The Pinnacle: October 2025
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Resilient Markets: Global Equities Advance as Growth Outlook Improves
Global markets advanced in October, buoyed by easing inflation, resilient corporate earnings, and renewed optimism around US–China trade relations. Major equity indices across regions closed higher, while bond yields declined and commodities rebounded modestly.
US Markets
US equities advanced strongly in October, with the 3 major indices up, the Nasdaq Composite up 4.7%, the Dow Jones rising 2.5%, and the S&P 500 gaining 2.3%. Early weakness from renewed US–China trade tensions quickly faded as investor sentiment improved, lifted by resilient corporate earnings and a wave of new artificial-intelligence partnerships that propelled stocks to record highs.
Inflation data also surprised on the downside, helping to reinforce confidence in the broader economic outlook. While the Federal Reserve trimmed rates slightly, markets focused less on policy shifts and more on the durability of growth and earnings momentum. The combination of easing price pressures, steady consumer demand, and strong technology performance underscored the market’s resilience heading into year-end.
UK Markets
The UK’s FTSE All-Share Index rose 3.7% in October, outperforming most developed-market peers. The rally was supported by a 30-basis-point decline in 10-year gilt yields, which lifted domestic and rate-sensitive sectors, while firm commodity prices boosted mining stocks. A weaker sterling further enhanced returns by increasing the value of overseas earnings for many international-facing companies.
Softer inflation data and a more cautious tone on growth prompted markets to raise expectations for monetary easing, with around 60 bps of rate cuts now priced in by the end of 2026.
Investor sentiment improved as confidence grew in the resilience of UK corporate earnings despite muted domestic growth. Mid-cap stocks on the FTSE 250 also advanced modestly, supported by upbeat results from consumer and industrial companies.
Eurozone
The MSCI Europe ex-UK Index rose 2.1% in October, slightly trailing other developed markets. Political uncertainty in France and limited exposure to commodities and AI-related technology tempered gains, though J.P. Morgan upgraded euro-zone equities to overweight on improving valuations and fundamentals.
Euro-area government bonds advanced 0.9%, with Italy (+1.2%) and Spain (+0.9%) leading as 10-year yields fell 18 bps and 11 bps, narrowing spreads over German Bunds.
Spain’s economy expanded 0.6% in the third quarter, supported by firm household spending and employment. Meanwhile, euro-zone inflation stayed close to the ECB’s 2% target, and consumer expectations eased, reinforcing confidence that price pressures remain contained.
Asia Emerging
The MSCI Asia ex-Japan Index advanced 4.5% in October, supported by broad improvements in risk sentiment and stronger capital-flow prospects across the region. Semiconductor-focused economies such as South Korea and Taiwan led gains, driven by sustained global demand in AI and electronics manufacturing. Later in the month, optimism was reinforced by signs of trade de-escalation between the U.S. and China, a softer US dollar, and expectations of monetary easing, all of which boosted confidence in regional equities.
In other emerging markets, Argentina outperformed sharply, with the MSCI Argentina Index surging 64% after the decisive midterm election victory of President Javier Milei’s party, which fuelled hopes of structural reform and policy stability. Meanwhile, Vietnam achieved a significant milestone as FTSE Russell upgraded it to secondary emerging-market status, a move projected to attract approximately US $3.4 billion in foreign inflows.
Commodities
Commodities advanced in October, with the broad index up 2.9% as industrial metals (+4.8%) and precious metals (+3.5%) led gains. Copper hit record highs amid supply disruptions, while gold and silver benefited from a weaker U.S. dollar and safe-haven demand. Oil prices were little changed (+0.7%), held back by ample supply and cautious demand forecasts.
October Rebound: How US–China Progress and Fed Easing Shaped Market Confidence
October marked a rare convergence of trade diplomacy and monetary easing, as the U.S. and China moved closer to a trade framework while the Federal Reserve delivered another rate cut. Together, these developments lifted market sentiment and improved the global growth outlook
Trade Developments
In the latter half of the month, US–China trade tensions appeared to ease. On 27 October, the US and China disclosed that they had established a framework agreement ahead of leaders’ talks, averting the imposition of proposed 100 % tariffs on Chinese imports. China agreed to defer export restrictions on critical rare-earth materials and to boost purchases of U.S. agricultural goods, while the US scaled back its threatened escalation of tariff action.
These developments triggered early-week rallies: U.S. stock futures and Asian equities rose on hopes that de-escalation would revive trade flows and reduce global supply-chain disruption risks. Still, caution remains warranted. While the framework establishes a positive base, the deal is not yet final, and senior market voices note the probability of a comprehensive trade agreement remains moderate.
Interest-Rate Outlook
The Fed lowered its target range to 3.75–4.00% and signalled a pause ahead, with Chair Powell noting that further cuts were ‘not a foregone conclusion.’ Markets responded by trimming expectations for additional easing.”
The rate decision came amid mixed signals in the U.S. economy: inflation remains above the Fed’s long-run goal while labour-market data have softened. Some Fed officials, such as Christopher Waller, indicated potential for additional cuts should conditions worsen, but emphasised that inflation is still a constraint.
Following the announcement and Powell’s remarks, bond yields rose and the US dollar strengthened, reflecting that markets had become more circumspect about the scale and pace of future easing.
Market Implications
The dual dynamic of improved trade sentiment and a modest monetary-policy loosening amplified investor appetite for risk-assets. Equities benefited from both tailwinds: trade optimism revived growth projections for export-sensitive sectors, while rate cuts reinforced the broader equity “carry” argument. The forthcoming US–China summit and Fed-rate path will remain focal points.
For fixed-income markets, the Fed’s cautious tone signals potential plateauing of yield-compression, meaning further upside in bond-returns may be limited unless growth softens materially. For global investors, the Asia-Pacific region, in particular, stands to gain from improved export prospects and the potential for cross-border capital flows provided the trade truce deepens into sustainable cooperation.