Europe: Easing Inflation, Political Friction, and Understated Resilience

Across the Atlantic, European equities moved moderately higher. The STOXX 600 gained roughly 2.5%, with CAC 40 near +3% on luxury and energy leadership, while DAX stayed largely flat amid industrial softness. The ECB kept its key rate at 2% for a third meeting, balancing disinflation with a still-resilient economy.

Eurozone GDP expanded about 0.2% in Q3, beating expectations as Spain and France outperformed. Headline inflation fell toward the 2% target, though services inflation remained sticky, a reminder that the path to price stability rarely runs in a straight line. The Commission’s new Affordable Energy Action Plan underscored the bloc’s structural challenge: cutting power costs while accelerating the green transition.

In France, Prime Minister Sébastien Lecornu resigned just weeks into the job, extending a period of political churn. In the U.K., consumer confidence hit cycle highs even as growth cooled, nudging markets to price a BoE cut by year-end.

Germany remained the weak link: industrial production contracted and auto output fell sharply, while exports softened against a backdrop of trade frictions. Even so, inflation stabilized and the trade surplus widened — a reminder that Europe’s largest economy still benefits from competitive niches and external demand.

Asia: Japan’s Surge, China’s Slowdown, and a Story of Divergence

Asia told two stories at once. Japan delivered the headline: the Nikkei 225 jumped nearly 17% to a record high, buoyed by expectations of expansionary fiscal policy under newly appointed Prime Minister Sanae Takaichi. Defense, energy, and technology are set to benefit most, and the market is cheering the prospect of firmer nominal growth.

South Korea’s KOSPI rallied almost 20% as foreign capital returned to semiconductor leaders. Hong Kong’s Hang Seng fell more than 3% on weak external demand and lingering China concerns.

The throughline is divergence: Japan and Korea are drawing capital on governance improvements and tech leadership, while China manages a slower, more complex adjustment across property, industry, and prices.

Commodities: Gold’s Historic Breakout, Oil’s Uneasy Range

Gold finally did it: the metal vaulted above $4,000/oz for the first time, peaking near $4,381 before settling around the round number into month-end. Drivers were familiar but potent — expectations for lower policy rates, persistent geopolitical hedging, and heavy central-bank buying. Over 12 months, gold’s gain is north of 45%, with major banks now floating $4,900–$5,000 targets on robust ETF and institutional demand.

Elsewhere in the complex, silver, platinum, and palladium rode the tide higher, supported by haven flows and strategic industrial uses.

Unless demand reaccelerates into year-end, crude looks range-bound — a relief valve for inflation, but a challenge for energy earnings momentum.

Crypto: “Uptober” Breaks Its Streak

For seven straight years, October had been kind to Bitcoin. Not this time. After setting a fresh all-time high near $126k early in the month, the coin slipped roughly 4% to finish near $110k. A tariff-heavy headline tape sparked the largest liquidation wave on record mid-month, sending prices down double digits within minutes before stabilizing.

Still, the market backdrop looks more mature than in past cycles: institutional inflows are stickier, exchange reserves are lower, and long-term holder behavior is more disciplined. That won’t immunize crypto from macro shocks — but it does argue for a less boom-and-bust-prone structure ahead.

Why It Matters

October’s rally and record prints mark a transition in market psychology. Investors are tilting back toward growth and innovation just as policy pivots from restrictive to merely tight. Yet the foundation is uneven: geopolitics remain fluid, valuations are ambitious in places, and regional cycles are out of sync. That asymmetry cuts both ways — it creates opportunity for global allocators, and it raises the premium on risk management.

The simultaneous surge in AI-linked equities and gold is not a contradiction; it’s a signal. Investors are positioning for technological abundance — and hedging for a world that may not arrive on schedule.

Investor Takeaways