Global News Summary 13-18 Oct 2025

Written By Larry Lim

The week was dominated by escalating U.S.–China trade tensions, a fragile European political backdrop, and mixed labor market signals. Early in the week, equity markets suffered their steepest one-day loss since April after Trump threatened sweeping new tariffs on China. However, by Friday, sentiment rebounded on renewed optimism about trade talks and stronger-than-feared U.S. regional bank earnings. The result was a volatile but net positive week for U.S. equities, with the S&P 500 posting its best performance since August. Meanwhile, the IMF struck a cautiously upbeat tone on global growth, even as risks from trade, fiscal imbalances, and stretched AI valuations kept recession worries alive.

United States

  • Trade Policy: Trump threatened to cancel his summit with Xi and impose 100% tariffs on Chinese imports (13 Oct), later softening his tone as Treasury Secretary Bessent confirmed the meeting was still planned (14 Oct). By week’s end, Trump struck a deal with Germany’s Merck KGaA to cut IVF drug prices in exchange for tariff relief.

  • Labor Market & Fed: Powell warned of rising labor market distress (15 Oct), and Fed’s Waller (17 Oct) backed more cuts but urged caution. Weekly state jobless data suggested claims declined to ~215k.

  • Fiscal & Shutdown: Trump pledged troop pay during the ongoing shutdown, now in its second week, but political brinkmanship continues. IMF warned the U.S. deficit will remain the widest among advanced economies despite tariff revenues (16 Oct).

  • Markets: Regional bank credit jitters sparked the sharpest selloff in six months midweek, but equities rebounded. S&P 500 ended +0.5% for the week, Nasdaq 100 +0.7%, Dow +0.5%. Dollar flat on the week. Treasuries saw safe-haven demand midweek, with 10Y yields ending ~4.00%.

United Kingdom

  • Fiscal & Policy: Chancellor Reeves prepared for steep tax rises and cuts in November’s Budget, with the IFS estimating a £22bn fiscal gap. She also hinted at action on regulated prices to help reduce energy bills.

  • Growth & Jobs: GDP grew just 0.1% in August, highlighting subdued activity. Payrolls rose 10k in Aug but fell 10k in Sep. Household spending up 1% YoY in real terms but down 3% per capita.

  • Inflation: IMF forecast the UK would face the highest inflation among the G7 over the next two years. BOE’s Catherine Mann warned of upside risks keeping inflation above the 2% target.

Euro

  • France: PM Lecornu unveiled a new cabinet (13 Oct) and later suspended Macron’s pension reforms until 2027 to shore up parliamentary support. Survived two confidence votes on 17 Oct, buying fragile political reprieve.

  • Germany: Industrial production fell to its lowest since 2005 in August, with autos –18.5% MoM. Government projects growth of just 0.2% in 2025, improving to 1.3% in 2026 via fiscal stimulus. Pension reforms will allow seniors to earn up to €2k/month tax-free.

  • ECB: Governing Council members signaled the next move is likelier to be a cut than a hike. Concerns rose over Chinese rare earth export controls potentially fueling inflation in the eurozone.

Japan

  • Politics: Sanae Takaichi formally became ruling party leader; opposition parties discussed uniting behind Yuichiro Tamaki. Coalition collapse drove equities lower midweek.

  • Macro: Household spending rose 2.3% YoY in Aug, its 4th straight monthly gain. Wages growth slowed to +1.5% YoY in Aug (Jul +3.4%), keeping real pay negative. BOJ officials split — some urging caution, others (Tamura) calling for hikes due to inflation risks.

China

  • Trade & Exports: Exports surged +8.3% YoY in Sep, defying tariff headwinds. However, PPI remained in deflation (–2.3% YoY).

  • Rare Earths: Beijing tightened controls, spurring G7 to discuss joint counter-measures.

  • AI & Chips: Authorities enforced stricter chip import curbs to accelerate domestic self-sufficiency. Domestic AI chipmaker Cambricon reported revenue up 14x YoY.

Australia

  • Labor Market: Unemployment jumped to 4.5% in Sep, a four-year high, with weaker job creation. RBA signaled cautious policy; markets now expect rate cuts as early as next month.

  • Inflation: Underlying inflation likely stronger than anticipated, keeping the central bank cautious.

  • Housing: Home prices rose 0.8% in Sep, strongest gain in nearly two years.

AI & Tech

  • Mega Deals: OpenAI announced $350–500bn chip purchases from Broadcom and signed a new $1tn infrastructure pipeline. Oracle guided for softer AI cloud demand. TSMC raised its 2025 revenue growth outlook to the mid-30% range.

  • Corporate Moves: Google pledged $15bn in India to build an AI hub. BlackRock & Abu Dhabi funds led a $40bn data center takeover in Texas. OpenAI also worked with Oracle to navigate chip export controls.

  • Risks: IMF and BOE warned of “dotcom-like” risks as AI valuations reach exuberant levels.

Week in Markets

  • Equities: S&P 500 +0.5%, Nasdaq 100 +0.7%, Dow +0.5%, Russell 2000 –0.6%.

  • Bonds: U.S. 10Y 4.00% (+3bps), 2Y 3.46% (+3bps).

  • Commodities: WTI $57.66 (+0.3%), Gold $4,231 (–2.2%) after record highs earlier.

  • Crypto: Bitcoin $106,475 (–1.3%), Ether $3,826 (–0.7%).

  • Flows: Equity inflows $28.1B, cash outflows $24.6B — a rotation into risk assets.

Larry Lim
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Global News Summary: 6 - 10 October 2025