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October Monthly Market Review

  • Writer: Anthony Walters
    Anthony Walters
  • Nov 20
  • 3 min read

Global markets continued their upward trajectory in October, supported by the Federal Reserve’s first rate cut of the year and signs of resilient economic growth. While the Bank of England and European Central Bank kept policy steady amid lingering inflation pressures, investor confidence improved as expectations of gradual monetary easing strengthened. Equities delivered broadly positive returns, with standout gains in tech-driven Asian markets and strong performance across Healthcare and Technology sectors, underscoring the ongoing momentum behind AI adoption and innovative growth themes.


Fed Cut Sparks Rally: Tech & Healthcare Take the Lead


·      Markets rose on Fed rate cut and resilient growth 

·      Tech-driven gains in Korea and Taiwan led Emerging Market equities

·      Healthcare and Tech. outperform, fueled by AI and biotech demand


It was another strong month for markets as the Balanced portfolio Index gained 2.56%, supported by lower rates in the US and gains across global equities.



Inflation and Interest Rates.


UK.


In October, the Bank of England held interest rates steady at 4.00%, amid a split Monetary Policy Committee and signs of easing inflation. While some members pushed for a cut to 3.75%, the majority opted for caution ahead of the November budget. Inflation remained unchanged at 3.80% in September, below expectations, with food prices easing. However, it remains well above the 2.00% target, keeping policymakers wary of premature rate cuts.



U.S. Federal Reserve.


The Federal Reserve lowered interest rates by 0.25 percentage points to 4.00%, responding to signs of a cooling labour market and stubborn inflation. Headline inflation remained elevated at 2.90%, above the Fed’s 2.00% target, while core inflation held steady at 3.10%. Despite persistent price pressures, policymakers initially indicated that two further rate cuts could follow before year-end. However, stronger-than-expected economic data has cast doubt on the pace of future easing. Adding to market uncertainty, Fed Chair Jay Powell stated at the end of October that “a further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it.”



European Central Bank (ECB). 


The European Central Bank (ECB) held interest rates steady at 2.00%, signalling the end of its rate-cutting cycle after eight reductions since mid-2024. Inflation in the eurozone returned to the ECB’s 2.00% target, with core inflation rising to 2.70%, driven by services and food prices. Despite elevated core inflation, the ECB maintained its stance, citing a resilient economy and disinflationary pressures from global trade tensions.



Market performance.


Finland was the top performer in October, gaining 10.19% amid strength in industrials and tech, supported by upbeat Q3 earnings and green energy momentum. Austria followed with a 7.99% rise, driven by financials and energy. At the other end, Norway fell 2.05%, pressured by declining oil prices and energy sector weakness. Denmark slipped 0.88% as healthcare and industrials faced profit-taking and valuation concerns.

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MSCI Korea soared 25.70%, driven by a tech-led rally as semiconductor and AI-related stocks surged on robust export data and optimism following global rate cuts. Taiwan followed with a 12.60% rise, supported by strong earnings from chipmakers and sustained demand for AI infrastructure.


In contrast, MSCI Greece slipped by more than 2.00%, as profit-taking set in after a strong year-to-date run, while MSCI China fell 1.40% amid concerns over slowing domestic growth and persistent property sector stress.


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Sector performance.


Healthcare led gains (+9.62%) on strong demand for biotech and AI-driven health solutions, while Technology (+8.62%) surged on AI adoption, cloud growth, and semiconductor strength. At the bottom, UK Direct Property (-0.43%) remained pressured by high borrowing costs and weak commercial activity, and China/Greater China (-0.75%) lagged amid slowing growth, property sector stress, and regulatory uncertainty.

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Source: FE FundInfo, 04/11/25


Summary.


Markets extended their positive momentum through October, buoyed by the Federal Reserve’s first rate cut of the year and resilient global growth signals. While the Bank of England and ECB maintained steady policy amid lingering inflation, investor sentiment improved on expectations of gradual easing ahead.


Equity performance was broadly constructive, with sharp dispersion across regions: Korea and Taiwan surged on tech strength, while select European markets posted double-digit gains. Sector leadership came from Healthcare and Technology, driven by AI adoption and biotech demand, while property and China-focused segments lagged. Despite inflation remaining above central bank targets, stabilising trends and policy support underpinned risk appetite, rewarding diversified portfolios and exposure to commodities and growth sectors.


Sources.

The ‘Balanced portfolio benchmark’ is the UT Mixed Investment 20-60% Shares Sector.

Federal Reserve cuts interest rates for first time this year, sees 2 more cuts in 2025, by Jennifer Schonberger, Yahoo Finance, 18th September 2025

Powell Says December Fed Rate Cut 'Far From' Foregone Conclusion, Yahoo Finance/Bloomberg, 29th October 2025

UK interest rates set to stay at 4%, but policymakers ‘deeply divided’ by Anna Wise, PA Media/Yahoo Finance, 6th November 2025


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