Market Outlook
Last Updated: 31 Oct 25 5 min read
Markets have been driven by central bank decisions, earnings releases, and trade developments this week. On Wednesday, the Federal Reserve cut interest rates by 0.25%, bringing the target range to 3.75–4%. While this was widely expected, Chair Powell’s cautious comments about future cuts tempered initial optimism. U.S. equities rallied briefly before settling lower as investors reassessed the outlook for monetary policy, while yields and the dollar moved higher.
In Europe, the ECB held rates steady at 2% on Thursday, signalling confidence that inflation is close to target and growth remains resilient. President Lagarde emphasised a data-dependent approach, reinforcing expectations that policy will stay on hold for now.
Earnings season continued to dominate headlines, particularly among the Magnificent Seven tech giants. We saw volatility in some of the tech names on Thursday; even though the earnings numbers were strong, markets had concerns over profitability against ambitious investment plans particularly for Microsoft and Meta. This came shortly after the Fed decision, adding to the uncertainty. Apple and Amazon results on Thursday evening continued to be strong, which helped lift sentiment into the end of the week. Overall, the results so far have highlighted solid topline growth, but the market reaction has varied as investors have weighed profitability against ambitious investment plans.
On the trade front, the U.S. and China reached a partial truce, easing tariff tensions. The U.S. reduced tariffs on Chinese goods (from 57% to 47%) and fentanyl related products, while China agreed to resume soybean purchases and maintain rare-earth exports under a renewable one-year deal. Although this offers short-term relief for supply chains, restrictions on technology exports remain unresolved.
Whilst markets remain reactive to a mix of economic and geopolitical signals, investors seem largely undeterred and continue to buy into short term softness. As we continue through Q3 earnings season, results broadly suggest that demand from consumers and businesses remains robust. As inflation trends diverge and labour markets evolve, central banks may take increasingly different paths - raising the potential for greater dispersion across asset classes and regions in the period ahead.
Equities |
1 Week |
YTD |
1 Year |
S&P 500 |
0.45% |
17.20% |
21.13% |
FTSE 100 |
0.91% |
22.76% |
24.34% |
Euro Stoxx 50 |
0.27% |
18.77% |
20.63% |
MSCI Asia Pacific ex Japan |
1.44% |
30.67% |
26.28% |
MSCI China |
0.57% |
39.09% |
36.50% |
Source: Bloomberg as at 8:42am on 31.10.25
We've also produced a version of this week's market commentary that can be forwarded directly onto your clients.