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This week's headlines
- UK inflation steady – inflation held at 3.8% for September, below the 4% markets expected. Price rises slowed considerably across live music events and non-alcoholic beverages, although motor fuels and air fares saw sharper rises.
- Gold dips – after a strong run this year, gold prices fell over 5% on easing trade tensions and investor profit taking. The precious metal has since regained some of these losses and remains up around 60% in 2025.
- US sanctions Russian oil providers – the US announced new sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, after a planned Trump-Putin meeting was cancelled. Oil prices rose on the news.
- Euro Area confidence improves – consumer confidence hit an eight-month high in October, beating expectations, as consumers start to benefit from lower borrowing costs and easing inflation.
- China’s expansion slows – GDP grew 4.8% year-on-year in Q3 - the country’s slowest quarter in a year - as US trade tensions and a property market weakness weigh on the economy.
What this means for financial advisers and clients
Investors welcomed September’s UK inflation figures, which showed no signs of reacceleration, even though the rate remained at 3.8%, nearly double the Bank of England’s 2% target. Another positive sign was core inflation, which strips out volatile food and energy prices, falling 0.01% to 3.5%. Both have renewed expectations for one further interest rate cut this year, potentially in December. Although this is far from a certainty - especially as details of the November Budget remain largely unclear.
Looking at gold, despite this week’s dip, the metal continues to be one of the best performing asset classes of the year. Its strength reflects ongoing investors demand for a safe haven during continued geopolitical tensions and trade uncertainty. That said, with such high valuations, investors are beginning to questions how much further it can run.
Chart of the week - China’s rare earth dominance
Source: Statista; United States Geological Survey
Why this matters
Rare earth elements are vital to modern technology - from defence systems and medical equipment to running data centres and renewable energy generation. As demand grows, control of these resources is starting to play a bigger role in international trade and diplomacy.
China dominates the market, holding by far the largest reserves. The country is already starting to leverage their position, including the recent restriction of international exports to help push the US into a more favourable trade deal.
Limited access to rare earth materials could slow the production of products reliant on their input, while prices could skyrocket. While we don’t see this as an imminent threat to markets, it’s certainly an important factor to be conscious of in an increasingly tech-dependent, and politically unstable world.
The Markets
UK markets jump
The FTSE 100 hit another record high, driven by companies such as Rentokil and the London stock Exchange Group. Oil and Gas companies like Shell and BP also benefitted from new Russian sanctions. The FTSE 250 also had a strong week, reaching levels last seen in 2022.
US remains positive
Strong corporate earnings lifted US markets early in the week, although results from Netflix and Tesla disappointed. The tech sector remained volatile, moving in line with the probability of a Trump-Xi meeting and semiconductors trade talks.
Asian markets climb
The Hang Seng, and South Korea’s Kospi index, both rose on hopes of positive trade talks between US and Chinese leaders. Japan’s Nikkei 225 also gained on improving confidence after the recent election of Prime Minister Sanae Takaichi and anticipation of her providing a boost to the tech sector.
Gold stumbles as oil rises
Gold fell steeply early in the week, before recovering some ground later on. In contrast, oil moved in the opposite direction as new Russian sanctions act to restrict supply.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 2.41% | 20.81% |
| FTSE 250 | 2.70% | 11.75% |
| S&P 500 | 1.65% | 8.48% |
| NASDAQ | 2.65% | 12.92% |
| FTSE Developed Europe Ex-UK | 1.19% | 22.79% |
| FTSE Emerging Markets | 1.98% | 18.06% |
| FTSE Japan | 1.64% | 15.21% |
| Brent Crude | 7.67% | -11.59% |
| Gold Spot | -1.61% | 56.97% |
| UK 10yr Gilt yield | -6bps | -17bps |
| US 10yr Treasury yield | -4bps | -58bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 23rd October 2025.
Stay tuned for next week’s market insights
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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.
