US First Fed Rate Cut of 2025 and India’s GST Effect

In the week gone by, global stock markets posted modest gains, supported by monetary policy shifts and sectoral resilience, though persistent growth concerns kept sentiment cautious. The technology sector remained under scrutiny amid renewed tensions in US-China trade relations.

In this blog, we’ll know in detail what happened last week (September 15, 2025 to September 19, 2025) all across the globe.

US Fed Rate Cut

In the US, the S&P 500, Nasdaq, and Dow hit record highs after the Federal Reserve delivered its first rate cut since 2024, lowering rates by 25 bps to 4.00-4.25%. Chair Powell described this as “a risk-management cut,” citing a weakening labor market despite elevated inflation, while Fed projections suggested two more cuts this year, potentially taking rates down to 3.50%-3.75% by December.

Labor data reinforced the case for easing: initial claims rose to 240,000 versus 235,000 expected, with continuing claims at 1.88 million-the highest in months, signaling cooling from tariff-linked hiring pauses, though unemployment held steady at 4.2%.

In Europe, markets balanced US-EU trade uncertainty with central bank signals. The ECB held rates at 3.5% but upgraded its 2025 GDP forecast to 1.1% and inflation to 2.1%, a stance seen as relatively hawkish, which lifted the euro by 0.5% and supported bond yields.

Bank of England Kept Rates Unchanged

The Bank of England also left rates unchanged at 5.0% in a 6-3 vote split, reflecting debate over wage growth at 4.1%.

UK macro data pointed to cooling inflation-August CPI slowed to 1.9% year-on-year from 2.2%, unemployment stayed at 4.3%, and retail sales rose 0.6% month-on-month-signaling progress toward the 2% target while resilient consumer spending provided support, though wage-price risks lingered.

Japan Upgraded GDP Growth

In Japan, the Nikkei climbed to fresh records as the Bank of Japan kept rates steady at 0.25% and upgraded Q2 GDP growth to 1.2% from 1.0%, reinforcing expectations of prolonged accommodation alongside potential fiscal expansion.

Meanwhile, Chinese equities were cautious as August data underscored economic fragility, with industrial output rising 4.5% year-on-year and retail sales up 2.1%, both slightly above forecasts.

These marginal beats suggested stimulus measures were cushioning trade headwinds, lifting hopes of sustaining 5% growth into Q4, though property sector weakness remained a drag, capping optimism despite a late-week equity rebound.

India Ready for GST Push

Back home, domestic markets closed the week on a mildly positive note after alternating sessions of gains and consolidation. The upbeat tone was anchored by the US Federal Reserve’s first rate cut since December, a 25 bps reduction to 4.25%, which lifted global liquidity expectations and bolstered investor confidence in emerging markets, including India.

Optimism over India-US trade negotiations and the upcoming GST reforms, effective September 22, added further support, while the rupee’s relative stability against the dollar reinforced sentiment.

Sectorally, pharmaceuticals outperformed, emerging as key beneficiaries of the Fed’s easing, while broader sentiment remained constructive on the back of sustained domestic flows and rotational buying across banks, IT, and select cyclicals.

On the macro front, the domestic backdrop is turning increasingly favourable with a pro-growth policy mix-RBI’s recent rate cuts, GST tweaks, income tax relief, easier reserve requirements, and an S&P ratings upgrade-alongside expectations of double-digit corporate earnings growth next year.

Future Outlook

Despite over $15 billion in foreign outflows this year, it is expected that the combination of a new Fed easing cycle and strong policy support at home could reignite foreign investor inflows going forward.

So, open Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.