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What’s in this issue;
This week, global markets swung between fear and optimism. Banking stress in the US rattled financial stocks, while tentative progress in US-China trade talks helped risk appetite recover.
Gold soared to record highs, emerging markets rallied, and AI-driven tech partnerships powered sector gains. With Q3 earnings ramping up and key inflation reports on the horizon, investors face a week packed with high-stakes data, corporate results, and market-moving policy signals.
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Weekly Movement - Heatmaps
Global equities endured a volatile week as renewed fears over US regional banks triggered a sharp sell-off, while cautious optimism late in the week helped limit losses.
In London, the FTSE 100 slipped as financial stocks fell sharply on renewed banking-sector jitters, though sentiment steadied after comments from Donald Trump suggested a softer stance toward China.
Across Europe, markets mirrored the downturn, with the Stoxx 600 dragged lower by heavy losses in major lenders, particularly in Germany and France, amid concerns over credit conditions and regulatory risks. Meanwhile, Wall Street pared earlier declines after reports of constructive US-China trade talks boosted risk appetite, helping the S&P 500 and Dow recover some ground into the weekend.
Despite the rebound, investor sentiment remains fragile, with global markets caught between hopes of easing trade tensions and persistent worries about financial stability.
📌 What This Means for Investors
Banking jitters resurface: Renewed stress in US regional banks may lead to short-term volatility in global financial stocks.
Trade diplomacy offers relief: Signs of progress in US-China talks could support cyclical sectors like industrials and materials if tensions ease further.
Flight to safety: Defensive assets such as gold, utilities, and consumer staples may remain attractive as investors hedge against renewed market shocks.
Focus on fundamentals: With sentiment driven by headlines, maintaining exposure to quality companies with strong balance sheets and stable earnings could help weather near-term turbulence.
What is Moving the Markets This Week
Trade Policy Reversal Rally: President Trump’s Monday walk-back of 100% tariffs on Chinese imports ignited a sharp recovery from the prior week’s plunge, driving the S&P 500 up 1.6% to 6,654.72 (its best day since May), Nasdaq +2.2% to 22,694.61, and Dow +1.3% to 46,067.58, though indices ended the week mixed with S&P +1.69%, Dow +1.56%, and Nasdaq -0.07% overall.
Mixed Bank Earnings Season Kickoff: Q3 results shone for JPMorgan (EPS $5.07, beating estimates with $14.39B profit) and Goldman Sachs (EPS $12.25, 20% revenue surge), lifting financials early, but fraud revelations at regional banks like Zions ($50M charge-off) sparked a Thursday selloff in the KBW Regional Banking Index (-4%), heightening credit risk fears.
Gold’s Record-Breaking Surge: Safe-haven buying amid trade volatility, Fed rate-cut bets, and geopolitical jitters propelled gold from $4,080 to a fresh all-time high of $4,380/oz (51% YTD gain), with silver topping $50 amid ETF inflows and dollar softening.
AI Tech Partnerships Fuel Sector Gains: Broadcom soared 9.9% on a massive OpenAI deal for AI chips (valued at $350-500B), Micron +9.1%, and Walmart +5% on ChatGPT integration, powering a 4.9% Philadelphia SOX Index rally as eased tariff fears boosted semis.
Dovish Fed Amid Data Blackout: Powell’s Tuesday speech flagged unemployment risks and reaffirmed 25bp cuts (starting Oct 28-29), bolstering sentiment despite the U.S. government shutdown’s 17th day halting key data like retail sales and claims, adding policy uncertainty.
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Top Economic News This Week
Oil Prices Stabilise on OPEC+ Output Hike Signals: Brent crude dipped to $78/bbl (Barrel) mid-week after reports of a potential 500K bpd (barrels per day) increase from OPEC+ allies, easing supply fears but pressuring energy stocks amid softer global demand outlooks from the IMF’s recent downgrade.
Eurozone Unemployment Hits 6.4% Low: Released Oct 16, the figure underscored labour market resilience despite sluggish growth, with ECB (European Central Bank) officials hinting at a pause in rate cuts, strengthening the euro to 1.09 vs. USD and lifting European peripherals.
