MARKETS IN A NUTSHELL — FOR OCTOBER 2025

Investors expecting to be spooked in October left with a sugar rush instead. Despite mounting reasons for caution — stubborn inflation, patchy growth, and the second-longest US government shutdown on record — investors doubled down on risk. Stock markets from New York to Mumbai broke records on a heady mix of AI exuberance, monetary easing, and just enough geopolitical restraint to keep nerves at bay.

The US central bank cut rates again — for only the second time this year — but refused to sound dovish. Officials insisted that the US economy remained resilient, and inflation sticky. This was a technical cut by the Fed, not an invitation to party — yet almost all assets traded higher, with non-Chinese emerging market bourses leading the gains.

The AI trade continued to defy gravity. Stock market darling Nvidia’s latest earnings turned AI sceptics into spectators. Nvidia powered across the $5 trillion valuation mark, dragging sentiment and secondary tech names with it. So powerful was the halo effect that even cash-strapped software firms found themselves upgraded. Talk of a bubble is growing louder — but so is the fear of missing out.

Commodities took their cue from supply and sentiment rather than politics. Oil fell as inventories swelled, eclipsing the impact of fresh European sanctions on Russian exports. Gold, meanwhile, fed off anxiety — economic, political, and monetary. With real yields falling and central banks hoarding bullion, gold surged past $4,000 and hit intramonth all-time highs once again.

China has been the only country to answer US tariffs in kind this year, prompting a tense standoff. Early October sabre-rattling by the superpowers had investors bracing for renewed escalation. But a trade war was again averted after Presidents Xi and Trump met in Busan, South Korea. For now, it is Beijing that appears to have the upper hand.

South African markets followed the global script. Risk appetite returned — and the rand firmed modestly — with local bonds and shares benefitting from the broader rally in emerging market assets. Mining shares have been on a tear this year, but traded lower in October. A calmer fiscal backdrop and stable inflation have helped SA investments, even as structural concerns remain unaddressed.

After a dazzling run this year, the Foord global funds traded slightly lower. Foord’s South African funds — including the fixed income suite — again added meaningful absolute returns, but lagged peers in the risk-on environment. The Foord Equity Fund outperformed on its more judicious weighting to mining shares, which fell this month.

October was again a month of contradictions: caution in the data, conviction in the markets. For now, investors are willing to suspend disbelief. But the higher markets climb, the thinner the air and the greater the risks. We continue to avoid the mania, favouring diversified portfolios directed towards more attractively valued growth markets.