In October  markets were mostly positive despite being overshadowed by the U.S. Federal Government shutdown, which began on October 1 after Congress failed to pass a continuing resolution to fund government operations. The shutdown lasted throughout the entire month and continued into November while more than 650,000 federal employees had their pay disrupted, along with key public services disrupted nationwide. It also resulted in delayed data releases, particularly from the Bureau of Labour Statistics which tracks the weakening US labor market and inflation, among other data.

Without that data it is more difficult for the Federal Reserve to outline their strategy. Nonetheless other available data strengthened expectations that one final interest rate cut in 2025 will take place.

The FED decreased the interest rate for the second consecutive time in late October by 0,25 percentage points to 4,00 percent. The final decision will take place on December 10.

U.S. equity markets maintained their upward trajectory throughout October 2025 despite trade uncertainties and signs of stress in credit markets as solid corporate earnings provided support. The Dow Jones index gained 2,51%, the S&P500 2,27% and the Nasdaq Composite 4,70%. The dollar made a partial recovery, gaining 1,69% to close at 1,1536 against the Euro.

Meanwhile the European Central Bank (ECB) appeared close to concluding its easing cycle as inflation remained just slightly above its 2% target rate and interest rate was kept unchanged.

The German DAX underperformed again, gaining a modest 0,32% while the French CAC index gained 2,85% and the overall Eurostoxx 50 index added 2,39%. The Slovene SBITOP index gave up some of its strong gains throughout the year, dropping  1,08% to close at 2477,73. In the UK, the FTSE index gained a solid 3,92% while the Pound Sterling dropped 0,48% against the Euro.

The biggest gainer however was Japan's with the Nikkei index adding a staggering 16,64%, primarily due to the election of conservative Japanese lawmaker Sanae Takaichi as Japan's first female prime minister.

As as a safe haven asset, Gold achieved a new record high above $4200 per ounce before suffering a significant correction, approximately 6 percent in a single session, marking its largest one day decline in more than a decade. Nonethless gold gained 3,18% throughout October to close at $3996,5 per ounce.

As a whole, the past month signaled market resilience. Equities moved higher despite the absence of decisive macro economic data, suggesting that investors were willing to focus on earnings while overlooking near term uncertainties. However, high valuations and underlying risks mean that caution remains on high level.

Rudy Marchant
Fund manager Primorski skladi 

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