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What’s in this issue;
Markets ended last week on a high, with cooling inflation, strong earnings, and renewed trade optimism driving risk-on sentiment. From megacap earnings to EM opportunities, this issue breaks down what’s moving markets — and how to navigate the week ahead.
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Weekly Movement - Heatmaps
Global equities ended the week on a positive note, as encouraging inflation data and solid early earnings helped lift investor sentiment across regions.
🇪🇺 Europe: Markets wrapped up the week higher, lifted by gains in banking and industrial stocks as optimism spread following upbeat U.S. inflation figures.
🇬🇧 London: The FTSE advanced after U.S. CPI data showed price pressures easing, while stronger domestic figures helped support the pound and sentiment.
🇺🇸 U.S.: Wall Street ended the week in the green as softer inflation and upbeat earnings from major banks bolstered hopes that the Fed can stay on hold.
💬 Investor takeaway: Cooling inflation across the U.S. and steady economic indicators in Europe reinforced a risk-on tone, setting a constructive backdrop as Q3 earnings season ramps up.
What is Moving the Markets
Wall Street’s best week since August: The S&P 500 jumped +1.9%, the Dow gained +2.2%, and the Nasdaq rose +2.3%, as optimism over trade talks and strong earnings lifted sentiment.
Soft inflation data fuels rate-cut bets: September’s CPI came in cooler than expected, reinforcing expectations that the Fed will cut rates by 25 bps at next week’s policy meeting.
Trade optimism returns: A meeting between President Trump and President Xi was confirmed for later this month, easing fears of escalating U.S.–China tensions.
Earnings spotlight: Tesla (TSLA) hit record revenue, while Netflix (NFLX) stumbled on one-off costs. Legacy automakers GM and Ford also impressed, driving sharp share gains.
💬 Bottom line: Softer inflation, upbeat earnings, and renewed trade dialogue gave markets a rare dose of optimism heading into the next Fed decision.
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Top Economic News This Week
This week saw a mix of resilient corporate earnings, cooling inflation signals boosting rate cut hopes, geopolitical tensions via US sanctions and trade uncertainties, and ongoing fallout from the US government shutdown that delayed key data releases.
Global growth forecasts were upgraded amid AI-driven optimism, while China’s property woes persisted. Below are the major headlines:
IMF Upgrades 2025 Global and US Growth Forecasts on AI Boom: AI investments are buffering the US from trade and immigration policy shocks, with VC spending on AI hitting $160B YTD (expected $200B by year-end); however, 2026 outlooks remain subdued.
US Government Shutdown Hits Week 3, Delays COLA Announcement to 2.7% for 2026 Social Security: The fiscal standoff, now the second-longest in history, postponed September CPI data and the COLA reveal, which will boost average retiree payments by $54 monthly; markets volatile as Apple hits record highs while gold rebounds.
US Budget Deficit Narrows Slightly in FY2025, But Tariffs and Debt Hit Records: Fiscal year ends with lower deficit thanks to higher revenues, though record debt payments and tariff collections underscore ongoing pressures from trade policies.
Escalating US-China Trade Tensions Loom Over Markets: Trump touts lower drug prices and lists rare earths priorities, but uncertainty clouds a potential Xi meeting; stocks dipped on worries, oil surged, and IMF warns tariffs make ‘uncertainty the new normal’.
Track Inflation Across Europe & US
Eurozone Inflation Accelerates to 2.2% in September: Up from 2% in August—the highest since April—driven by core prices holding at 2.3%; meanwhile, UK CPI eased to 3.8% and Canada’s rose modestly to 2.4%, signaling varied cooling trends.
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Economic data that moves markets (before it's released)
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Emerging Markets
Emerging markets continued their strong run last week, rising 1.7% (MSCI EM Index: 1,382) and extending year-to-date gains to ~28%, outpacing developed markets’ +17%.
Regional Highlights
India led again — the Sensex hit new highs (+1.5%) as festive spending and trade optimism boosted sentiment.
China slipped ~1–2% after softer Q3 GDP (4.6% vs. 5% expected) and renewed U.S.-China tensions.
Brazil added ~1%, lifted by stronger commodities and policy optimism, while Mexico dipped on tariff concerns.
Poland and South Africa gained ~2%, supported by inflows, while Turkey stayed volatile amid high inflation.
Key Drivers
A weaker U.S. dollar and expectations of rate cuts are drawing investors into EM assets. However, trade tensions and China’s policy uncertainty remain watchpoints.
Why It Matters
Emerging markets—spanning countries like China, India, Brazil, and South Africa—are benefitting from global growth rotation and attractive valuations.
IMF forecasts 4.2% EM growth in 2025, vs. 1.8% in developed economies.