Crypto Market Rebound on Regulatory Clarity: Bitcoin climbed above $68K following the SEC’s Oct 15th approval of spot ETF staking rules, drawing $2B in inflows and boosting altcoins, though volatility persisted amid US shutdown-related liquidity concerns.
Emerging Markets Update
Emerging markets (EM) are experiencing a rally amid global uncertainties, with equities up nearly 30% year-to-date—the strongest performance since 2009—driven by a weakening US dollar, easing inflation, and Asia’s tech boom.
However, escalating US-China trade tensions and downside risks from protectionism are tempering optimism, as EM growth holds steady but faces fragmentation pressures.
Here’s a snapshot of key developments:
Equities and Bonds Surge on Fundamentals and Diversification: The MSCI EM index has climbed sharply, fueled by attractive real yields (e.g., in Mexico and South Africa), record $286B in local-currency bond issuance, and investor shifts toward geographic diversification away from overvalued US/European markets. Valuations remain compelling at ~14x forward earnings vs. 23x for the S&P 500, with Asia leading via AI/semiconductor demand in Taiwan (TSMC at 11% index weight), South Korea, and China. Local bonds have risen >15%, and the rally is seen as the start of a re-rating, potentially sustaining into 2026.
Gold Rally Boosts EM Confidence: Soaring gold prices (recent highs near $4,380/oz) are delivering windfalls to EM producers and buyers, enhancing liquidity and investor sentiment in metal-dependent economies like South Africa and India.
Goldman Sachs Forecasts Continued Rally: EM stocks and currencies are projected to advance through year-end, with the MSCI EM hitting 1,480 (+7.8% price return) on 9% earnings growth in 2025 and 14% in 2026. Tech/AI sectors in China, Taiwan, and South Korea are top picks; recommended ETFs include GREK (Greece, +64.7% YTD), KEMQ (EM consumer tech, +58%), EZA (South Africa, +56%), and FRDM (freedom-focused EM, +42%).
IMF Projects Steady but Vulnerable Growth: EM and developing economies (EMDE) are expected to expand ~4% in 2025-2026, outpacing global growth (down to 3.2% in 2025), thanks to resilient policies like stronger reserves and credible monetary frameworks. Yet, risks are downside-tilted: Trade wars, fiscal strains, and inflation persistence could amplify output losses, especially in aging or skill-short economies. Structural shifts in FX and EM bonds add resilience but new vulnerabilities.
US-China Trade War Fuels Uncertainty and Regional Shifts: Fresh 100% US tariffs on Chinese exports (in retaliation for rare earth curbs) are heightening global fragmentation, prompting EM to deepen bilateral ties (e.g., EU-CPTPP links) and diversify trade. This “fallout” boosts resilience via cooperation but clouds growth via higher costs and uneven globalisation benefits, per IMF and WTO leaders.
Outlook: Momentum favors EM as a diversification play, with tech and commodities shining, but watch for trade escalations and US data delays (e.g., CPI). Crypto adoption in EM (e.g., stablecoins like Mento’s localised assets for Africa/LatAm) is gaining traction as a hedge. For real-time buzz, sentiment on X highlights EM’s role in crypto empowerment and tokenized bonds.
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🔭 Looking Forward: What We Anticipate Next Week
Wall Street heads into week two of Q3 earnings season with momentum building — and a few major catalysts on deck to test investor sentiment.
With the government shutdown still freezing parts of Washington’s data flow, traders will finally get a pulse check from the September inflation report, offering one of the few official reads on U.S. economic conditions.
💼 Corporate Earnings — Big Week for the Heavyweights
The spotlight shifts to consumer and tech powerhouses, with earnings from two of the Magnificent Seven — Netflixand Tesla — alongside global realisable brands like Coca-Cola, 3M, and General Motors. Their results will offer a cross-sector snapshot of spending, demand, and global supply chains.
