Daily Market Outlook, October 29, 2025
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute…
Asian stock markets saw gains as excitement around artificial intelligence (AI) lifted tech shares, with investors hopeful that upcoming earnings from major companies will confirm the sector's strong profit trajectory. Adding to the positive mood were rising expectations of a potential interest rate cut by the Federal Reserve. The MSCI Asia-Pacific Index rose by 0.4%, driven by strength in semiconductor and tech hardware stocks. Companies like SK Hynix and Advantest Corp. posted impressive results, boosting Japan’s Nikkei 225 and South Korea’s Kospi indices. However, despite the gains, more stocks declined than advanced in both markets, hinting at underlying caution. A similar trend was observed in the S&P 500, which hit a record high even as nearly 400 of its constituents saw losses. Nvidia Corp. jumped over 8% during Asian trading on the alternative Blue Ocean platform, signalling potential further gains when U.S. markets reopen. The surge followed President Donald Trump’s announcement that he plans to discuss Nvidia’s Blackwell chip with Chinese President Xi Jinping. Meanwhile, S&P 500 futures gained 0.2%, and Nasdaq 100 futures climbed 0.4%, though European equity futures pointed to a slightly weaker start. This week is critical for tech investors, as five major U.S. technology giants—accounting for nearly a quarter of the S&P 500’s market value—are set to release their earnings between Wednesday and Thursday. Market watchers are eager to see if heavy investments in AI infrastructure will deliver continued profit growth. Adding to the week’s significance, the Federal Reserve is widely expected to announce a quarter-point interest rate cut on Wednesday, based on market predictions. In currency markets, the yen strengthened after U.S. Treasury Secretary Scott Bessent commented on the Bank of Japan’s policy flexibility, sparking speculation about a possible rate hike in Japan. The dollar index edged higher after two days of declines. In commodities, crude oil remained near a three-day low due to ongoing concerns about oversupply, while gold inched up after three straight sessions of losses.
The FOMC is operating with limited visibility due to the absence of regular data releases caused by the ongoing government shutdown. However, the September CPI report came in below expectations, and while the official employment report remains unpublished, the latest ADP data indicates private sector job losses in three of the past four months. Combined with recent volatility in risk sentiment tied to private credit markets, there is sufficient evidence to justify another 25bp rate cut, bringing the upper bound of the Fed Funds rate to 4%. The September ‘dot plot’ also suggests rate cuts at both this meeting and the December meeting, making it potentially disruptive for markets if the FOMC does not proceed with the anticipated reduction. A more contentious issue, however, is whether this meeting marks the right time to end the QT process. As shown in the data, the pace of U.S. Treasury run-off has already slowed significantly. Ending QT now—or at the next meeting—would ensure that banking system reserves remain ‘ample,’ supporting financial stability and the smooth transmission of monetary policy. Recent reliance on the Fed’s Standing Repo Facility indicates that continuing QT could make reserves too scarce.
As with the Fed balance sheet, the BoE balance sheet is shrinking due to gilt QT and the winding down of the TFSME, a pandemic-era small business lending programme. With the four-year limit on the last TFSME loans approaching, outstanding balances are expected to drop from ~£65bn to ~£43bn, implying over £20bn in repayments. While this reduces the BoE balance sheet, its repo operations provide liquidity to offset lost TFSME funding. Yesterday’s six-month repo (ILTR) saw record participation at £7bn, and further usage is expected in short-term repos. The BoE aims to stabilise gilt repo rates, which have recently risen to 20-25bps over SONIA, closer to the policy target.
Overnight Headlines
US Trsy's Bessent Calls On Japan To Give BoJ Space To Fight Inflation
BoJ Likely To Hold Rates In Oct; Final Judgment Tied To FX Assessment
Investors Primed For Fed Rate Cut And End Of QT Despite Data Blackout
BoC Poised To Ease Again Despite Rebound In Jobs, Headline CPI
Teradyne Sees Big Q4 Revenue Jump On AI-Related Demand
Visa Earnings Top Estimates As Consumers Keep Spending On Cards
Booking Rise After FY Travel Outlook Tops Estimates
Trump Heads To South Korea With Pivotal Trade Questions Looming
Nvidia CEO Praises Trump In Speech Ahead Of Trade Talks
OpenAI Completes For-Profit Transition, Pushes MSFT Above $4T Valuation
Apple Plans MacBook Air, iPad Air And iPad Mini With Overhauled Displays
Eli Lilly, Nvidia Team Up To Build Pharma’s Biggest AI Supercomputer
Israel Strikes Gaza After Accusing Hamas Of Ceasefire Violations
EU Parliament Warns Von Der Leyen: “Change Budget Or We’ll Reject It”
Helsing, Stark, Rheinmetall Awarded Germany Drone Contract
Goldman Pauses $2.5B Sevita Loan With Plan To Revise Sale
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)
EUR/USD: 1.1600 (440M), 1.1650 (1.1B), 1.1670 (500M), 1.1675 (490M), 1.1690-95 (590M)
EUR/USD: 1.1750 (1.0B), 1.1800 (870M)
USD/JPY: 149.25 (450M), 149.50 (425M), 150.00 (660M), 151.50 (625M), 154.00 (450M)
AUD/USD: 0.6400 (645M), 0.6475 (615M), 0.6530 (1.8B), 0.6540 (825M)
USD/CAD: 1.3750 (600M)
CFTC Positions as of the Week Ending 9/10/25
October 1, 2025: During the shutdown of the federal government, Commitments of Traders Reports will not be published
Technical & Trade Views
SP500
Daily VWAP Bullish
Weekly VWAP Bullish
Above 6826 Target 6952
Below 6816 Target 6784
EURUSD
Daily VWAP Bullish
Weekly VWAP Bearish
Below 1.1668 Target 1.1526
Above 1.1668 Target 1.1739
GBPUSD
Daily VWAP Bearish
Weekly VWAP Bearish
Below 1.33 Target 1.3085
Above 1.33 Target 1.3369
USDJPY
Daily VWAP Bullish
Weekly VWAP Bullish
Below 150.50 Target 147.78
Above 150.50 Target 154.48
XAUUSD
Daily VWAP Bearish
Weekly VWAP Bullish
Above 4046 Target 4345
Below 4046 Target 3684
BTCUSD
Daily VWAP Bullish
Weekly VWAP Bearish
Above 113k Target 118k
Below 112k Target 107k
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!