Markets Unwrapped: October 2025
October saw returns for global equities vary. After an incredibly strong previous month, Chinese equities saw a noticeable retreat. With trade tensions rising to begin the month and the US announcing a 100% tariff to come into effect from November (a truce being worked out later in October), China’s manufacturing indicator showing a sixth straight decline, showcasing China’s economic slowdown. In comparison, US equities saw it’s sixth straight month of gain with a return of 2.27% for the month and up almost 23% since starting its rally in May this year and Europe also continued to rally as business continue to spend rapidly in infrastructure and defence.
Despite being at all time highs through the back half of the month, Australian equities ended the month relatively flat as the official quarterly inflation came in higher then projected, squashing the hope of a rate cut by the RBA in the first week of November. Despite a slowing Chinese economy typically impacting Australia’s resource companies, this sector rallied through October.
The Australian 10-year government bond yield stayed relatively flat to end the month despite significant volatility through October as US-China trade tensions grew-and subsequently reduced. Quarterly inflation showing pressure is still present, sent yields back up in the final days of October as these figures potentially suggest any rate cuts will need to be put on hold in order to manage inflation.
Tariffs continue to flow into the economy and despite not all of the impact yet to be felt, predictions indicate that current tariffs have already added 0.4% to core inflation in the US. The US economy continues to shows signs of a slow down and unemployment is now a major concern, as despite inflation remaining above target, the Federal Reserve decided to cut the cash rate by 0.25%.
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