IMF raises global growth projections

Market update 

Global equities posted mixed results during last week, with an overall increase of +0.7%. In the US, equities rebounded by +1.2% from the previous Friday’s sell-off. Although equities saw some midweek declines as renewed concerns over credit quality emerged following fraud-related losses of two US regional lenders, equities were buoyed by strong corporate earnings, particularly from major US banks. European equities were volatile as bank stocks were under pressure due to fears of credit contagion from the US, though this eased as US markets recovered and was also supported by strong earnings from luxury brands like LVMH, leading to an overall increase of +0.6%. In contrast, UK equities declined by -0.7% amid concerns over upcoming tax hikes in the Autumn budget and persistent inflation, compounded by weakness in financials following US banking jitters. Emerging market equities saw a decline of -0.9%, as investors rotated out of risk assets against the backdrop of continued global trade tensions and cautious sentiment around US tariffs.

Global bond markets rallied as investors sought safety during financial sector concerns and soft economic data. In the US, 10-year Treasury yields fell by -5 basis points, in the midst of the ongoing federal government shutdown and expectations of further Federal Reserve rate cuts. UK 10-year gilt yields dropped by -14 basis points over the week, as GDP figures showed a modest 0.1% growth in August (following contractions in the previous periods). Additionally, Governor Bailey noted the economy was operating “below potential” and flagged a softer labour market, which reinforced expectations of a 25-basis-point rate cut by February 2026.

Commodities saw divergent trends during the week. Gold surged +5.2% to, driven by safe-haven demand amid banking stress and expectations of lower interest rates. In the energy space, oil fell -2.9%, pressured by oversupply concerns and weak demand forecasts. Industrial metals like copper and aluminium declined slightly due to cautious positioning ahead of China’s policy announcements.

Macro news

Real GDP grew by 0.3% in the three months to August 2025 compared to the three months to May 2025. GDP increased by 0.1% on a monthly basis and by 1.3% year on year. There was growth in two of the three main sectors of the economy. A rise of 0.4% (3m/3m) in the services sector made the largest contribution to the increase in GDP during this period. Construction output also grew, by 0.3%, while production output (mostly manufacturing) fell by 0.3% over this period.

In its October 2025 World Economic Outlook, the IMF slightly raised its global growth projections, forecasting a 3.2 % expansion in 2025 and 3.1 % in 2026, driven by support from trade exemptions, strong investment in AI infrastructure, and loose fiscal policies. The United States is now expected to grow at 2.0 % in 2025 and 2.1 % in 2026, though inflation remains persistently above the central bank’s target. Meanwhile, the UK is projected to post growth of 1.3 % in both 2025 and 2026, making it the second-fastest-growing G7 economy in 2025, but also to suffer the highest G7 inflation, averaging 3.4 % in 2025 before easing to 2.5 % in 2026.

China has expanded export curbs on five additional rare‑earth metals and related magnet‑manufacturing technologies, citing national security, effective 1 December. In response, Trump threatened a 100% tariff on all Chinese exports plus U.S. export controls on critical software before 1 November. The US and China have rolled over successive tariff deadlines since agreeing to a ceasefire in the trade war earlier this year. The current 90-day window expires in mid-November.