Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia – giving you clear insights to support client conversations.
This week's headlines
- US and China call a trade truce – The world’s two largest economies have agreed to a one-year pause in their trade tensions. The deal cuts tariffs on Chinese goods and reduces port fees, in exchange for a halt on China's new export controls of rare earth metals – vital for tech and green industries. China has also committed to major purchases of US soybeans and shown interest in American oil and gas, hinting at a cautious thaw in relations.
- Fed trims rates to 3.75% – As expected, the Federal Reserve (Fed) cut interest rates by 0.25% this week. Chair Jerome Powell struck a balanced tone, noting that another cut in December is “not a foregone conclusion” given differing views within the committee. The Fed also announced it will end quantitative tightening from December, a move that could help ease longer-term borrowing costs.
- US inflation cools – US inflation data came in a touch softer than expected. September’s CPI rose 0.3% month-on-month and 3.0% year-on-year. While higher gasoline, food, and shelter costs added pressure, price drops in used cars, insurance, and communication services helped offset the gains – offering a little relief for consumers and policymakers alike.
- Big Tech shines – but with a caveat – Amazon and Alphabet shares jumped after both reported strong earnings and revenue growth. Meta and Microsoft also posted robust results, though investors were less enthusiastic about the heavy spending needed to power their AI ambitions.
- Central banks hold firm – The European Central Bank held rates steady at 2.00% for the third meeting in a row, pointing to stabilising inflation and resilient eurozone growth. The Bank of Japan also kept rates unchanged at 0.5%, though the decision wasn’t unanimous – two members voted for a rise, signalling a growing split over how to tackle persistent inflation.
What this means for financial advisers and clients
This week’s developments have added fuel to the risk-on rally. The US-China trade truce is a clear positive for the global economy, and markets will be hoping it signals a more constructive phase in their relationship. China’s prolonged manufacturing slowdown – the longest in nearly a decade – may have been a key factor pushing both sides back to the negotiating table.
While the US government shutdown has limited the flow of new economic data, the latest inflation print, and the Fed’s rate decision have reinforced the view that monetary policy remains supportive. The Fed’s move to end its Quantitative Tightening (QT) programme – after reducing its balance sheet by over $2 trillion since mid-2022 – should also provide a liquidity boost, particularly for rate-sensitive parts of the market.
Big Tech remains in the driver’s seat after another strong earnings season. However, the market’s reaction to Meta and Microsoft’s heavy AI spending serves as a reminder that enthusiasm for the theme has its limits. With Harvard estimating that AI-related investment accounted for as much as 92% of US GDP growth in the first half of the year, the data also suggests that much of the wider economy remains subdued.
Chart of the week - the golden share of assets
Source: Goldman Sachs.
Why this matters
Gold’s appeal has been rising. Over the past two years, its share of global investable assets has grown from 4% to 6%, marking its highest level since 1986. History shows similar swings: gold’s popularity peaked at 22% of global assets in the 1980s, then fell to just 1% by 2000.
Today, with US national debt surpassing $38 trillion, it’s no surprise investors are drawn to the metal. Gold has been a key beneficiary of weaker sentiment toward US Treasuries, now representing over 20% of global central bank reserves – the highest proportion in nearly three decades.
Yet, history also offers a cautionary note: investor sentiment is fickle. The lesson for long-term investors is clear – a well-diversified portfolio, combined with valuation discipline, helps manage the risks of chasing momentum-driven trades and strengthens resilience as market narratives shift.
The Markets
Weak pound lifts FTSE
A softer pound gave a boost to FTSE-listed multinationals this week, improving the earnings outlook for firms with significant overseas revenues. The banking sector also delivered strong performance, as HSBC and Standard Chartered both reported upbeat Q3 results and outlooks.
US equities extend their run
The S&P 500 is on track for its sixth straight monthly gain, driven by continued strength in Big Tech. Nvidia made headlines by becoming the first company to reach a $5 trillion market cap, while Microsoft and Apple remain close behind, each valued above $4 trillion.
Emerging Markets find support
A weaker US dollar provided a tailwind for emerging market (EM) currencies and helped lift local equities. The AI trade continued to benefit EM heavyweight TSMC, which rose 5% over the week. Sentiment was also buoyed by Beijing’s targeted stimulus plans for infrastructure and the EV sector, sparking gains across Hong Kong and mainland markets.
Gold takes a tumble
Gold prices saw their steepest weekly fall in over a decade as investors locked in profits after a long rally. Analysts described the move as a healthy correction, with rising US Treasury yields and easing geopolitical risks adding further pressure on the precious metal.
Bond yields edge higher
US Treasury yields moved sharply higher, with the 10-year rising 0.10% after last month’s pullback. The move reflected hawkish signals from the Federal Reserve, resilient economic data, and a repositioning among investors.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 1.19% | 23.10% |
| FTSE 250 | -1.07% | 11.38% |
| S&P 500 | 1.61% | 11.29% |
| NASDAQ | 2.65% | 17.18% |
| FTSE Developed Europe Ex-UK | 0.32% | 23.71% |
| FTSE Emerging Markets | 2.19% | 21.22% |
| FTSE Japan | 1.49% | 17.65% |
| Brent Crude | -1.64% | -18.58% |
| Gold Spot | -1.69% | 46.04% |
| UK 10yr Gilt yield | -2bps | -16bps |
| US 10yr Treasury yield | +10bps | -48bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 30th October 2025.
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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.
