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As painfully contrarian as ever here on triple witching day.

Posted on: Sep 20 2025

The market is in a fine mood, but the time frame just after the Fed starts a rate cut cycle often fraught with danger.

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Today’s Links

An auspicious time to be tactically bearish? Here is a comment spotted on Le Shrub’s substack pointing out that market corrections not long after the Fed starts cutting cycles are quite common. Don’t forget even further back when Greenspan did the surprise inter-meeting 50-bp cut on January 2, 2001. Very different setup then, of course, the market had been cratering for months into that rate cut. It did managed to spark a rally, if one that peaked out 16 trading days later before more brutal drawdowns ensued.

The eastern border with Russia is hardening Poland has closed its border to rail traffic indefinitely, disrupting tens of billions of euros of imports into the Eurozone from China.

What if that expensive AI gear is short-lived already does not age well in ROIC terms… Hyperscaler hangover risk. All of that AI data center capital spend is not only expensive, but needs to pay for itself very quickly - those rapid writedowns on expenditures are expensive for hyperscaler balance sheets.

Today in silly, but funny AI images. Apparently, making photorealistic AI images of famous people (odd combinations of famous people, to be specific) standing in a grocery store aisle is a thing. I nearly choked on my coffee when I saw this hilarious one. Dumb, yes. Funny, yes please.

Chart of the Day - Darden Restaurants (DRI)

Darden shares stumbled badly after reporting earnings. The bad news in much of the coverage was merely a modest miss in comparable sales numbers for its flagship Olive Garden restaurants - which rose 5.9% rather than the consensus 6.1%. It was also a deceleration from the 6.9% comparable sales growth of the prior quarter. But perhaps something else is afoot here. On the pod I mentioned that the company is rolling out out lower priced menu options at a lower price point at Olive Garden restaurants to see if it can increase traffic at its restaurants. Initial efforts are “encouraging” according to Darden. The Bloomberg article mentions that a stunning 44% of American adults order from kids menus to save money and possibly for smaller portions, also speculating on the possible impact of weight-loss drugs on sizes of appetites. Maybe that is adding a bit to the negative reaction here. Something to follow up on in the future. In general, if people are simply eating fewer calories, growth in any business related to sheer volumes being eaten and drunk will face strong headwinds - especially once the pill forms of GLP-1 medications become widely (and cheaply) available. The obesity treatment transformation is in its early days.

 

Source: Bloomberg

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JP 225 forecast: prices approach the upper boundary of the upward channel

Posted on: Sep 19 2025

The JP 225 index continued to rise within the upward channel and hit a new all-time high. The JP 225 forecast for today is positive.

JP 225 forecast: key trading points

  • Recent data: Japan’s balance of trade for August came in at -242.5 billion JPY
  • Market impact: this result carries a positive signal for the Japanese equity market

JP 225 fundamental analysis

Japan’s balance of trade for August 2025 stood at -242.5 billion JPY, better than the forecast of -513.6 billion JPY but weaker than the previous reading of -118.4 billion JPY. Although the trade deficit remained, the gap turned out nearly half as small as expected. This indicates stronger external economic conditions than anticipated and reduces concerns about pressure on the trade sector.

For the JP 225 index, the impact is mixed: on the upside, the result exceeded expectations, which supports confidence in Japanese companies’ export activity. On the downside, the deficit still widened compared to last month, reflecting reliance on energy and raw material imports.

Japan Balance of Trade: https://tradingeconomics.com/japan/balance-of-trade

JP 225 technical analysis

The JP 225 index resumed growth and hit a new all-time high. The support level is located at 44,500.0, with resistance at 44,980.0. The narrowing gap between resistance and support may act as an indirect indicator of a forthcoming directional move. Currently, the uptrend is highly likely to continue.

The following scenarios are considered for the JP 225 price forecast:

  • Pessimistic JP 225 scenario: a breakout below the 44,50 support level could push the index down to 43,960
  • Optimistic JP 225 scenario: a breakout above the 44,980 resistance level could propel the index to 45,730
JP 225 technical analysis for 18 September 2025

Summary

The data release is perceived by markets as a moderately positive signal: although the deficit widened compared to last month, the result was significantly better than forecasts. For the JP 225, this increases the likelihood of strengthening positions among export-oriented companies, while the energy sector remains under pressure. The next upside target for the JP 225 is 45,730.0.

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