Global equity markets were stronger in October. The MSCI World Index (hedged into AUD) returned 2.7%. Over 2025, this index has returned around 18%. There was also strength in most major Developed and Emerging equity markets.
USA
The S&P500 slightly underperformed the Developed Market index. It returned 2.3%, which is still strong. Threats by the Trump administration to impose punitive trade measures on China caused volatility. This fall recovered, though, after the threats were talked down, China agreed to lift its suspension on the export of rare earths and the US lowered tariffs on some Chinese goods.
Sentiment remains high in companies linked to AI, with large cap technology stocks performing particularly strongly over 2025.
Asia
Taiwanese and Korean equity markets were stronger (in local currency terms), posting double digit returns. Technology and Industrial sectors were the primary drivers of their outperformance.
Chinese equities were a little weaker, linked to lingering concerns over trade tensions with the USA. Chinese equity markets have been very strong over the last 12 months however, returning 34% in local currency. They have seen a sharp uplift in sentiment relative to the majority of the post-covid period.
Australia
The Australian equity market achieved a positive return in October (0.4%). Returns for the Consumer Discretionary and Healthcare sectors was particularly poor. These brought down the performance of Australian equities relative to broader Developed Markets.
Unemployment figures rose during October, up to 4.5%. However, the most recent information suggested a reversion in unemployment figures to 4.3%. The RBA highlighted that there is ongoing tightness in the labour market, with low level underemployment and a historically high participation rate.
Currency and bonds
Australian bonds (0.4% return) and Global bonds (0.7% return) were positive. Performance was only slightly impacted by changes in yields, with very small changes in both the Australian and US 10 year bond yield. Australian 10 year yields were unchanged at 4.30%, while US yields fell 6bps to 4.09%.
Most major Developed Market currencies were weaker relative to the USD over the month. This includes the Australian Dollar, which fell by 1.2% relative to the USD. The Japanese Yen was notably weaker, driven by a material fall early in the month. The election of Japan’s new leader (who is expected to more aggressively stimulate the economy) was the key driver of the volatility.