Market navigator: week of 27 October 2025
US equity indices reach all-time highs on cooling inflation data. Fed, ECB and BOJ convene for critical rate decisions. Gold retreats 6% from record peak whilst crude oil surges on Russian sanctions.
Summary
- What happened last week: US-China trade dialogue advances as Bessent meets Chinese Vice Premier He, lifting Hang Seng Index 3.6%. Japan appointed Sanae Takaichi as its new prime minister.
- Markets in focus: US equity indices reached fresh all-time highs following cooler inflation data. Gold retreated 6% from record $4381. WTI crude surged 8% on Russian sanctions.
- The week ahead: The Fed, ECB and BoJ hold interest rates meetings. Five Magnificent Seven companies report earnings. China's PMI data releases Friday.
What happened last week
- Progress on trade negotiations: US Treasury Secretary Bessent met Chinese Vice Premier He in Malaysia, marking significant progress towards de-escalation. The White House expressed optimism regarding the Trump-Xi dialogue at the South Korea summit on Thursday. The Hang Seng Index rebounded 3.6% last week. Meanwhile, the US terminated all trade talks with Canada following an anti-tariff television advertisement.
- Persistent challenges in China's economy: Third-quarter gross domestic product (GDP) expanded 4.8%, meeting expectations. Whilst year-to-date growth of 5.2% suggests China remains on course to achieve its 5% target, expansion remains concentrated within industrial production. Retail sales growth decelerated to 3.0%, the slowest pace since last November, while used home prices recorded their steepest drop in twelve months.
- Key takeaways from China's plenum: The four-day session established priorities for the 15th five-year plan, emphasising artificial intelligence and technology development. Officials committed to combating involution while promoting birth-friendly policies. Notable personnel changes underscored the party's intensified focus on anti-corruption measures.
- Japan's new prime minister: Sanae Takaichi secured a simple majority in both parliamentary houses, becoming Japan's first female prime minister after forming an alliance with Nippon Ishin. However, challenges lie ahead as her Liberal Democratic Party struggles to maintain public support. The Nikkei broke through historic highs, approaching 50,000.
Markets in focus
Easing credit and inflation concerns propel US equities to record highs
All three major US equity indices established fresh all-time highs on Friday. The S&P 500 concluded the week with 1.9% gains, whilst the Nasdaq 100 and Dow Jones indices both advanced 2.2%. Improved US-China trade narratives provided positive sentiment, while robust earnings from regional banks Zions and Western Alliance alleviated credit concerns.
Markets surged on Friday following a cooler-than-expected Consumer Price Index (CPI) report. Core inflation rose 0.2% month-on-month (MoM) in September, the lowest reading in three months. Shelter prices increased modestly, though furniture, audio and video equipment, and apparel reflected tariff impacts. The CPI report provides confidence for the Federal Reserve (Fed) to cut rates at Wednesday's meeting. Bond futures reflect a 98% probability of an October cut and 91% probability of a December reduction.
Several major technology companies announced results last week. Tesla recorded strong sales in Q3 driven by US consumers' urgency to purchase electric vehicles ahead of the tax credit expiry. However, a 50% surge in operating expenses caused profits to decline substantially. Adjusted earnings per share fell 31% year-on-year (YoY), below market expectations. Intel, conversely, returned to profitability after securing significant artificial intelligence deals and implementing aggressive cost reduction measures. Share prices surged to an 18-month high following the results announcement. Earnings from five Magnificent Seven companies will be the focal point this week.
The US Tech 100 has regained momentum following the sharp sell-off on 10 October. With price action restored within the ascending channel established since mid-May, the index has potential to test the upper boundary near 26,150. However, the Relative Strength Index (RSI) warrants close monitoring as early signs of bearish divergence emerge. Inability to maintain momentum could drive the index towards the 50-day moving average (MA) near 24,400.
