Global Market Overview | October 2025

05 November 2025

Global markets maintained positive momentum over the month of October (MSCI World Index: +2.0%) with emerging markets (MSCI Emerging Markets Index: +4.2%) outperforming once again as several regions, including Korea (MSCI Korea Index: +24.5%) and Taiwan (MSCI Taiwan Index: +10.8%), delivered robust performances amid ongoing optimism within the AI and semiconductor space. The Magnificent 7 (+4.9%) lifted the US market once again while the broader market also locked in gains (Russell 2000 Index: +1.8%) as investors continued to monitor several key events, including trade negotiations between the United States (US) and China, the Federal government shutdown, and the Federal Reserve’s policy announcement.

The US market delivered decent overall gains (S&P 500 Index: +2.3%) despite heightened volatility, helped by solid third-quarter earnings numbers from companies. The Federal government shutdown remains in place as lawmakers struggle to find common ground on government spending. Trade concerns with China surfaced once again with tit-for-tat announcements made by both governments – initially Beijing planned to expand export restrictions on rare earths and US President Donald Trump threatened to implement a fresh 100% tariff on Chinese goods in response. The heads of state met in South Korea towards month end and made notable progress in trade negotiations with Trump saying that the meeting was “amazing”. A one-year trade truce was agreed to, which contributed to the solid recovery in markets into month end. The Federal Open Market Committee (FOMC) lowered the fed funds target range by 25bps, which was widely anticipated – in addition, the central bank decided to conclude the reduction of its aggregate securities holdings at the beginning of December. At the press conference, Fed Chair Jerome Powell's tone was interpreted as hawkish relative to market expectations, with him warning that another cut in December is far from being a forgone conclusion.

Across the pond, European equities also delivered gains with the Euro Stoxx 600 Index adding 2.6% as investors cheered recent Eurozone growth numbers which showed that the economy expanded by 1.3% y/y in 3Q25, slightly above market expectations. Spain led the major economies, followed by the Netherlands and France. The better-than-expected growth outcome eased pressure on the European Central Bank (ECB) to cut interest rates in the near term. As expected, the ECB left interest rates unchanged for a third consecutive meeting in October noting that inflation remains close to its 2% medium-term target, and the Governing Council’s assessment of the inflation outlook was broadly unchanged. The council noted that the economic outlook remains uncertain, hence policymakers will continue to follow a data-dependent, meeting-by-meeting approach in setting monetary policy.

Moving over to the Asia Pacific region, China lagged over the month with the MSCI China Index falling 3.9% as trade and tariff concerns and soft economic data weighed heavily on sentiment. Japan, however, delivered a solid performance (MSCI Japan Index: +7.9%) with investors cheering the election of Japan's first female Prime Minister, Sanae Takaichi. Takaichi was considered to have the most expansionist fiscal and monetary agenda among five candidates in the Liberal Democratic Party race to replace hawkish Prime Minister Shigeru Ishiba.

Locally, the JSE delivered a positive performance as well with the All-Share index up 1.6% (USD terms: +1.2%), helped by broadly positive emerging markets. The removal of South Africa from the Financial Action Task Force’s (FATF) “greylist” was also a key event in capital markets, lending support to the local currency. Equity market gains were capped by a weaker performance by precious metal miners into month end as gold and PGM prices tempered from recent highs. In terms of economic data, the annual inflation rate ticked up to 3.4% in September from 3.3% in August, slightly below market forecasts of 3.5%. The reading confirms the consensus view that interest rates will remain on hold at the South African Reserve Bank’s next meeting.

