Monthly Market Commentary
As at 30 October 2025
Economic Overview
Australia
US and Australia sign agreement on critical minerals
US President Trump and Australian Prime Minister Albanese have signed an agreement for Australia to supply critical minerals to the US. Both countries will commit to invest US$1 billion over the next six months in projects that are ready to launch immediately.
The S&P Global Australian PMIs continue to signal slow economic growth. In October, the composite PMI edged up to 52.6 from 52.4, driven by gains in the services sector; while the Manufacturing PMI fell into contraction territory at 49.7, down from 51.4. The survey showed that business confidence declined even as business activity increased, leading businesses to hire more staff during the month.
Australian Q3 2025 inflation rose to 3.2% YoY, slightly above market expectations and the previous quarter. Trimmed-mean inflation also increased to 3.0% from 2.7%, exceeding forecasts and placing inflation at the upper end of the Reserve Bank of Australia’s (RBA’s) 2-3% target range. The main drivers were higher electricity prices and increased local government charges, such as council rates and waste levies. As a result, the probability of an interest rate cut in November dropped sharply from 57% to just 5%.
International
US government shutdown extends into 5th week
The US government shutdown continued throughout October, with Congress still unable to reach a spending agreement. This marks the second longest shutdown since funding gaps began causing government shutdowns in 1980. While essential services remain operational, approximately 40% of the government workforce is currently on unpaid leave. The suspension of US economic data releases during the shutdown has reduced visibility into the state of the US economy.
Trade negotiations between the US and Chinese Presidents in Busan resulted in several agreements: including a reduction in tariffs from 20% to 10% and a one-year suspension of export controls on Chinese rare earth minerals and magnets.
Israel and Hamas have accepted a US-brokered peace framework aimed at establishing a Gaza ceasefire. The agreement follows a 20-point plan presented by US President Trump on September 29, which called for the release of Israeli captives in Gaza within 72 hours of signing, in exchange for Palestinian prisoners.
China’s GDP growth in the third quarter slowed to 4.8% YoY, in line with expectations, bringing growth for the first three quarters to 5.2% YoY amid ongoing concerns in the real estate sector.
Market Review
Emerging markets posted strong gains in October
International shares (hedged) rose 2.6%, as the start of the US Q3 2025 earnings season signalled solid upside potential for US company earnings growth. To date, 64% of S&P 500 companies have reported results, with several of the Mag 7 stocks delivering positive earnings and investors are now focused on Nvidia’s upcoming report on November 19.
Information technology led all sectors, gaining 6.7%, driven by solid earnings from major US tech stocks.
Emerging market shares climbed 5.5% for the month; with gains fuelled by strong performances in Korea, Taiwan and Brazil, while Chinese shares remained unchanged.
Australian shares rose on the strength of the materials and energy sectors
Australian shares rose 0.4% in the month, as expectations for interest rate cuts were lowered following stronger-than-expected inflation data.
The materials sector was the largest positive contributor, up 4.1%, driven by the rare earth mineral deal between Australia and the US. The energy sector was the second biggest contributor, rising 3.6%.
Information technology was the largest negative contributor, down -7%, reflecting high sector valuations.
Australian small cap shares outperformed large caps, reflecting investor optimism in the resources sector.
Australian unlisted property rose, led by retail and industrial sectors
Australian unlisted property rose 1.2% in the month; driven by a 0.3% income return and 0.9% capital appreciation, primarily from the retail and industrial sectors.
Australian government bonds largely unchanged
Australian government bonds rose 0.3% in October, with bond yields remaining largely unchanged during the month.
The Australian Dollar (AUD) continues to climb
The AUD fell -1% against the US Dollar (USD) in October, despite strong inflation data and a decrease in market expectations for interest rate cuts. This decline reflected a weaker month for the USD against most other currencies. The AUD also performed well against most currencies, except the USD.
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