Investment environment overview 10/2025

Global equity markets sustained their bullish momentum throughout October, capping-off a remarkable six-month rally streak as key U.S. benchmarks continued to notch all-time highs. Optimism was driven by a strong start to the Q3 earnings season, a U.S.-China trade deal and the Fed’s second interest rate cut of the year, which brought the target range to 3.75%‑4.00%. Yet Powell warned that further easing was “not a foregone conclusion”. Market breadth remained moderate, suggesting that while the rally persisted, gains continued to be increasingly concentrated in select sectors and large cap growth names, with Mag7 companies now making up nearly a record 37% of the S&P 500’s total market capitalization.

The STOXX 600 rose by approximately 2.5% during the month, supported by a firm European Q3 earnings season start on the backdrop of the ECB’s decision to keep rates steady amid a fairly stable Eurozone economy. Technology, luxury (led by LVMH), energy, healthcare and food & beverage sectors contributed to gains, while mining and insurance underperformed. Late in the month, autos rallied following news that Nexperia would resume chip shipments from China. Bitcoin surged to BTC/USD 125,000 before ending down 4.3%, while BTC spot ETFs added USD 3.5b, raising institutional holdings to 12% of total BTC supply.

Soybeans for rare earths

On October 30, President Trump and President Xi struck a trade ceasefire, with China agreeing to suspend its rare earth export controls for one year and commit to buying 12m metric tons of U.S. soybeans in 2025 and 25m annually for the next three years, restoring pre trade war demand. Despite the announcement, the most active CBOT soybean future contract fell 1.3% during the day as the market reacted to the lack of concrete details about the deal.

China, which controls 60% of global rare earth mining and 90% of processing, leveraged this dominance, while the U.S. backed down from threatened 100% tariffs, maintaining current levels and reducing tariffs on fentanyl. Other concessions included delaying “Entity List” restrictions and suspending docking fees for a year, resulting in about 47% average tariffs on Chinese goods. It is unsure who benefited the most: some see a Trump win for commodity flows, while others argue China gave up little and forced U.S. concessions.

Earnings season off to a great start, again

As of the time of writing, 64% of S&P 500 companies have reported Q3 results, with 83% beating EPS estimates, the highest since Q2 2021, and 79% exceeding revenue forecasts, showing strong operational and topline growth. Earnings grew 10.7% YoY, marking the fourth straight quarter of double-digit gains, led by IT sectors’ 27% growth driven by AI, cloud computing, and semiconductors. Net profit margin for the index increased to 12.9%, with IT margins at 27.6%. For Q4 guidance is mixed, with 28 companies issuing negative and 21 issuing positive EPS outlooks.

The market heavily punishes earnings misses, with “penalized” stocks dropping 3-5%, and mega cap tech seeing selloffs of 8-12%, reflecting sensitivity to shortfalls amid high valuations. Among the Mag7 that have already reported, Amazon saw the strongest post earnings surge, with shares jumping over 10% after reporting 20% Amazon Web Services sales growth. In contrast, Meta saw the sharpest decline after majorly missing earnings, with shares falling about 11%.

Chinese chip halt threatens European auto production

Nexperia, which produces over 100b semiconductor chips annually, saw its Chinese operations, accounting for 70% of the company’s final assembly capacity, halt chip deliveries on October 14, amid a geopolitical dispute between the Netherlands and China. The stoppage threatened European auto production, where Nexperia supplies over 40% of semiconductors, with inventories projected to last just weeks and analysts predicting German car output potentially falling by 10%, or up to 30% in a worst-case scenario.

The mentioned U.S.-China trade deal resumed exports, though tight conditions are expected until mid-2026, when new EU chip fabs come online.

Metals skyrocket before easing; dollar stabilizes

Despite Fed and ECB moves, USD held up well, ending the month on a positive note and adding some stability to the broader picture. Looking ahead, EUR/USD could be poised to restart a longer-term uptrend, provided EUR/USD stays above key levels. Short-term, we’re watching support at 1.1400 and 1.1200, which could present buying opportunities if the pair dips that low. Resistance around 1.2000 remains a critical threshold.

Meanwhile, commodities have stolen the show. Gold continues to trade at historically high levels, and silver briefly hit XAG/USD 50 for the third time ever. During this euphoria, our advised strategy was to exit or at least trim substantially long positions. The recent price action and other patterns suggest a potential top in precious metals may be forming. Given the surge in gold and silver and the essential nature of food, we turn our focus to the agricultural sector. Most soft commodities appear relatively cheap, and our analysis of both technical indicators and fundamental factors supports a positive outlook.