We enter a new week with all eyes on the growing tensions between the world’s two biggest economic nations, which caused US stocks markets to plunge at the end of last week. The calm in volatility and never-ending rise in risky assets was upset abruptly by President Trump’s announcement of plans to impose additional 100% tariffs on Chinese exports. This came after a volley of trade measures by China that expanded its export controls on rare earths and related technologies, while also imposing fees on American-owned ships docking at Chinese ports.

Crucially, these new measures by both sides won’t be imposed before at least November 1 and are seen as trying to exert leverage ahead of a face-to-face meeting between Presidents Trump and Xi in South Korea at the end of this month. China is deemed to be endeavouring to turn the tables and create a more level playing field with increased bargaining power. We expect the war of words to remain hot, having hinted previously that there has been an eerie sense of calm in recent weeks, with an increasing ‘wall of worry’ evident. But we will also be monitoring actions rather than words, in what seems like classic, ad-hoc trade policies and announcement from the Trump playbook.

An environment of high equity valuations, ongoing geopolitical risks and increased uncertainty over the pace of Fed easing had seeped into markets. The big bearish engulfing weekly candles in US stock indices need to be watched as we kick off the earnings season with major US banks reporting this week. Bitcoin too suffered, in what some are calling a ‘black swan’ event during the ‘largest liquidation in crypto history’ as dozens of so-called altcoins saw almost total wipe-outs. This kind of price action is certainly signalling previous complacency, as fears of an AI capex bubble grow louder. The circular financing flywheel has got our attention, so too that fact that the 10 biggest US stocks, eight of which are tech megacaps, now account for close to 25% of the entire global stock market.

In Brief: major data releases of the week (US data likely delayed, as subject to the government re-opening)

Tuesday, 14 October 2025

– UK Jobs: Unemployment is forecast to remain at 4.7% and average earnings (ex-bonus) one-tenth lower at 4.7%. Wage growth will likely be the main focus with the labour market weakening and expected to drag earnings lower into year-end. 

Wednesday, 15 October 2025

– US CPI: The August headline print is expected to ease one-tenth to 0.3% m/m, and the core is forecast to remain steady at 0.3% m/m. Any tariff-induced price pressures could be offset by weaker housing rents, wage growth and falling energy prices. Regarding the dollar, seasonal patterns do typically see a brief squeeze higher in late October/early November ahead of renewed losses for the DXY right into year-end. The 50-day SMA at 97.99 appears to be a key pivot level for direction.

– Japan Parliamentary vote: The parliamentary vote on a new PM is scheduled to take place after the surprise win by Takaichi in the LDP leadership election. A weaker yen, surging stocks and a steeper yield curve were seen in response, but the new PM tried to stem worries about excessively dovish fiscal and monetary policies last week. That said, this date could be pushed back after junior coalition partner Komeito pulled its support. Investors flocked to the yen late Friday, pushing USD/JPY lower after hitting near eight-month highs.

Thursday, 16 October 2025

– Australia Jobs: Expectations are for a modest recovery in employment growth after the negative print in August. Annual jobs growth has slowed to 1.5% from 3.5% at the start of 2025. Unemployment is forecast to tick one-tenth higher to 4.3%, which is still low by historical standards. The aussie took the worst hit of the majors on the US-China trade escalation. The 200-day SMA sits at 0.6419.

– US Retail Sales: Consensus expects both headline and core prints of 0.4% in September. Activity could slow due to rising living costs and continued trade uncertainty. That said, lower interest rates could help into holiday season.