🗓 Monday · Oct 20 — Steel Dynamics (STLD), Cleveland-Cliffs (CLF), Preferred Bank (PFBC)
🗓 Tuesday · Oct 21 — Netflix (NFLX), Coca-Cola (KO), Philip Morris (PM), 3M (MMM), Lockheed Martin (LMT), General Motors (GM)
🗓 Wednesday · Oct 22 — Tesla (TSLA), IBM (IBM), AT&T (T)
🗓 Thursday · Oct 23 — T-Mobile US (TMUS), Blackstone (BX), Intel (INTC), Honeywell (HON)
🗓 Friday · Oct 24 — Procter & Gamble (PG)
💡 Names to Watch:
Netflix kicks things off with streaming growth in focus as competition heats up.
Tesla follows midweek, where pricing power and global EV demand remain in the spotlight.
Intel, Blackstone, and Honeywell round out the week, giving investors a look across semiconductors, private markets, and industrial demand.
Also reporting this week: Amazon, GE Aerospace, RTX Corp, and Texas Instruments, rounding out a packed slate across every major sector.
🌍 Global Data to Watch
Outside of earnings, a wave of inflation reports and growth readings will provide crucial context for monetary policy across major economies.
🇨🇳 Monday — China GDP Growth (QoQ / YoY)
📈 Forecast: 5.4% | Previous: 5.2%
➡️ A solid reading would confirm that China’s recovery is holding, even amid global trade headwinds.
🇨🇦 Tuesday — Canada Inflation Rate
📈 Forecast: 2.2% | Previous: 1.9%
➡️ A modest uptick keeps inflation near the Bank of Canada’s target — unlikely to move policy, but worth watching for momentum shifts.
🇬🇧 Wednesday — UK Inflation Rate
📈 Forecast: 4.0% | Previous: 3.8%
➡️ Sticky inflation could force the Bank of England to hold rates higher for longer as price pressures persist across core categories.
🇺🇸 Friday — U.S. CPI (YoY)
📈 Forecast: 3.0% | Previous: 2.9%
➡️ The headline number is key — a modest rise would reinforce the Fed’s “wait and see” tone, while a surprise jump could reignite rate worries.
⚖️ The Bigger Picture
As earnings ramp up and inflation data trickle through the shutdown fog, the market narrative pivots from policy speculation to profit reality.
Investors will be watching for signs that corporate America can still deliver growth despite higher costs, slower global trade, and a fragile consumer backdrop. With Netflix, Tesla, and Intel leading the charge — and the Fed sidelined for now — this week could redefine how confident markets feel heading into year-end.
ICYMI: What Else Is Happening?
Here are some of the noteworthy developments that are indirectly influencing markets and investor sentiment:
Global Growth Outlook Holds Up But Is Fragile – The latest International Monetary Fund (IMF) estimates now suggest world growth of ~3.2% in 2025 and 3.1% in 2026, down from earlier projections.
Market implication: With growth weak but not collapsing, investors are in a “wait and see” mode — supportive of risk assets but sensitive to any negative surprise.
Supply Chain & Tariff Risks Rising in Infrastructure & Energy – Tariff uncertainty and supply-chain dislocation are slowing U.S. power-project growth and affecting equipment flows.
Market implication: Capital-intensive sectors like infrastructure, utilities, and industrials are under pressure; margin risk and delays could hit contractors and heavy-equipment makers.
Market Pulse: Volatility and Valuation Warning Signs – Markets ended the past week on a positive note but remain fragile, with concerns around high valuations, especially in artificial-intelligence and tech sectors.
Market implication: While bulls remain in control, the base case is a modest rise — but the tail risk of a sharp correction appears elevated.
Funds Flowing But with Caution – Despite the uncertain backdrop, global equities posted modest gains, though risk appetite is cautious and defensive hedges (gold, safe currencies) have been active.
Market implication: Investors may rotate into sectors with clearer growth or defensive qualities rather than broad speculative plays.
Useful Links – Worth a Read
Financial regulators highlight how crypto and stablecoins remain potential systemic risks — increasingly relevant for investors in risk assets.
Rising sovereign debt piles could limit fiscal flexibility and elevate long-term interest-rate risks.
The global risk body cautions that high leverage and stretched valuations may set up markets for a disorderly correction.
U.S. markets rebounded after easing trade rhetoric and receding regional-bank worries boosted sentiment.
Japan’s finance ministry warns of sharp currency swings amid global uncertainty — a key signal for FX-exposed investors.
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