Fin-X Weekly 3 November 2025

Global equities advanced last week after several significant earnings reports and some positive announcements following the meeting between American and Chinese leaders. However, higher interest rate expectations constrained returns across other asset classes.

A significant upside surprise in quarterly CPI figures prompted the Australian dollar to strengthen.

The Federal Reserve cut the policy rate and signalled the end of its balance sheet reduction. However, Chair Powell pushed back against expectations of another cut in December.

Key events this week include policy decisions from the RBA and several European central banks, the ISM surveys, the ADP employment report, and the US Supreme Court’s tariff hearing. The quarterly reporting season also continues.

Global equity markets advanced over the week amid a busy schedule of earnings and central bank meetings. The US Federal Reserve and Bank of Canada both cut rates, but comments from the Fed Chair pushed bond yields higher, weighing on interest-sensitive property and infrastructure sectors.

The Australian dollar strengthened, offsetting gains in unhedged global equities. Australia’s September-quarter CPI surprised with a +3.2% annual increase, up from +2.1% in June. Housing, recreation, and transport costs drove the rise, with electricity prices a key factor. Electricity prices rose by +9.0% in the quarter, driven by annual price reviews and rebate timing. However, excluding rebates, they still increased by +4.8%. Trimmed mean inflation rose +3.0% year on year, the first increase since December 2022. Markets had previously priced in a better-than-even chance of a rate cut this week, but the CPI data erased expectations of any cut before next year.

With President Trump on an Asian tour, the US government shutdown remained unresolved, delaying the GDP report.

After a cordial meeting with Japan’s new prime minister, the president met China’s President Xi Jinping in Busan for 1 hour and 45 minutes. The two leaders agreed to a one-year trade truce and further talks on implementation. Both sides described the meeting as a de-escalatory step that reopened dialogue while leaving major issues unsettled.

The US will halve fentanyl-related tariffs to 10%, cutting average tariffs on Chinese goods from about 57% to 47%. In return, China pledged stronger enforcement against fentanyl precursors. Beijing also agreed to suspend for one year its new export controls on rare earth metals and related technologies, easing supply pressures for high-tech industries. The arrangement will be reviewed annually.

The US will suspend certain Section 301 port fees on China-linked vessels, and China will pause corresponding countermeasures pending further technical talks. Scott Bessent said Beijing had agreed to buy 12 million metric tonnes of soybeans this year, which is down from about 25 million tonnes in normal trade years.

At the end of his tour, President Trump unexpectedly announced that the US would soon resume nuclear testing for the first time in 30 years, apparently to project strength.

Despite tensions, China’s exports have continued to grow. Goldman Sachs raised its 2025 GDP growth forecast to +5.0% from +4.9%, citing expected annual export volume growth of 5 % to 6%. Industrial profits rose +21.6% in September from a year earlier, the largest gain since November 2023. However, the manufacturing PMI slipped to 49 in October from 49.8, marking the longest contraction in more than nine years. The non-manufacturing PMI was steady at 50.1.

Despite being starved of data, the FOMC cut the federal funds rate target range by -0.25% to 3.75% - 4.00%. Chair Powell cautioned that another cut in December was “not a foregone conclusion”, saying, “When you’re driving in fog, you slow down.” However, this meeting was also notable for two dissents, one in each direction. Kansas City Fed President Jeffrey Schmid preferred to keep rates on hold, while recent White House appointee Stephen Miran urged the FOMC to cut by half a percentage point.

The Fed also announced an end to balance-sheet reduction from 1^st December, as signs of stress appeared in the repo market.

Treasury Secretary Bessent named five potential successors to Jerome Powell as Fed Chair: Bowman, Hassett, Rieder, Waller, and Warsh. An appointment is likely before the end of the year.

The Bank of Canada cut rates from 2.50% to 2.25%, while the ECB and Bank of Japan left policy unchanged. The UK, Sweden, and Norway are expected to join the RBA in holding rates steady this week.

ECB President Christine Lagarde said policy is in a “good place” and emphasised data-dependence in future decisions. Swap markets indicate the ECB’s easing cycle has ended. Euro-area inflation eased but stayed above 2% in October, while French inflation fell further below target. French lawmakers approved several tax-raising amendments, casting doubt on the government’s ability to finalise the 2026 budget by year-end.

The Japanese yen fell -1.1% against the US dollar after the BOJ’s decision. Investors now expect Japanese rates to rise following stronger growth and a +2.8% year-on-year increase in Tokyo inflation. Governor Ueda balanced hawkish and dovish signals, retaining flexibility to lift rates in December or January.

Nvidia became the first company to reach a US$5 trillion market capitalisation. It reported orders for 14 million additional Blackwell chips over the next five quarters, worth about US$500 billion in sales. The company will supply more than 260,000 AI chips to Samsung, Hyundai, and SK Group under South Korean government-brokered deals. It is also investing US$1 billion in Nokia and will provide AI-powered computing systems for its wireless networks.

Approximately two-thirds of S&P500 companies have reported Q3 results. Revenues are up +8.4% and earnings have risen by +10.3% on average compared to a year ago.

Five of the “Magnificent Seven” stocks reported earnings during the week. Apple (+2.9%) delivered +8% year-on-year revenue growth, broadly in line with estimates, though China sales lagged expectations.

Alphabet (+8.2%) surpassed US$100 billion in quarterly revenue for the first time, supported by strength in YouTube advertising and Google Cloud. Amazon (+8.9%) rallied after lifting the upper end of its sales forecast, with CEO Andy Jassy noting cloud growth at its fastest pace since 2022.

Meta (-12.2%) sold US$30 billion in bonds, attracting US$125 billion in orders, but its aggressive spending plans unsettled investors.

Microsoft (-1.1%) posted +18% revenue growth, though concerns about high capital expenditure levels intensified.

In Australia, ANZ warned of a A$1.1 billion profit impact from staff reductions and regulatory penalties ahead of full-year results. The bank plans to cut over 3,000 jobs, about 8% of its 43,000-strong workforce, at a pre-tax cost of A$585 million, above the initial forecast of A$560 million.

In addition to the central bank meetings, the US Supreme Court will hear arguments this week on the legality of President Trump’s country-specific tariffs. The Constitution appears to rule out presidential tariff powers, but the Court has previously upheld administrative authority in several comparable cases despite clear textual limits.

Household spending and job advertisements will be published in Australia later today. Significant American data is likely to be constrained to the ISM surveys and ADP private payrolls figures unless the shutdown is resolved. 135 more S&P500 companies are scheduled to report results.