The week ending October 24, 2025, delivered one of the broadest and most impressive global surges of the year. Equities around the world climbed to new record highs as optimism returned with force. What stood out was how inclusive this rally felt — not just mega-caps, but small- and mid-caps, Asia, and Europe all joined the advance.
Analysts are calling it the “Triple Shot Rally” — a potent mix of cooling U.S. inflation, rising hopes of central-bank easing, and the relentless earnings power of Big Tech. But beneath the euphoria, questions remain: is this momentum sustainable, or is it resting on a fragile foundation of assumptions and liquidity bets?
United States: Disinflation, Dovish Bets, and Tech Dominance
The U.S. led the charge once again. The S&P 500 climbed nearly 2 percent, the Nasdaq 2.31 percent, and the Russell 2000 gained 2.5 percent — a sign of broader market participation.
The catalyst was the September CPI report, which came in cooler than expected. Headline inflation slowed to 3.0 percent year-over-year versus forecasts of 3.1 percent, and core inflation eased as well. The disinflation narrative reignited bets on imminent Fed cuts.
Fed-funds futures now price a 97 percent probability of a quarter-point rate cut at the October 29 meeting — which would be the second cut of 2025. Markets effectively declared it a done deal.
At the same time, economic activity indicators remain resilient. The S&P Global Composite PMI rose to 54.8, its highest since March, driven by strength in services. Investors are trying to balance two opposing signals: softer inflation and solid growth. It’s a Goldilocks scenario — not too hot, not too cold — but entirely dependent on the Fed delivering as expected.
Underneath the surface, concentration risk remains extreme. The so-called Magnificent Seven tech giants are expected to post earnings growth of nearly 15 percent this quarter, more than double the pace of the rest of the S&P 500. If even one of these leaders stumbles, the rally could lose its backbone.
Bond markets sent their own mixed message. Short-term Treasury yields rose as traders positioned ahead of the expected cut, while 10-year yields slipped below 4.3 percent — a signal that long-term growth expectations remain cautious.
Europe and the UK: Resilience with Risks
European equities joined the upswing. The Stoxx Europe 600 gained 1.68 percent, buoyed by improving PMI data and stronger consumer sentiment. The Eurozone Composite PMI reached 52.2, its best level since May 2024, while manufacturing output finally stabilized at 50.0 — a neutral reading after months of contraction.
Consumer confidence hit an eight-month high, easing fears of an imminent downturn. Yet beneath the headline, the divergence between major economies is widening.
France remains the region’s weak link. Activity there has contracted for 14 consecutive months, acting as a drag on the broader bloc. The prolonged stagnation in the Eurozone’s second-largest economy limits the scope of recovery even as Germany and Spain show tentative improvement.
Across the Channel, the UK outperformed. The FTSE 100 rallied more than 3 percent as retail sales rose 0.5 percent in September — the fourth straight monthly increase. Inflation held steady at 3.8 percent, with core easing to 3.5 percent. A resilient consumer has given the Bank of England a bit more breathing room. If conditions hold, policymakers may begin cutting rates as soon as December, easing pressure on households while preserving momentum.
Asia: Policy Optimism in Japan, Cautious Hope in China
Japan was one of the standout performers. The Nikkei 225 surged 3.6 percent following the appointment of new Prime Minister Takahiro Hara, whose pro-growth platform and stable coalition lifted confidence. Investors quickly priced in the likelihood of fiscal stimulus to reinforce the recovery.
Yet the yen weakened sharply toward 153 per U.S. dollar, reflecting the contrast between expected Fed easing and Japan’s ultra-loose policy. Core inflation remains sticky at 2.9 percent, keeping pressure on the Bank of Japan to consider a rate hike by December. Political stability may give the BoJ the cover it needs to tighten modestly without destabilizing growth.
China, meanwhile, delivered its own rally. The CSI 300 advanced over 3 percent, led by technology shares. Third-quarter GDP growth came in at 4.8 percent year-over-year, keeping Beijing on track to meet its 5 percent target. Industrial output rose 6.5 percent, driven largely by exports.
But the domestic picture remains subdued: retail sales grew only 3 percent, and fixed-asset investment slipped 0.5 percent. The Fourth Plenum, which concluded this week, focused heavily on self-reliance in technology and advanced manufacturing for the forthcoming 15th Five-Year Plan. Long-term direction is clear, but near-term momentum still hinges on the Chinese consumer’s willingness to spend.
The Week Ahead: October 27 – 31, 2025
United States
Wednesday, Oct 29: Fed rate decision and Powell’s press conference.
Thursday, Oct 30: Q3 GDP (preliminary).
Friday, Oct 31: PCE Price Index — the Fed’s preferred inflation gauge.
Europe
Monday, Oct 27: Germany IFO Business Climate.
Thursday, Oct 30: ECB rate decision, Eurozone Q3 GDP, and October inflation flash estimates.
Asia
Thursday, Oct 30: Bank of Japan policy decision.
Friday, Oct 31: China NBS Manufacturing PMI.
These releases will determine whether the “triple shot” rally has solid foundations — or whether it’s a sugar high before year-end volatility returns.
Top Five Risks to Watch
Federal Reserve Decision
Markets are pricing a near-certain cut. Any hesitation or delay would likely trigger a sharp sell-off in risk assets.Growth Momentum Check
U.S. and Eurozone Q3 GDP figures will confirm whether growth is holding up or rolling over. A weak print could undermine confidence quickly.U.S. PCE Inflation
If the PCE report surprises to the upside, the disinflation narrative collapses — and with it, much of the current rally.Bank of Japan Positioning
A continued delay in policy normalization could weaken the yen further, heightening FX volatility and raising intervention risks.China’s Manufacturing Pulse
The PMI on Friday will test whether the new policy roadmap is translating into real factory momentum or if growth remains export-dependent.
Final Insight: A Rally Built on Expectation
This week’s surge showcased the market’s extraordinary faith in central banks and corporate earnings power. Yet under the record highs lies a familiar tension: disinflation and liquidity optimism versus structural fragility and uneven demand.
From France’s persistent contraction to China’s hesitant consumer, pockets of weakness remain. With the Fed, ECB, and BoJ all meeting in the same week, complacency could prove dangerous. At these levels, volatility only needs a small trigger — and the next few days are packed with them.
Frequently Asked Questions
Why did global markets rally so strongly?
Cooling U.S. inflation, renewed central-bank easing expectations, and robust tech earnings created a synchronized risk-on wave.
Is this rally sustainable?
Not necessarily. The rebound relies on the Fed cutting rates next week — any surprise pause could unwind much of the gain.
Why does France’s slowdown matter?
As the Eurozone’s second-largest economy, prolonged weakness in France limits the bloc’s overall growth potential.
Could the Bank of Japan raise rates this year?
Yes. Persistent inflation and political stability may allow the BoJ to tighten policy slightly by December.
What should investors watch next week?
The Fed and ECB rate decisions, U.S. PCE data, and China’s manufacturing PMI will all shape whether this rally extends or fades.
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