October 2025 Market Trends: A Soft Landing Takes Hold

Falling rates, firm growth, and a rising tide across markets

October extended the year’s upbeat tone, with global data pointing firmly toward a soft landing for the world economy. Inflation continued to ease, central banks trimmed rates, and investors embraced the idea that slower growth doesn’t have to mean recession. The result: another strong month across asset classes, with global equities rising, and from the FTSE to the Nasdaq, and from Tokyo’s Nikkei to Seoul’s KOSPI, major indices hit fresh all-time highs, a global vote of confidence that slower growth isn’t the same as a slowdown.

A ‘soft landing’ refers to a situation where the global economy slows down from a period of high growth and inflation, often after central banks have raised interest rates, without tipping into recession.

The U.S. Federal Reserve cut rates for the second consecutive month, bringing the target range down to 3.75 - 4%, while inflation fell too, below expectations. The International Monetary Fund (IMF) confirmed the U.S. economy remains ‘resilient,’ even if 2025 growth slows. Investors welcomed the prospect of lower borrowing costs and steadier growth, sending U.S. equities up for the month.

In Asia, Japan stole the spotlight. The election of Sanae Takaichi, the country’s first female leader in two millennia, brought fresh optimism for structural reform and fiscal stimulus. The Nikkei surged to record highs, with the Topix moving higher. India continued its path higher too. By contrast, China’s recovery wavered, as investors weighed slower momentum despite a truce in the U.S., China trade dispute.

Back home, the UK’s focus shifted to the upcoming Budget as Chancellor Rachel Reeves faced a tough fiscal balancing act. Despite political noise, markets stayed constructive, the FTSE 100 rose, hitting new highs, while UK gilts rallied, as yields fell on reassurances that fiscal rules will be met.

Monthly and long-term performance snapshot

The chart below provides a visual snapshot of unhedged index fund investment returns for a selection of assets and regional exposures, both for the month of October and over three years, in sterling terms. It highlights how the ‘soft landing’ narrative continues to support risk assets while revealing the dispersion beneath the surface.

Gold and industrial commodities like copper led monthly gains, signalling optimism around growth and inflation moderation. Equities remained strong across regions, with U.S., India, and global markets outperforming, while China and real estate lagged. Over three years, gold remains the standout performer, up over an extraordinary +100%, at the end of October, followed by steady strength from global and U.S. equities. Bonds continue to lag over the longer term, but the recent rally in gilts and Treasuries suggests that fixed income may finally be regaining its footing as yields peak.

What stands out for investors

October offered three insights of current market narratives:

1. Global soft landing and falling rates

A synchronised easing cycle and cooler inflation reinforced the ‘goldilocks’ narrative, not too hot, not too cold. With inflation trending lower and growth holding steady, equities and risk assets thrived. With falling rates lifting all boats, bond yields eased slightly, supporting valuations across risk assets.

Lower rates and a soft landing backdrop remain powerful fuel for global markets, even as investors debate how long it can last.

2. Divergent regional growth and policy paths

Markets reward reform and resilience in October, with policy clarity and stimulus promises proving valuable over the period. While China and Europe lagged despite moves higher. China’s recovery story remains fragile. 

3. Volatility in commodities and concentration risks

Commodities had a volatile month. Gold surged, briefly hitting record highs before pulling back, while oil edged higher amid sanctions and supply jitters. Copper climbed higher, recovering from its summer slide sparked by Trump’s copper tariff, in a sign of strengthening industrial demand.

Meanwhile, U.S. tech leadership remains powerful, but increasingly narrow, making diversification more important than ever, and investors should watch for consolidation in trades like gold.

In Summary

October reinforced the power of policy. With inflation cooling, rates falling, and earnings holding up, for now, the market seems focused on the soft landing narrative. 

Disclaimer: This article is for information and educational purposes only. It expresses my personal views and frameworks for thinking about markets and investing. It does not constitute investment advice or a financial promotion, nor is it a personal recommendation to buy or sell any investment. Everyone’s situation is different, so if you are unsure about a decision, it’s important to seek guidance from a qualified financial professional.

The views, forecasts, and figures included reflect analysis at the time of writing, unless otherwise stated. sources used are believed to be reliable, but markets and circumstances can change quickly, which means our views may also evolve over time.