Global Markets & Economic Outlook: From Weekend to Monday
By Market Insights Desk • October 6, 2025
Executive Summary
Global equity markets enter Monday on a cautiously optimistic footing. Over the weekend and into Monday morning, investor sentiment has remained buoyed by continued expectations of central bank rate cuts—particularly in the U.S.—even as sticky inflation and geopolitical risk keep markets on edge. Commodities, notably crude oil and industrial metals, have moved meaningfully, adding complexity to the macro backdrop. In this report, we analyze developments across the U.S., Europe, and Asia, integrating central bank signals, sentiment drivers, and commodity price trends to inform strategic positioning.
Global Equity & Macro Snapshot
Globally, markets rebounded into the weekend, with many indices closing at or near new highs. The IMF’s Global Markets Monitor noted that equities in Asia and Europe extended the rally, and U.S. equity futures were signaling further upside. 0 Meanwhile, the winding U.S. government shutdown continues to create uncertainty, particularly around the release of key economic data such as nonfarm payrolls. 1
Investor expectations for future rate cuts remain a driving force. According to S&P’s “Week Ahead” outlook, markets are keenly awaiting the FOMC minutes and public remarks from Fed Chair Jerome Powell to illuminate the policy path. 2 At the same time, the European Central Bank (ECB), Bank of England (BoE), and Bank of Japan (BoJ) are all looming on the calendar for fresh guidance. 3
Cross-asset flows also underscore key investor preferences: a weakening U.S. dollar, inflows into safe havens like gold, and tight credit spreads in the U.S. corporate space illustrate a “risk-on but cautious” mood. 4
U.S. Markets & Policy Outlook
Equities and Yields
On Friday, the S&P 500, Nasdaq, and Dow all touched fresh record highs, extending a broad rally driven by technology and AI-related sectors. 5 The benchmark 10-year Treasury yield has lingered in a 4.00–4.30% band, while the yield curve has flattened amid market repricing of the Fed’s path. 6 The yield curve flattening suggests skepticism about aggressive rate cuts amid sticky inflation pressures. 7
Credit markets remain resilient. The U.S. investment-grade bond space has seen a surge of rating upgrades, supported by strong balance sheets and limited new issuance. 8 Tight corporate spreads and high investor demand point to sustained confidence in corporate fundamentals. 9
Monetary Policy & Data Risks
The first Fed rate cut of 2025 came in September, but the path ahead is contested. Among FOMC participants, some envisage two more cuts before year-end, while others remain more hawkish, especially if inflation surprises upward. 10 The upcoming Fed minutes and Powell commentary will be critical in clarifying whether the Fed maintains a dovish leaning or exercises more caution. 11
However, the U.S. government shutdown casts a cloud over that data agenda. Key releases—particularly nonfarm payrolls and CPI—may be delayed, complicating the Fed’s decision-making and leaving markets more prone to volatility. 12 A muted data flow could lead to greater sensitivity to Fed signals rather than hard readings.
Sentiment & Risks
Investor sentiment is broadly bullish: the AAII survey showed a rise in bullish positioning and a drop in neutral stances. 13 Yet underlying risks—persistent inflation, geopolitical tensions, and a protracted shutdown—demand respect. Markets appear to be walking a tightrope between optimism and caution.
European Markets & Policy Signals
Equity Performance & Sector Trends
European equities extended gains into the weekend. The STOXX 600, DAX, and other regional indices approached record territory, underpinned by strength in healthcare, industrials, and technology stocks. 14 The FTSE 100 also revisited highs, aided by pharmaceutical and large-cap defensive names. 15
That said, some investors remain cautious about valuations. The rally has leaned heavily on defensives and export-oriented sectors, which may limit further upside unless earnings or macro data provide fresh catalysts.
ECB, Inflation & Policy Outlook
Eurozone inflation in September ticked up to ~2.2%, slightly above the ECB’s target. 16 Core inflation remains more stable, but the upside surprise reinforces hawkish leanings among some ECB members. 17 Some ECB officials may push against cuts unless downside risks to growth escalate. 18
Upcoming data—retail sales, trade flows, PMI surveys—will be scrutinized for signs of durable domestic demand that could embolden or restrain further easing. 19 Meanwhile, the BoE and BoJ policy windows in coming weeks will add cross-regional pressure on expectations and flows. 20
Currency & Cross-Border Flows
The euro has seen modest strength against the dollar, supported by dollar softness and expectations that ECB cuts may be restrained. 21 Capital flows have also favored European markets, as investors rotate away from purely U.S.-centric risk. However, currency volatility and rate differentials remain vulnerabilities if the dollar reverses. 22
Asian Markets & Regional Dynamics
Market Moves & Themes
Across Asia, markets ended the prior week strongly. Japan’s Nikkei surged ~1.9%, hitting fresh records, led by strength in tech and export sectors. 23 Korea’s KOSPI also posted strong gains amid optimism in semiconductor demand. 24 Hong Kong equities were more mixed, as some investors locked in gains after prior run-ups. 25 Mainland Chinese markets remained offline due to the Golden Week holiday, placing greater focus on regional peers. 26
Monetary Policy Settings & Forward Guidance
Asian central banks are largely in a pause mode. The Reserve Bank of Australia (RBA) last met to hold its rate at 3.60%, acknowledging elevated headline inflation but easing core pressures. 27 In Thailand and the Philippines, inflation data will be closely watched for potential pressure to tighten or pivot. 28 Meanwhile, in New Zealand a new central bank governor takes the helm amid slowing growth and potential policy recalibration. 29
Regional Risks & Tailwinds
China’s growth signals remain under the microscope. Any signs of a renewed stimulus push or reacceleration could reenergize commodity demand and regional asset flows. Conversely, property sector fragilities and export headwinds pose downside risks.
Currency pressures also loom. While many Asian FXs have benefitted from dollar weakness, any reversal could trigger capital outflows and stress carry trades. Countries with high external debt or import exposure may become more vulnerable in such a scenario.
Commodity Markets: Oil, Metals & Gold
Oil & Energy
This weekend, OPEC+ agreed to a modest output hike of 137,000 barrels per day commencing November, matching the rate of October’s increase. 30 The cautious decision reflects concern over potential oversupply while trying to maintain a degree of market discipline. 31
Crude benchmarks (Brent, WTI) have been under pressure, declining roughly 7% week-on-week before stabilizing. 32 The threat of weakening demand and rising U.S. production have weighed on near-term sentiment. 33
Looking ahead, any further hints from OPEC+ about deeper cuts or production moderation will be critical for price support. Conversely, demand weakness from China or signs of macro slowdown would limit upside. The delicate balance between supply discipline and demand concerns defines the near-term oil outlook.
Metals & Base Commodities
Industrial metals have been on a tear. Copper recently hit
