Weekly Market Update – 06 October 2025

Global equities climbed for the week on expectations of lower US borrowing costs. European equities performed best, while Japanese equities were mixed.

US: Equities rise despite government shutdown

Stocks posted solid gains, shrugging off the U.S. government shutdown that began on Thursday after legislators were unable to reach a funding agreement to keep non-essential government functions open. As a result of the government shutdown, the closely watched September nonfarm payrolls report from the Bureau of Labor Statistics (BLS) was not released. In the absence of the BLS jobs report, markets focused on alternative labour market indicators. In a “bad news is good news” environment, equities appeared to draw support from the September private payrolls report from payroll processing firm Automatic Data Processing (ADP) showing 32,000 jobs lost for the month (versus consensus of 51,000 jobs added). If the shutdown continues, other vital economic indicators provided by the government could be delayed, including the September consumer price index (CPI) report scheduled for October 15. This could make the economic situation even murkier in advance of the Fed’s October policy meeting.

Japan: Mixed returns in Japan driven by uncertainty surrounding the presidential election

Japan’s stock markets registered mixed performance over the week, with the Nikkei 225 Index gaining 0.91% and the broader TOPIX Index down 1.82%. Japanese technology stocks rallied on favourable developments relating to artificial intelligence investments. Despite uncertainty about the outcome of Japan’s ruling Liberal Democratic Party’s presidential election on October 4, the yen strengthened against the USD, as the greenback weakened following the shutdown of the U.S. government. The latest comments from the Bank of Japan (BoJ) confirmed that the central bank remains on the path to higher interest rates but provided few clues about the potential timing of its next rate hike. BoJ Governor Kazuo Ueda said that the bank had refrained from raising rates at its September meeting because of the need to maintain accommodation during U.S. tariff volatility.

China: Stocks rise into Golden Week holiday

Mainland Chinese stock markets rose in a holiday-shortened week. China’s stock markets are closed from October 1 to October 8 for the National Day holiday and Mid-Autumn Festival and will resume trading Thursday, October 9. The eight-day break—also known as the Golden Week holiday—marks a period of high consumption in China as millions of people travel, shop, and eat out. In economic readings, China’s official manufacturing Purchasing Managers’ Index (PMI) improved to 49.8 in September and the official nonmanufacturing PMI, a gauge of construction and services activity, fell more than expected to 50. Both readings imply a contraction in economic activity. Both PMIs indicated that weakness in China’s economy persisted into the third quarter, following strong growth in the first half of the year.

Europe: Expectations for lower US borrowing costs drives European stocks higher

A rally in technology stocks and expectations for lower U.S. borrowing costs this month boosted sentiment. Major stock indexes also rose. Germany’s DAX climbed 2.69%, France’s CAC 40 Index gained 2.68%, and Italy’s FTSE MIB added 1.43%. Headline annual inflation in the eurozone accelerated to 2.2% in September from 2.0% in August on higher services costs and a slightly slower drop in energy prices. A core inflation rate, which excludes volatile food and fuel prices, remained at 2.3%. European Central Bank (ECB) President Christine Lagarde said in keynote speech at a Bank of Finland conference: "As we can model the future, the risks to inflation appear quite contained in both directions." She added: "With policy rates now at 2%, we are well placed to respond if the risks to inflation shift, or if new shocks emerge that threaten our target."

UK: Improving economic outlook drives equities higher

The UK’s FTSE 100 Index rallied 2.22% for the week. Cyclical stocks were the main driver, with banks benefiting from the improving economic outlook and miners benefiting from firm commodity prices. Lending for house purchases dipped over the summer, Bank of England data showed. Lenders approved 64,700 mortgages in August, down from 65,200 in July, snapping three months of increases. Separately, the Nationwide Building Society said house prices rebounded a seasonally adjusted 0.6% sequentially in September after declining 0.1% in the preceding month.