Markets Regain Footing as Investors Eye More Fed Easing

LONDON/SINGAPORE, October 15, 2025 — Global stock markets rebounded on Wednesday after U.S. Federal Reserve Chair Jerome Powell struck a dovish tone, reigniting expectations of further interest rate cuts before the end of the year. The renewed optimism, coupled with upbeat U.S. bank earnings and a strong performance from luxury giant LVMH, lifted sentiment across Europe and Asia, while the U.S. dollar weakened against major peers.

The Euro STOXX 600 rose 0.7%, snapping a two-day losing streak. France’s CAC 40 (.FCHI) jumped 2.4%, powered by a 12% surge in LVMH (LVMH.PA) shares after the world’s largest luxury group reported better-than-expected third-quarter sales, buoyed by stronger Chinese demand.

“Powell struck a more dovish tone than expected,” analysts at Deutsche Bank noted, adding that the Fed Chair’s remarks “put December on the map” as a likely point to halt balance-sheet reductions.

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Powell’s Comments Spark Global Relief Rally

In remarks on Tuesday, Jerome Powell left the door open for additional monetary easing, saying that the Fed’s balance-sheet runoff — the process of shrinking its bond holdings — could end “in the coming months.” His statements were widely seen as a sign that the Fed is prepared to maintain an accommodative stance amid signs of a softening U.S. labour market.

Traders now expect roughly 48 basis points of rate cuts by December, futures data showed, helping to spark a rally in equities and commodities.

The U.S. dollar index slipped 0.3%, retreating from last week’s highs. The Japanese yen and Australian dollar were among the best performers, each recovering from steep declines against the greenback.

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Wall Street Futures and Global Growth Support

U.S. stock futures pointed to early gains, with Nasdaq futures up 0.5% and S&P 500 futures adding 0.4%, extending Tuesday’s rebound.

Markets also drew comfort from strong earnings reports by several U.S. banking giants and an upward revision of the IMF’s 2025 global growth forecast, which together helped calm nerves after renewed volatility earlier in the week.

Still, analysts cautioned that sentiment remains fragile amid lingering U.S.-China trade tensions.

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Trade Tensions Keep Volatility High

Global markets have swung sharply in recent sessions following U.S. President Donald Trump’s announcement of 100% tariffs on Chinese imports, a retaliatory move after Beijing expanded export controls on critical rare earth minerals.

Trump later said Washington was “considering terminating some trade ties with China,” while both nations introduced new port fees for shipping firms — deepening concerns of escalating protectionism.

“A lasting truce is not going to be easy to achieve,” said Tony Sycamore, market analyst at IG. “But the market also knows that these policy arrows often get shot and then quietly walked back.”

In China, inflation data underscored domestic weakness, with both consumer and producer prices falling in September, highlighting ongoing deflationary pressures in the world’s second-largest economy.

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Asia-Pacific Stocks Rally on Policy Optimism

Despite the trade backdrop, Asia-Pacific equities surged as easing expectations took centre stage.

• MSCI’s Asia-Pacific index (ex-Japan) rose 2.1%.
• Hong Kong’s Hang Seng Index (.HSI) added 2%, led by tech and consumer stocks.
• Japan’s Nikkei 225 gained modestly as exporters benefited from a softer dollar.

Investors also welcomed signs that monetary authorities across Asia could follow the Fed’s lead with supportive measures if global growth slows further.

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French Markets Cheer Political Calm

French assets extended gains for a second day after Prime Minister Sébastien Lecornu announced that the government would suspend its controversial pension reform until after the 2027 elections, easing fears of further political turmoil.

French government bonds rallied strongly, with 10-year yields falling to 3.37%, their lowest since mid-August and on track for the biggest weekly decline since May.

“Anything that reduces political gridlock in France is a win for markets,” said Juan Perez, Director of Trading at Monex USA.

The euro traded 0.2% higher at $1.163, largely steady despite recent political developments.

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Commodities Mixed: Gold Breaks Record, Oil Slips

Commodity markets reflected a mixed tone:

• Spot gold surged past $4,200 per ounce for the first time ever, extending its record-breaking rally as investors sought safety amid geopolitical uncertainty and falling yields.
• Brent crude slipped 0.2% to $62.27 a barrel, while U.S. crude eased 0.1% to $58.63, pressured by demand concerns and a stronger supply outlook.

Gold’s rise underscores investor preference for hard assets in times of currency weakness and central bank easing.

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Outlook: Fragile Optimism Returns to Global Markets

While Powell’s remarks sparked a relief rally, strategists warned that geopolitical risks, trade disputes, and economic uncertainty could still weigh on sentiment in the weeks ahead.

“The market is embracing the Fed’s dovish shift, but volatility will remain elevated until we see confirmation that inflation is trending lower and growth is stabilising,” said Emma Li, Senior Economist at CapitalEdge Research.

For now, investors appear willing to take on more risk, betting that central banks — led by the Fed — will remain supportive through year-end.