EM debt is rising ($109T, ~242% of GDP), making them sensitive to inflation and rate changes.
Investor Takeaway
EMs are outperforming thanks to cheaper currencies and global diversification.
Long-term investors may consider small allocations (5–15%) through diversified ETFs such as VWO or EEM.
For more exposure, regional funds like INDA (India) or FXI (China) capture top performers.
Outlook
Analysts expect EM momentum to continue, with potential 10% upside into mid-2026 (Goldman target: 1,480). Keep an eye on next week’s U.S. inflation and Fed data for currency cues.
🔭 Looking Forward: What We Anticipate Next Week
Wall Street is bracing for one of the biggest weeks of the quarter, as earnings season collides with major central bank decisions and the Federal Reserve’s penultimate policy meeting of the year.
After last week’s softer U.S. inflation print, investors widely expect the Fed to deliver another 25 bps rate cut on Wednesday — its second since restarting policy easing in September.
With the government shutdown still limiting access to fresh data, markets will hang on every word of the Fed’s statement and Chair Powell’s tone for clues about December’s outlook.
Adding to the mix, President Donald Trump heads to Asia for a closely watched meeting with China’s Xi Jinping, reigniting hopes of progress on trade.
📅 Key Events This Week
Wednesday
🇨🇦 Bank of Canada Interest Rate Decision
🔻 Forecast: 2.25% | Previous: 2.50%
➡️ Why it matters: A modest rate cut is expected, but any hint of a shift in tone could move CAD-sensitive assets.
🇺🇸 Federal Funds Rate Decision
🔻 Forecast: 4.00% | Previous: 4.25%
➡️ Why it matters: The Fed is expected to cut again as inflation cools — but forward guidance will be key.
Thursday
🇯🇵 Bank of Japan Rate Decision
⏸️ Forecast: 0.5% | Previous: 0.5%
➡️ Why it matters: No policy change expected, though the arrival of new PM Takaichi Sanae could bring fresh policy signals.
🇪🇺 European Central Bank Rate Decision
▶️ Forecast: 2.15% | Previous: 2.15%
➡️ Why it matters: The ECB remains on hold, but may hint at further easing ahead.
💰 Earnings on Deck
It’s a blockbuster stretch for Q3 results with five of the Magnificent Seven reporting, alongside heavyweights from finance, pharma, and energy.
Monday, Oct 27
Waste Management (WM), Keurig Dr Pepper (KDP), Brown & Brown (BRO), FTAI Aviation (FTAI), F5 Inc. (FFIV)
Tuesday, Oct 28
Visa (V), UnitedHealth (UNH), NextEra Energy (NEE), Booking (BKNG), UPS (UPS), PayPal (PYPL), MSCI (MSCI)
Wednesday, Oct 29
Microsoft (MSFT), Alphabet (GOOGL), Meta (META), Caterpillar (CAT), ServiceNow (NOW), Boeing (BA)
Thursday, Oct 30
Apple (AAPL), Amazon (AMZN), Eli Lilly (LLY), Mastercard (MA), Reddit (RDDT)
Friday, Oct 31
ExxonMobil (XOM), AbbVie (ABBV), Chevron (CVX), Charter Communications (CHTR)
🧭 The Big Picture
Markets face a pivotal week balancing monetary easing, megacap earnings, and geopolitics. With the Fed, ECB, and BoJ all in play — and five of the Mag7 set to report — volatility could spike as traders recalibrate for year-end positioning.
Focus themes: Rate cuts, tech earnings momentum, and any signals from Trump’s Asia visit.
ICYMI: What Else Is Happening?
Global agricultural commodity markets brace for volatility – A mix of extreme weather, geopolitical tension and supply-chain disruption is creating turbulence in agricultural markets.
Market implication: Rising food/commodity costs could feed into inflation, impact emerging markets and squeeze consumer margins — watch food-input stocks, commodity exporters/importers.
Australia’s bond market surges as a global safe-haven – The Australian dollar-bond market is becoming a significant channel for international borrowing, driven by Australia’s AAA rating, stable inflation and institutional flows.
Market implication: Portfolio flows may tilt more into Australian debt, shifting yield curves and FX dynamics; emerging market debt may face relative outflows.
Useful Links – Worth a Read
US futures climb on dovish Fed hopes ahead of key inflation data – Markets pricing in a Fed shift.
Global agricultural markets brace for volatility amidst climate, geopolitical & supply-chain headwinds – How commodity disruption could ripple across sectors.
Record surge: How Australia’s bond market became a global powerhouse – Rising importance of Australian debt markets.
US-China trade negotiations: Critical materials and market volatility in 2025 – Strategic materials & trade tensions.
Gold & Silver sell-off: Why metals corrected in October 2025 – Metals correction despite strong fundamentals.
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