuesday: U.K. Unemployment Rate, E.U. ZEW Economic Sentiment, U.S. Housing Starts and Pending Home Sales
- Wednesday: Japan Trade Balance, U.K. CPI
- Thursday: U.S. US Leading Index
- Friday: Japan National Core CPI and S&P Global Services PMI, U.K. Retail Sales, E.U. HCOB Eurozone Composite PMI, U.K. S&P Global Services PMI, U.S. S&P Global Manufacturing PMI and Michigan Consumer Sentiment
- There are few major economic reports this week, so markets will likely focus on U.S. inflation worries and WTI oil prices. Higher oil prices could add to inflation concerns and change expectations for U.S. interest rates. Traders will also watch AI stocks to see if last week’s falls continue. More selling could make investors cautious and lead to losses in other markets.
