Fin-X Weekly 13th of October 2025

Global equities fell sharply, and safe havens rallied late last week after President Trump announced plans to impose 100% tariffs on Chinese goods and new export controls on critical software, reigniting fears of a global trade disruption.

The Federal Reserve’s September minutes signalled a hawkish bias, though officials remain divided on the outlook for inflation and growth.

The budget standoff continued in Washington. This week’s US CPI report is likely to be delayed if the government shutdown continues.

This week’s other key events include the IMF and World Bank meetings, accompanied by central bank speeches on the economic outlook, and quarterly earnings from major US banks.

Global equities erased early-week gains on Friday after US President Donald Trump announced a new 100% tariff on China and additional export controls on “any and all critical software” from 1st November. At the same time, he threatened to cancel an upcoming meeting with President Xi. The announcement followed earlier warnings of trade action over Beijing’s “hostile” export controls on rare-earth minerals, also due to begin next month. The existing deadline for negotiations with China had been 10th November, with the Supreme Court scheduled to consider whether Trump’s country-specific tariffs are lawful on 5th November.

The new tariffs would raise import taxes on many Chinese goods to 130%, just below the 145% rate imposed earlier this year. Tariffs on Chinese imports have had the most significant impact on American consumers, and fears of a renewed tariff escalation have revived concerns over a global disruption to trade.

The S&P 500 fell -2.7% on Friday, its sharpest one-day decline since 10th April, when markets were still reacting to Trump’s initial “Liberation Day” tariff announcements. The Nasdaq Composite also shed -3.6% and bitcoin fell -5.6%, ending the week down -8.1%. The Australian market is expected to open -1.0% lower today.

Safe havens were in demand. The US 10-year Treasury yield fell by -0.10% to 4.03%, while gold and silver held above the US$4,000 and $50 marks reached earlier in the week, despite a firmer US dollar.

Leading up to the China announcement, investor sentiment had been more positive. The S&P 500, Nasdaq and Russell 2000 had all reached new record highs, supported by a +24% rise in AMD shares after the company reached a deal with OpenAI that could ultimately see the maker of ChatGPT take a 10% stake in the chipmaker. AMD plans to use specific graphics processing units rolled out over several years. Nvidia, its main competitor, which last month announced a US$100 billion infrastructure partnership with OpenAI, came under pressure following the news. On CNBC’s Squawk Box, Nvidia CEO Jensen Huang commented: “I saw the deal. It’s imaginative. It’s unique and surprising considering they were so excited about their next-generation product. I’m surprised that they would give away 10% of the company before they even built it. Anyhow, it’s clever, I guess.”

Oil prices rose before retreating after President Trump announced an agreement between Israel and Hamas. The deal includes the release of all remaining hostages held by Hamas, Israel’s release of almost 2,000 Palestinian prisoners, and increased UN aid deliveries to Gaza. While welcomed internationally, questions remain over its durability, with some Israeli officials voicing reservations despite government approval and Hamas calling for condemnation of Israeli military actions.

OPEC+ also agreed to restore 137,000 barrels a day of halted supply, a slower pace than earlier this year, despite signs that a long-awaited surplus is emerging. The decision comes as the forward curve weakens, with cargoes building at sea and the International Energy Agency projecting supply will exceed demand by a record margin next year.

A lower oil price would offer some relief to households. The New York Fed survey showed consumers still expect the rate of inflation to remain elevated.

The Federal Reserve cut rates by -0.25% in September, but last week’s minutes struck a relatively hawkish tone. “Almost all” officials supported the cut, though “a few” favoured leaving rates unchanged. “A majority” cited upside risks to inflation amid continued tariff uncertainty. At that meeting, newly appointed Fed Governor Stephen Miran dissented, saying he saw less tension between the Fed’s dual mandates than others. Miran reiterated that the Fed could continue lowering rates, given slower population growth and limited inflation impact from President Trump’s tariffs. However, policymakers noted that the government shutdown could complicate the Fed’s upcoming decisions, with key data releases being delayed. This week’s CPI and PPI reports seem highly likely to join the list of postponed publications as Congress remains at an impasse. Democrats have said they will not support a funding bill unless it addresses healthcare subsidies and will not accept promises of future talks. President Trump indicated willingness to negotiate but also suggested blocking back pay for some federal workers, saying, “there are some people that really don’t deserve to be taken care of.” The White House Budget Office has drafted a memo arguing that the Government Employee Fair Treatment Act of 2019 is deficient, stating that furloughed staff can only be paid if the bill ending the shutdown explicitly allocates funds. Democrats have wholeheartedly rejected this interpretation.

Despite the gridlock at home, the US government has offered US$20 billion in financing to stabilise Argentina’s economy and conducted a rare intervention in currency markets to support the peso. The intervention aims to assist President Javier Milei, a Trump ally, ahead of Argentina’s midterm elections.

In France, Prime Minister Sébastien Le Cornu resigned after just 26 days, deepening a political crisis sparked by last year’s snap elections, which led to a hung parliament. France’s fifth prime minister in under two years had been tasked with securing parliamentary support for a 2026 budget but faced criticism for largely mirroring that of the ousted predecessor, François Bayrou. In a surprise move on Friday, President Emmanuel Macron reappointed Le Cornu, who said on X that he had accepted Macron’s “mission” to “do everything so France has a budget for the end of the year.”

New Zealand’s central bank cut interest rates by more than expected, signalling openness to further reductions to stimulate weak demand. The Reserve Bank’s Monetary Policy Committee reduced the Official Cash Rate to 2.5% from 3.0% and remains prepared to ease further to anchor inflation sustainably near the 2% target.

In Australia, consumer confidence fell by 3.5% from September, according to Westpac, though the broader uptrend remains intact. ANZ–Indeed job advertisements dropped by -3.3% in September, the most significant monthly decline since February 2024. The unemployment rate, due Thursday, is expected to have risen to 4.3%, while NAB’s business confidence survey is due tomorrow.

We have also updated our infrastructure benchmark, replacing the S&P Global Infrastructure Index with the FTSE Global Developed Core 50/50 Infrastructure (Hedged) Index, which better reflects infrastructure strategies available to Australian investors.

This week, the IMF and World Bank annual meetings will take place, alongside related events featuring the RBA Governor. Fed Chair Jerome Powell will address the NABE Annual Meeting on the economic outlook and monetary policy. Quarterly earnings reports are due from major US banks, including JPMorgan, Goldman Sachs, and Wells Fargo, as well as technology group ASML. The American and Japanese markets are closed for public holidays today.

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