Figure 1: US Tech 100 index (daily) price chart
Gold retreats from historic peak
Following an impressive 14% rally since the start of the month, gold prices exhausted their upward momentum. After establishing a new record high at $4381, gold prices experienced a sharp 6% retreat on Tuesday, marking the steepest daily drawdown since 2013.
While the long-term fundamental investment thesis for gold continues to be supported by geopolitical uncertainties, central bank allocations, and diminishing confidence in fiat currencies, the recent surge exhibited signs of overbought conditions. With part of the rally driven by fear-of-missing-out (FOMO) sentiment and exuberant interest from leveraged traders, profit-taking from investors appears unsurprising. The recent pullback could represent a healthy reset for the medium to long-term trend.
Since reaching $4003 on Wednesday, the decline has largely stabilised. Whether last week's sell-off represents the beginning of a trend reversal or merely a technical correction will depend on price action in the coming week. Key levels to monitor include support at approximately $4000 near the 20-day MA, as well as $3940, which marks a 10% drawdown from the peak. If historical patterns provide guidance, the pullbacks in November 2024 and April 2025 were both approximately 10%. A break below these levels could further exacerbate outflows from the asset class. Conversely, a hold above $4000 would signify buy-on-dip interest, which could propel gold prices back towards record high levels.
Figure 2: Spot gold (daily) price chart
Crude oil rebounds on sanctions
Western Texas Intermediate (WTI) crude oil rebounded sharply from its five-month low on Monday, recording its strongest weekly performance since the Israel-Iran conflict in June, with front-month futures surging 8%. However, this does not alter the fact that oil remains one of the worst-performing asset classes this year, returning -14%.
Last week's rally was triggered by US sanctions on Russia's largest oil companies, Rosneft and Lukoil. In response to Russia's lack of progress in ending the war against Ukraine, the US intensified its sanctions on oil companies, aiming to eliminate a major revenue stream supporting the military campaign. The UK also added Rosneft and Lukoil to its sanction list, while the European Union is implementing a ban on Rosneft and Gazprom. The latest round of sanctions is likely to substantially complicate India's ability to continue purchasing Russian oil, which currently accounts for 36% of India's total oil imports. Reuters reported that Chinese state-owned oil companies have paused purchases of seaborne Russian crude oil to assess the implications of sanctions.
These sanctions should not be viewed lightly as they possess the capacity to drive oil prices higher. However, the impact appears to have been weighed against the backdrop of increasing output from OPEC+ as well as lower consumption demand from slower global economic growth. Despite an unexpected decrease in US crude oil inventories last week, the medium-term outlook appears dim as the International Energy Agency anticipates supply surplus to exceed 4 million barrels per day in 2026.
The latest price chart indicates that US crude oil prices remain dominated by a bearish trend established since late June, trading below the 200-day MA. The sharp rebound is currently positioned at the 50-day MA at approximately $61.80 per barrel. Additional developments restricting future oil supplies could propel prices further towards the resistance range between $62.90 and $63.90. Should oil prices fail to break through the 50-day MA, the bearish trend may resume, with support at approximately $55-$56.
Figure 3: US crude oil futures (daily) price chart
The week ahead
The week presents critical central bank decisions alongside important economic indicators. Central banks dominate Thursday's agenda with three major policy meetings. The Fed is widely expected to deliver a 25-basis-point rate cut, bringing the policy rate to 3.75%-4.00% as labour market softening continues. Focus will centre on the tone of the meeting statement, as investors scrutinise for clues regarding the monetary policy trajectory in December and 2026. The European Central Bank (ECB) will likely maintain its deposit rate at 2% as the central bank has signalled the easing cycle may be at its end. The Bank of Japan (BoJ) faces a more complex calculus as core inflation accelerated to 2.9% in September, yet newly appointed Prime Minister Takaichi advocates for maintaining accommodative policy, creating uncertainty around the central bank's next move from its current 0.5% rate.
