Global News Summary — 27 Oct to 31 Oct 2025

The final week of October brought a decisive shift back to optimism, as central banks balanced measured policy restraint with visible progress on global trade relations.

Markets rallied into month-end after the U.S. Federal Reserve cut rates by 25bps and Presidents Trump and Xi struck a one-year trade truce, easing tensions over chips and rare earths. Meanwhile, AI megacaps extended their dominance, led by Nvidia’s $5 trillion valuation milestone, propelling the S&P 500 and Nasdaq 100 to fresh record highs.

Despite the stronger dollar and soft inflation prints, global data signaled resilient growth, contained price pressures, and rising industrial activity in Asia — setting the stage for a potentially strong Q4 rally.

United States — Inflation Cools, Fed Cuts, Trade Truce Lift Sentiment

Monetary Policy & Inflation

The Federal Reserve cut rates by 25bps but emphasized that further easing is not guaranteed, noting fiscal uncertainty from the government shutdown.

Powell’s hawkish tone lifted the dollar to a three-month high as markets priced out one of two expected 2025 cuts.

Inflation: September CPI rose 3.0 % YoY (vs 3.1% est.), marking the lowest since early 2024 and reinforcing disinflation momentum.

Trade & Geopolitics

The Trump–Xi summit in Seoul produced a broad one-year trade agreement:

Postponement of export controls on rare earths and semiconductors,

Tariff relief on fentanyl-related and shipping industry goods,

South Korea’s $350bn investment pledge in exchange for reduced auto tariffs (25%→15%).

The deal triggered a global risk-on surge, lifting equities and commodity currencies.

Corporate & Market Trends

Earnings beat expectations, with Amazon +10%, Meta securing $60B for AI infrastructure, and Apple posting mixed results.

S&P 500: +0.8% to ~6,840 — +40% since April, +16% YTD.

Nasdaq 100: +1.0%, seventh consecutive monthly gain (longest since 2017).

Treasury yields steady: 10Y ≈ 4.1%, 2Y ≈ 3.55%; gold corrected below $4,000/oz as risk appetite rose.

United Kingdom — Fiscal Dilemma Deepens Ahead of Budget

PM Keir Starmer signaled that fiscal discipline will take precedence, even if it means breaking the government’s no-tax-rise election pledge.

Chancellor Rachel Reeves weighed scrapping the windfall tax on oil and gas to support investment while exploring income, NI, or VAT hikes to fill a £22bn fiscal gap.

Economic data remained soft: household spending grew just 1% in real terms, while per-capita spending fell 3%, reflecting consumer caution.

Sterling weakened to its lowest against the euro since 2023, logging its ninth consecutive monthly loss.

The Bank of England is expected to hold rates at its next meeting, with markets pricing potential rate cuts in early 2026 if growth remains sluggish.

Euro Area — Growth Stabilizes, Inflation Falls, ECB Holds

The ECB held its deposit rate at 2.0% for the third meeting, with Lagarde reaffirming policy is “in a good place.”

Eurozone GDP (Q3) expanded 0.2% QoQ, buoyed by France (+0.5%) despite recent political turbulence.

Germany’s inflation slowed to 2.3%, confirming a broad disinflation trend across Europe.

ECB officials, including Isabel Schnabel and José Luis Escrivá, struck a measured tone, stressing stability over premature easing.

The euro held firm near $1.165, supported by narrowing U.S.-EU inflation differentials.

Japan — New Leadership, Policy Continuity

Sanae Takaichi officially took office as Japan’s first female Prime Minister, pledging continued monetary accommodation and fiscal stimulus to support growth.

The BoJ left rates unchanged at 0.5%, with two dissenters (Tamura, Takata) urging a hike — signaling early cracks in consensus.

Tokyo inflation: +2.8% YoY (Oct), up from 2.6%, reinforcing the case for a gradual tightening bias in 2026.

The yen fell to 153.4 per dollar, its weakest since February, before recovering slightly on stronger inflation data.

Japanese equities rallied to record highs, supported by optimism over Takaichi’s stimulus and AI-related industrial policy.

China — Trade Relief Amid Industrial Divergence

Q3 GDP: +4.8% YoY (Q2 +5.2%), reflecting a modest slowdown amid a prolonged property slump.

Industrial profits surged +21.6% YoY in September, the strongest in nearly two years, as overcapacity controls stabilized pricing.

However, manufacturing PMI slipped further to 49, marking the longest contraction streak in nine years, showing uneven recovery.

The PBOC was expected to resume bond purchases for the first time since January to ease liquidity conditions and support equities amid renewed investor inflows.

Australia — Labor Costs and Policy Caution

Former RBA Governor Philip Lowe urged a pause in policy moves, warning that unit labor costs (~5% YoY) remain too high for a durable return to the 2.5% inflation midpoint.

The Aussie dollar outperformed G10 peers on trade optimism, supported by higher commodity prices and China’s policy stabilization.

Economic data showed steady employment and fiscal improvement, with the budget deficit narrowing faster than forecast.

AI & Technology — Nvidia at $5 Trillion, OpenAI IPO Nears

Markets Snapshot (as of 31 Oct 2025)

Economic Growth

Global data painted a resilient but uneven picture — steady in the U.S., stabilizing in Europe, and softening in China. Fiscal support and trade détente underpin growth into early 2026.

Jobs

U.S. labor softness persists but no collapse yet; Japan and Europe show mild improvement. Australia’s labor costs remain elevated, constraining inflation progress.

Debt & Fiscal

IMF warned the U.S. debt trajectory could exceed Italy and Greece by 2030 (>140% GDP). The U.K. faces a £22bn fiscal hole; Japan’s spending to rise under Takaichi.

Inflation

Disinflation holds globally: U.S. 3.0%, Eurozone 2.3%, Japan 2.8%. Inflation fears easing, supporting dovish central bank bias into 2026.

AI & Innovation

AI dominance remains the defining market driver — Nvidia, OpenAI, SK Hynix, Meta, and Anthropic cementing a multi-trillion-dollar wave of data-infrastructure expansion.

ESG & Commodities

Energy strategies diverged: Exxon expanding output, Chevron focusing on capital return. Renewables quiet amid fiscal reprioritization. Gold’s correction reflects improved risk sentiment.

Recession Risks

Recession odds diminished further. The Fed’s soft landing scenario remains intact; global PMIs suggest slowing, not contracting, growth.

Bottom Line (Week of 27 Oct – 31 Oct 2025):

Markets ended October with AI-fueled exuberance, Fed moderation, and trade relief combining to extend the equity rally into November.

While fiscal fragility and narrow breadth remain concerns, liquidity, earnings resilience, and seasonality continue to favor risk assets — setting the stage for a controlled Q4 melt-up led by AI and large-cap strength.