Fin-X Weekly 27th of October 2025

Economic data remained limited by the US government shutdown. But US equities set fresh highs as softer inflation data reinforced expectations of a Federal Reserve rate cut this week and global PMIs pointed to steady expansion led by the US and Europe. China’s GDP growth beat forecasts but slowed during the quarter.

Australia and the US concluded a significant rare earths deal and renewed their commitment to AUKUS.

This week brings the Trump–Xi meeting, policy decisions from the Fed, the ECB, and the Bank of Japan, Australian CPI, and a large volume of US corporate earnings, including five of the “Magnificent 7”.

US equities advanced to new record highs last week despite continued credit concerns as softer inflation data strengthened expectations of a Federal Reserve rate cut at this week’s meeting. Small-cap stocks also rose, while the US 10-year Treasury yield dipped below 4%, its lowest level since April. Gold retraced by more than -6% from recent highs without an identifiable trigger, but held above US$4,000 per oz.

Wall Street’s gains were led by technology stocks, with Apple shares reaching a ten-month high. Earnings from Coca-Cola exceeded expectations, while Tesla, Netflix and IBM reported weaker results.

Amazon Web Services experienced a major global outage between 19th and 20th October, disrupting thousands of websites and applications worldwide. The disruption originated in its US-East-1 (Northern Virginia) region, the firm’s largest data hub and core component of public internet infrastructure.

US macroeconomic data remained limited by the ongoing government shutdown, but inflation figures provided the key focus. Headline CPI rose +3.0% yoy in September, the highest level since January yet marginally below consensus (+3.1%). Core CPI was unchanged at +3.0% yoy, indicating gradual progress towards disinflation.

Markets are now fully pricing a -0.25% cut this week to 3.75%–4.00%, reflecting rising labour-market risks. The Fed is also expected to confirm the end of its balance sheet reduction program, as the Chair recently signalled.

S&P Global’s October flash PMIs continued to show global expansion led by the US and Eurozone, offset by slower momentum across Asia. The data pointed to a resilient start to Q4, with easing input-cost pressures but lingering caution over tariffs and policy uncertainty. Business confidence weakened broadly, constrained by political risk, high funding costs, and softening trade flows.

Commenting on the US survey, Chief Business Economist at S&P Global Market Intelligence Chris Williamson noted that “although input costs continued to rise sharply again in October, reflecting tariff pass-through, average selling-price inflation has eased to the lowest level since April as firms compete more aggressively on price.”

This week’s early estimates of GDP are expected to show annualised Q3 growth of +3.0% for the US and a yearly increase of +1.2% for the eurozone.

In Australia, services activity continued to expand while manufacturing slowed. Jingyi Pan, S&P Economics Associate Director, said: “While it was positive to see services activity expanding at a solid pace in October, growth in new business and employment has moderated. Falling optimism among service providers, combined with weakening manufacturing sentiment, points to a softer near-term outlook.”

China’s GDP slightly exceeded expectations but moderated from +5.2% yoy in Q2 to +4.8%. Industrial production surprised to the upside at +6.5% yoy, while retail sales slowed to +3.0%, in line with expectations. The jobless rate edged down to 5.2%.

President Trump is scheduled to meet President Xi Jinping on Thursday. Treasury Secretary Scott Bessent confirmed that Washington is considering new export restrictions on software incorporating US technology. The announcement follows Trump’s earlier statement that controls on “any and all critical software” will take effect from 1 November.

The US is also advancing its new critical minerals partnership with Australia, announced last week, designed to reduce reliance on Chinese supply chains. The A$8.5 billion initiative will see each country contribute US$1 billion to joint projects over the next six months, with a further US$1 billion commitment to follow. Prime Minister Albanese described the agreement as a step towards “the next level” of economic and defence co-operation.

Australia also drew support as Trump reaffirmed his commitment to the AUKUS submarine and technology-sharing agreement, despite an ongoing Pentagon review. The arrangement, signed by former President Biden, will see Australia acquire second-hand Virginia-class vessels from 2032. Production delays had prompted concerns about Navy readiness, but Trump said, “It was going too slowly. We have the best submarines anywhere in the world and we’re going full steam ahead.”

Trade talks with Canada were meanwhile suspended after the President reacted angrily to a provincial advertisement portraying Ronald Reagan arguing against tariffs.

Oil prices firmed after Secretary Bessent said the US would tighten sanctions on Russia. Washington also lifted restrictions on Ukraine’s use of Western long-range missiles. According to reports in The Wall Street Journal, the Trump administration quietly ended the prohibition in mid-October, enabling Kyiv to use British and French-supplied cruise missiles for limited cross-border strikes without separate US clearance.

Beyond the US-China meeting, the Fed’s policy decision and several GDP estimates, the ECB and Bank of Japan are expected to leave rates unchanged this week. Australia’s Q3 CPI is forecast to rise to +3.1% yoy, while China’s official PMIs are due on Friday.

The coming week is the busiest of the US earnings season, with 172 companies scheduled to report, including ResMed and five of the “Magnificent 7”: Alphabet, Microsoft, Meta, Apple and Amazon

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