US economic data releases remain subject to considerable uncertainty. The shutdown has already disrupted the normal calendar, putting Friday's scheduled core personal consumption expenditure (PCE) – the Fed's preferred inflation gauge – and retail sales figures in limbo.
Australia's third-quarter inflation and the Euro Area's October price data will prove significant for the Reserve Bank of Australia (RBA) and ECB respectively, while China's official purchasing managers' indices (PMI) will assess business activities in the world's second-largest economy.
Corporate earnings season reaches its climax with five Magnificent Seven members reporting results. Microsoft, Alphabet, Meta, Apple and Amazon will provide essential perspectives on artificial intelligence investment returns and consumer technology demand. The seven mega caps are still anticipated to outpace other US companies, though the growth gap may narrow next year. Earnings from Chinese state-owned financial institutions including Industrial and Commercial Bank, China Construction Bank and Bank of China will reveal how domestic economic challenges are affecting the banking sector. Meanwhile, results from Japan's industrial leaders such as Hitachi, Keyence and Panasonic will demonstrate the health of the manufacturing sector amid trade uncertainties.
Figure 4: Earnings growth projection by analysts – Magnificent Seven vs. other US companies
Key macro events this week
Potential data release from delay caused by the US government shutdown
- US Non-Farm Payrolls (September): previous 22K, consensus 50K
- US Unemployment Rate (September): previous 4.3%, consensus 4.3%
- US Trade Balance (August): previous -$78.3B, consensus -$60.4B
- US PPI MoM (September): previous -0.1%, consensus 0.3%
- US Retail Sales MoM (September): previous 0.6%, consensus 0.4%
Monday 27 October 2025
- Subject to resolution of shutdown – US Durable Goods Orders MoM (September): previous 2.9%, consensus 0.3%
Wednesday 29 October 2025
- 8.30am (HK time) – Australia inflation rate YoY (Q3): previous 2.1%, consensus 3.0%
- 1.00pm (HK time) – Japan Consumer Confidence (October): previous 35.3, consensus 35.6
Thursday 30 October 2025
- 2.00am (HK time) – US Fed Interest Rate Decision: previous 4.00-4.25%, consensus 3.75-4.00%
- 11.00am (HK time) – Japan BoJ Interest Rate Decision: previous 0.5%, consensus 0.5%
- 6.00pm (HK time) – Euro Area GDP Growth Rate QoQ Flash (Q3): previous 0.1%, consensus 0.1%
- 9.15pm (HK time) – ECB Interest Rate Decision: previous deposit rate 2%, consensus 2%
- Subject to resolution of shutdown – US GDP Growth Rate QoQ Advance (Q3): previous 3.8%, consensus 3%
Friday 31 October 2025
- 7.30am (HK time) – Japan Tokyo CPI excluding fresh food (October): previous: 2.5%, consensus 2.6%
- 9.30am (HK time) – China NBS Manufacturing PMI (October): previous 49.8, consensus 49.6
- 9.30am (HK time) – China NBS Non-Manufacturing PMI (October): previous 50.0, consensus 50.0
- 6.00pm (HK time) – Euro Area Inflation Rate YoY Flash (October): previous 2.2%, consensus 2.1%
- Subject to resolution of shutdown – US Core PCE Price Index MoM (September): previous 0.2%, consensus 0.2%
- Subject to resolution of shutdown – US Personal Income MoM (September): previous 0.4%, consensus 0.4%
- Subject to resolution of shutdown – US Personal Spending MoM (September): previous 0.6%, consensus 0.4%
Key corporate earnings
(in local exchange time)
Tuesday 28 October 2025
Wednesday 29 October 2025
Thursday 30 October 2025
- BYD
- China Construction Bank
- PetroChina
- Industrial and Commercial Bank
- Hitachi
- Panasonic
- Eli Lilly
- Mastercard
- Apple
- Amazon
- Shell
Friday 31 October 2025
Source: Trading Economics, Nasdaq, LSEG (as of 18 October 2025)
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