Stay up to date with the latest market trends, economic shifts, and key financial developments across the UK, US, and Asia – helping you guide client conversations with clarity and confidence.
This week's headlines
- US-China trade tensions intensify - China has moved to restrict rare earth exports, prompting the US president to announce an additional 100% tariff and export controls on the country, starting November 1st.
- French Prime Minister reappointed – after resigning last week, French PM Lecornu was swiftly reinstated and survived two no-confidence votes, easing political uncertainty. The CAC 40 rose and French bond yields fell on the news, though budget challenges loom ahead.
- UK unemployment rises – the unemployment rate rose to 4.8% in the three months to August. This unexpected increase was driven by rises in people unemployed for up to 6 months and over 12 months. This adds to signs of a cooling labour market.
- UK returns to modest growth – GDP rose by 0.1% in August – after falling 0.1% in July – as a boost in manufacturing helped offset a stagnant services sector.
- Chinese exports surge – Chinese exports rose 8.3% year-on-year, reaching a seven-month high. Despite slowing US trade, other markets such as South Korea and the EU more than offset the shortfall.
What this means for financial advisers and clients
While US-China trade tensions look to be escalating in a row that started last week around US tech-restrictions, talks have already moved on to possible climb-downs and an extension of a series of 90-day truces due to expire in November. The countries leaders are also likely to meet in South Korea this month in an attempt to reach an agreement. Equity indices that dipped on the tariff news largely rebounded following these more positive comments.
Closer to home, this week’s UK data paints a mixed picture - rising unemployment and low growth numbers, suggest a weak outlook for the economy, and increase the chances of further interest rate cuts this year. However, this is far from certain, worries continue around the upcoming Autumn Budget and this data contrasts with a recent International Monetary Fund (IMF) report predicting higher growth, and higher inflation levels, for the UK into 2026.
Chart of the week - when quality falls behind
Source: Montanaro; Schroders
Why this matters
The quality investment style - which targets stable companies with strong earnings, strong balance sheets, and consistent profitability - has been under pressure this year. Markets have instead rewarded speculative risk-taking leaving quality stocks trailing.
We’re seeing a fairly extreme example of this quality-lag in the US this year. As the chart highlights, unprofitable and zero-revenue-producing companies in the NASDAQ have significantly outperformed their profitable peers. And this pattern is repeated for small and medium sized companies as unprofitable companies outperform profitable ones.
This is an unusual and likely unsustainable pattern. Today, any sign of market weakness could quickly trigger a reversal in fortunes, as the viability of these unprofitable companies are questioned and higher quality alternatives outperform on a relative basis.
The Markets
UK markets subdued
UK markets stayed restrained this week, reflecting a mixed economic outlook. Stand out performers included Croda, which delivered strong results and helped boost the chemicals sector. However, the FTSE was weighted down by stocks such as Shell and BP as oil prices fell.
US remains positive
Despite ongoing trade troubles and fresh worries around regional banks, US markets remained in positive territory. Strong earnings results and gains from companies such as Broadcom on renewed AI positivity, helped support investor confidence.
China drags
After a very strong Q3, Chinese equities underperformed, dragging the broader emerging markets index down. Investors turned cautious ahead of key economic data releases and a high-level Chinese Communist Party meeting, while trade concerns added to the unease.
Gold glitters as oil falls
Gold price surged on the back of continued economic uncertainty and increased US-China trade tensions. In contrast, oil moved in the opposite direction as those same trade tensions raised concerns over future demand and oversupply.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 0.15% | 18.99% |
| FTSE 250 | 0.90% | 9.85% |
| S&P 500 | 0.20% | 5.83% |
| NASDAQ | 0.81% | 10.02% |
| FTSE Developed Europe Ex-UK | 1.55% | 22.14% |
| FTSE Emerging Markets | -0.35% | 17.13% |
| FTSE Japan | 0.29% | 13.98% |
| Brent Crude | -2.66% | -18.19% |
| Gold Spot | 9.42% | 65.62% |
| UK 10yr Gilt yield | -25bps | -10bps |
| US 10yr Treasury yield | -15bps | -58bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 17th October 2025.
Stay tuned for next week’s market insights
For more market updates sign up to our CPD-accredited Let's Talk Markets webinars.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
