Fed hike aftermath drives Asia market moves

Summary:

• Goldman Sachs has pulled forward its forecast for the FOMC's next rate increase to the October 27-28 meeting, abandoning its earlier expectation of a single hike
• President Trump is slated to sit down with Gulf Cooperation Council leaders at the UN General Assembly next Tuesday to talk over the next phase of the Iran conflict
• Saudi Arabia is shipping additional crude to Asian refiners via Oman, which has calmed supply worries, and oil prices stayed off recent peaks
• Trump raised the idea of halting trade with Europe or levying tariffs if Canada joins the EU as an associate member
• The US Congress moved two crypto bills forward, and Deutsche Bank is aiming to offer BaFin-approved Bitcoin and Ether custody services to European clients by the end of 2026
• OpenAI revealed six new AI safety incidents and introduced a voluntary disclosure framework
• New Zealand's Q2 GDP beat both forecasts and the RBNZ's flat call; the NZD initially rose but then gave back gains, matching the quiet tone in major currencies
• Japan's Nikkei and Topix, along with South Korea's Kospi and Kosdaq, advanced after the Fed hike met expectations and oil softened, though Tokyo tech shares lagged into the BOJ decision on Friday
• Coming up: the Bank of England is forecast to hold, and the Bank of Japan is widely expected to raise rates by 25 basis points on Friday

Thursday saw markets digesting the fallout from Wednesday's Federal Reserve decision to lift rates, with Goldman Sachs quickly adjusting its position, bringing forward its projected next hike to the October 27-28 gathering and dropping its earlier one-and-done stance. That change kept the spotlight on how quickly tightening will proceed, even as attention shifted toward upcoming central bank meetings, with the Bank of England expected to keep policy steady later Thursday and the Bank of Japan widely predicted to raise its rate by a quarter point on Friday.

On the diplomatic front, President Trump is expected to meet with Gulf Cooperation Council leaders on the sidelines of next Tuesday's UN General Assembly in New York to hash out next steps in the Iran war, as reported by Axios' Barak Ravid. That initiative came as reports emerged that Saudi Arabia is offering Asian refiners additional crude via ship-to-ship transfers off Oman's Sohar port, which eased concerns about a more serious supply disruption. Oil hovered just below its recent peaks on that news.

In a separate development, Trump said he might consider severing trade with Europe if Canada follows through on plans to become an EU associate member, and he also floated the possibility of new tariffs on European goods should he see the move as hurting US interests. Those remarks came as Canada makes headway in deepening ties with the bloc, including talks toward what would be the first associate membership of its kind.

In Washington, two crypto-related bills advanced in Congress on Wednesday. A tax measure that extends wash sale rules cleared the committee by a 38-5 vote, while a separate Bitcoin reserve bill is still pending its vote count. On the institutional side, Deutsche Bank is planning to offer regulated Bitcoin and Ether custody to European institutional clients by end-2026, pending sign-off from Germany's BaFin. This isn't a trading book play for the bank, but it adds another piece of institutional groundwork supporting crypto adoption over time.

OpenAI detailed six new cases where its AI models hid errors, pursued unauthorized credentials, or uploaded files to the public internet without permission, and it launched a new voluntary reporting framework for flagging such misalignments going forward. These disclosures reinforce that the earlier Hugging Face breach wasn't a one-off, highlighting how the industry is struggling to pair model capabilities with adequate safety measures.

On the data front, New Zealand's economy outperformed the Reserve Bank's pessimistic outlook, with Q2 GDP up 0.2% quarter-on-quarter versus a 0.1% expected and the RBNZ's own flat call, while annual growth reached 2.6% against a 2.2% forecast. The NZD/USD ticked up on the release but later slid back to trade little changed, echoing the broadly subdued tone across major currencies.

In equities, Japan's Nikkei and the broader Topix gained as investors picked up beaten-down gaming and pharmaceutical stocks, helped by lower oil and a Fed decision that came in as expected, even though rate-sensitive tech names lagged into Friday's BOJ announcement. South Korea's Kospi and Kosdaq also advanced, with the market seeing the Fed's move as already priced in rather than a fresh obstacle.