Market Commentary

Global Overview

Despite its reputation for volatility, October defied the so-called “October effect,” delivering solid gains across most global markets. While intra-month swings were notable, investor sentiment improved on the back of stronger-than-expected third-quarter earnings, optimism around continued AI-driven growth, and expectations of further monetary easing — which materialised with the U.S. Fed’s rate cut at month-end. Additional support came from a partial easing of Sino-US trade tensions ahead of the meeting between Presidents Trump and Xi Jinping, which resulted in a modest step-down in tariffs.

United States

The S&P 500 reached a new record high on 30 October before closing the month slightly below that level, gaining 2.3%. The Dow Jones Industrial Average advanced 2.5%, while the Nasdaq rose 4.8% — marking its seventh consecutive month of positive performance. The Trump–Xi meeting yielded partial tariff relief, including reduced US duties on certain Chinese imports and reciprocal Chinese purchases of US agricultural goods. China also agreed to suspend export controls on rare earth metals critical to technology and electric vehicle production.

However, trade friction resurfaced elsewhere as tensions emerged between the US and Canada. On the economic front, headline CPI rose to 3.0% year-on-year from 2.9% in August, while core inflation remained firm at 3.0%. With the government shutdown extending beyond 30 days, CPI data remains one of the few official releases available. Inflation continues to sit above target and import costs may add upward pressure in coming months.

Facing a cooling labour market, the Federal Reserve cut the policy rate by 25 basis points to a target range of 3.75%–4.00%, its second cut of the year, and announced plans to halt the runoff of its $6.6 trillion balance sheet from December. The Fed continues to navigate a challenging environment of sticky prices, softening demand, and rising political scrutiny.

Europe

European markets also firmed, with the CAC 40 gaining 2.96% and the DAX rising 0.3%. Corporate earnings provided reassurance on regional business activity. Inflation across the euro area eased to 2.1% year-on-year in October from 2.2% in September, while core inflation held steady at 2.4% — slightly above expectations.

With inflation now broadly within the ECB’s 2% target range, lower energy prices and a stronger euro have supported price stability. However, increased defence spending, green transition initiatives, and demographic pressures continue to raise fiscal concerns, with average European debt ratios potentially doubling to around 130% of GDP within 15 years. Third-quarter GDP growth came in stronger than expected at 0.2%, and as anticipated, the ECB left policy rates unchanged at its October meeting.

United Kingdom

UK equities rallied in October, with the FTSE 100 hitting record highs and ending the month up 3.9% after peaking at 9,760.06. Corporate earnings were broadly positive, supported by strength in energy shares. Inflation remained steady for the third consecutive month at 3.8% year-on-year, while core inflation edged down to 3.5%.

Economic growth is projected at 1.3% for 2025, slightly above the previous 1.1% forecast, as exporters accelerated orders ahead of anticipated tariff increases. Growth is expected to stabilise in 2026 amid persistent inflationary and trade pressures. The labour market remains resilient with unemployment at 4.8%, although wage growth has started to moderate. Elevated defence and infrastructure spending continues to weigh on public finances, with government debt expected to reach 105% of GDP by 2030.

Asia

Asian equities delivered mixed results. Optimism surrounding trade negotiations with the US was tempered by weaker economic data and a lack of new policy stimulus. The Shanghai Composite gained 1.9%, while the Hang Seng retreated 3.5%.

China’s GDP expanded 4.8% year-on-year in the third quarter, down from 5.2% in Q2, as fixed-asset investment contracted 0.5% year-to-date. Resilient exports, up 8.3% year-on-year, helped mitigate the slowdown. The official manufacturing PMI slipped to 49.0 in October (from 49.8), while the non-manufacturing PMI edged higher to 50.1.

In Japan, markets surged as the Nikkei gained 16.6% and reached new record highs, buoyed by optimism surrounding the appointment of the country’s first female prime minister, Sanae Takaichi. Investors welcomed her proposed fiscal stimulus and expanded defence spending. Industrial production rebounded by 2.2% in September following a 1.5% decline in August. Headline inflation accelerated to 2.9% year-on-year, marking the 42nd consecutive month above the Bank of Japan’s 2% target. Inflation is projected to rise further to between 2.7% and 3.3% in 2025, even as growth moderates to 0.6% in 2026. Unemployment remains low at 2.6%, but demographic headwinds continue to constrain productivity. The BoJ, like the ECB, left policy rates unchanged in October.

South Africa

The JSE All Share Index (ALSI) extended its winning streak to eight consecutive months, advancing 1.2% in October. Financials led the gains, with the FINI-15 rising 7.7%, followed by property (+6.3%) and industrials (+1.5%). Resources, however, declined 10.5% amid profit-taking and commodity price volatility, as both gold and platinum weakened.

Notable share performances included MTN (+19.3%), South32 (+14.5%), and Ninety One (+13.5%), while Mondi PLC (-18.3%), WeBuyCars (-16.9%), Foschini (-15.6%), and Impala Platinum (-15.5%) were among the laggards.

Headline inflation edged up slightly to 3.4% year-on-year in September (from 3.3% in August), while core inflation rose to 3.2%. A key positive development was South Africa’s removal from the FATF grey list after 32 months — a milestone that should ease compliance costs for local banks and improve the environment for foreign investment inflows.