Outlook

Local

• The International Monetary Fund’s (IMF’s) latest forecast update still suggests constrained global growth relative to the pre-pandemic period and pre-2025 forecasts. Even as import front-loading and favourable financial conditions have upheld 1H25 activity, country-level challenges are expected to emerge and could be exacerbated by market turbulence and asset repricing as well as policy gyrations. Industrial policy could be used to support key sectors through trade policy shocks, but long-term stability will be enhanced by structural reforms, macroeconomic rebalancing, and the rebuilding of policy buffers. Global growth is expected to ease from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026.
• Expectations for SA reflect the opposite trend. While 1H25 activity was disappointing, momentum is expected to lift in 2H25 and support growth of around 1% this year. We get mixed signals from the productive sectors, which reflect a challenging operating environment given global trade uncertainty and local structural impediments. However, indications on consumer spending remain encouraging. With stronger investments expected in the outlook, SA’s growth trajectory is upward.
• That said, restrictive monetary policy should contain growth. The MPC is expected to maintain a real policy rate of around 3% to support slow core inflation and guide inflation expectations lower. This will allow them to achieve their new preferred target of 3% even as administered price inflation slowly evolves. Fortunately, imported inflation is subdued and the rand’s resilience compounds this positive supply-side dynamic. Inflation should average 3.3% this year, 3.5% next year, before slowing towards 3% in 2027 and 2028. This outlook should allow monetary policy easing from next year. A formal backing of the 3% target by Treasury would create space for an earlier and more robust continuation of the cutting cycle.
• The Medium-Term Budget Policy Statement is expected to reflect Treasury’s commitment to fiscal consolidation. Revenue mobilisation by the South African Revenue Service (SARS) and a potential commodity price windfall should support tax revenue in the fiscal outlook, and when coupled with contained spending growth, the primary surplus (excluding interest payments) should continue to grow. This will be key to stabilising debt while an improving risk profile and lower inflation embed resilience in fiscal dynamics.

Global

• The global trade policy uncertainty index fell from its highs reached in April, but it remains high relative to history. US/China relations were the main topic of the month where it started with further threats to end exports of rare earths by China, in retaliation of more Chinese companies put on a ‘watch-list’ by the US. Eventually a truce was reached at the end of the month where China will buy US soybeans and pause its rare-earths licensing regime for at least a year. In return the US will halve the fentanyl-related tariffs effective immediately.
• The IMF released their quarterly global economic outlook in October. Growth in most countries were lifted somewhat compared to their previous report in July. World output is now expected at 3.2% and 3.1% for 2025 and 2026, respectively. The US growth forecast was lifted to 2.0%, up from 1.9%. According to the IMF, risks to growth are still tilted to the downside.
• This month, US CPI and core CPI both came out at 3.0%, slightly below expectations. Goods inflation is showing some evidence of tariff passthrough, but housing rental inflation (and owner's equivalent rent) is moderating. Inflation expectations are still elevated; University of Michigan one-year inflation expectations printed 4.6% from 4.7% in the previous month. This is still some way off the 2% target of the Fed. Shelter inflation and core services should continue to trend lower, causing overall inflation to move down towards target, but risks remain that inflation proves “stickier” than expected (depending on the rates where tariffs eventually settle).
• The Fed cut interest rates by 0.25% to 3.75%-4.0% at their October meeting, as expected. However, the cut was not unanimous, and Fed Chair Jerome Powell made it clear that a rate cut in December is not a done deal. There appears to be strongly differing views in the Committee, and limited data visibility due to the government shutdown. Markets are forecasting a 70% change of another cut in December, as well as another two cuts in 2026. The Fed also announced and end to their Quantitative Tightening (QT) programme, effective on 1 December 2025.
• China’s 3Q25 GDP came out at 5.3%, stronger than expected. Manufacturing and exports did most of the heavy lifting, as local consumer demand and the property sector remained constrained. Exports to the US have fallen sharply but exports to the rest of the world have increased by a similar amount as China seeks new trading partners to overcome steep US tariffs.
• The US dollar weakening trend paused in October with the USD index gaining 1.7%. Capital flows for the year have been out of the US into other less expensive markets as uncertainty remains (with Europe and emerging markets the biggest beneficiaries).
• Gold and platinum had a volatile month but still performed well, rising by 3.7% to $4 002 per fine ounce and remaining steady at $1 574. Reasons include central bank buying, geopolitical tensions, uncertainty around policies, lower interest rates, and growing investor appetite. Gold reached a high of $4 380, before retail ETF selling pulled the price lower.
• Oil also had a volatile month, rising to $66.80 per barrel on fears of Russian sanctions by Trump, but ending the month down 2.9% at $65.07.
• Given all the above uncertainties, we are closely aligned to our strategic asset allocation benchmarks.