Market Commentary with Chris Twort - Friday 24th October

Global markets were driven this week by a mix of political transitions, trade negotiations, and commodity volatility - with a continued focus on U.S. monetary policy and China relations.

Weekly Recap

Japan:
The Liberal Democratic Party confirmed a coalition with the Japan Innovation Party, paving the way for newly elected leader Sanae Takaichi to become Japan’s next Prime Minister. Known for her pro-stimulus stance and criticism of the Bank of Japan’s tightening, her appointment sent the Nikkei 225 up 3% and strengthened the JPY to 150.70. Later in the week, Takaichi officially secured the parliamentary vote, promising cash handouts and tax cuts — a move that pushed 30-year JGB yields to record highs amid concerns over fiscal sustainability.

US & China:
President Donald Trump signed a deal with Australia to strengthen U.S. access to rare earth metals, reinforcing his pledge to secure critical supply chains. Meanwhile, U.S.–China trade negotiations resumed in Malaysia, as both sides sought to ease escalating tensions ahead of the November truce deadline. Market sentiment improved following Trump’s prediction of a “really good trade deal” with Beijing.

Europe:
France’s credit rating was downgraded by S&P to AA- from A+, reflecting fiscal strain and political uncertainty. A potential follow-up review by Moody’s later this week poses further risk for French bonds.

Markets & Commodities:
After several weeks of strength, gold and silver experienced their sharpest corrections in years — down 6.3% and 8.7% respectively — before stabilising midweek. The pullback was largely seen as technical after prolonged overbought conditions, while central bank demand remains firm.
In energy, the U.S. announced sanctions on Russia’s largest oil producers, sending Brent crude up 4% to around $64.40. This move came as Trump prepared for further talks with China’s Xi Jinping regarding Russian oil purchases.

Data & Earnings:
The week was light on data due to the ongoing U.S. government shutdown, which has delayed the release of September’s CPI figures and several labour market updates. The UK CPI surprised slightly lower, while investors awaited major earnings reports from Netflix, GE, Coca-Cola, Tesla, IBM, and Barclays.

Chris’ Comments

“All that glitters is not gold.”
The phrase originates from a line in William Shakespeare's The Merchant of Venice, but this week, it applies perfectly to the financial markets. We have seen the largest intraday correction in 10 years following nine consecutive weeks of rallies.

Support in XAUUSD sits at $4,000, and while the pullback was largely seen as technical, there is still strong belief that central bank demand remains firm as reserve requirements are yet to be completed heading into year-end.

Data - yes, we’ve really been missing it!
Today, we have the US CPI data at 13:30, where we expect a 0.3% increase in September core CPI. Over the coming months, tariffs are expected to continue boosting monthly inflation, and we forecast core CPI inflation of around 0.2%–0.3%.

Aside from tariff effects, we expect the underlying trend in inflation to ease, reflecting smaller contributions from housing rentals and labour markets. However, this data point is unlikely to influence the final two Fed meetings of the year — 29th October and 10th December — both worth putting in your diary.

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