A Tale of Two Tapes: Tech Giants and Central Banks Drive a Volatile Week in Global Markets

A Global Market at a Crossroads

The final week of October 2025 delivered a market environment rich with conflicting signals, a period where record highs on major indices coexisted with deep-seated economic anxiety and growing policy uncertainty.¹ It was a week that investors might remember as a time of “tricks, treats, and new records,” where the surface-level performance of the market often masked the complex and sometimes contradictory forces at play beneath.⁴ The global financial narrative was shaped by three dominant and interconnected themes: the immense power of corporate profits, particularly from a handful of technology titans; the increasingly cautious tone from the world’s central banks signalling a move away from stimulus; and the shifting political and economic dynamics between major global powers.⁵

This complex backdrop was brought into sharp focus by a series of pivotal events. In the United States, the Federal Reserve delivered a much-anticipated interest rate cut, but the message that accompanied it was one of restraint, rattling investor expectations for future policy easing.¹ A torrent of quarterly earnings reports from America’s largest technology companies created a stark divide, with some results fueling a powerful rally while others sparked concerns over the colossal costs of the artificial intelligence arms race.⁶ Meanwhile, a new trade truce between the U.S. and China provided a degree of relief, yet it was quickly overshadowed by fresh data from China revealing a seventh consecutive month of contraction in its vital manufacturing sector, deepening concerns about the health of the world’s second-largest economy.⁶ These crosscurrents resulted in a week of dramatic divergence, with some markets soaring to historic heights while others stumbled under the weight of local and global pressures.

Table 1: Global Index Performance Summary (Week Ending October 31, 2025)

The View from Wall Street: A Week of Records, Rate Cuts, and Rebounds

The U.S. stock market experienced a week of remarkable volatility, swinging between record highs and sharp sell-offs as investors grappled with a flood of information from the nation’s largest companies and its central bank. While the major indices ultimately finished the week with solid gains, the headline numbers belied a market that was both selective in its optimism and showing signs of potential fragility.

A Tale of Two Techs: The Great Earnings Divide

The week’s trading was overwhelmingly dictated by the quarterly earnings reports from the so-called “Magnificent Seven” technology stocks.⁶ While the overall corporate earnings season has been robust—with 317 of the S&P 500 companies having reported, 82% of which beat bottom-line profit expectations—the market’s reaction was far from uniform.¹ A clear schism emerged between companies rewarded for immediate profitability and those whose massive future investments were met with scepticism.

The “treat” for investors arrived at the end of the week, as spectacular results from Amazon (AMZN) and Apple (AAPL) single-handedly rescued the market from a mid-week slump.⁷ Amazon’s stock was the week’s undisputed hero, surging nearly 13% in after-hours trading Thursday and closing up almost 10% on Friday.⁶ The rally, which added over $300 billion to the company’s market capitalisation, was fueled by blowout profits and stunning growth in its Amazon Web Services (AWS) cloud division, which posted its fastest revenue growth in 11 quarters.⁶ Apple also provided a powerful lift, with its shares gaining over 2% after the company issued an outlook for iPhone sales that surpassed analyst expectations, reinforcing confidence in consumer technology spending.⁶ The influence of these two behemoths was so profound that without Amazon’s contribution alone, the S&P 500 index would have finished Friday’s session in negative territory.¹¹

This end-of-week euphoria stood in stark contrast to the “trick” investors felt earlier. The market had been spooked by the earnings reports from Meta Platforms (META) and Microsoft (MSFT).⁸ Despite delivering strong results themselves, both stocks sold off sharply, with Meta plunging 11% and Microsoft falling 3%.¹² The source of investor anxiety was not the companies’ current performance but their future spending plans. Both firms announced significant increases in capital expenditures as they pour tens of billions of dollars into the global artificial intelligence arms race.⁶ Alphabet, Meta, and Microsoft collectively reported a staggering $78 billion in capital expenditures in the last quarter alone, an 89% year-over-year increase, with a focus on building out data centres and acquiring powerful graphics processing units (GPUs).⁷ This spending spree, while aimed at securing future dominance in a transformative technology, was perceived by the market as a major drag on near-term profitability and free cash flow. This created a peculiar paradox: the market is demanding that companies invest heavily in AI to remain competitive, yet it is simultaneously punishing them for the immediate financial impact of those very investments. This tension is a key source of volatility and makes the task of valuing these technology giants increasingly complex.

The Fed’s “Hawkish Cut” and the Bond Market’s Response

Adding to the week’s complexity was the policy decision from the U.S. Federal Reserve. As widely expected, the Federal Open Market Committee (FOMC) announced a 25-basis-point cut to its benchmark interest rate, lowering the target range to 3.75-4.00%.¹ However, the move was accompanied by a surprisingly “hawkish” message that caught many investors off guard.¹

In his post-meeting press conference, Fed Chair Jerome Powell explicitly pushed back against the market’s assumption that another rate cut in December was a near certainty.¹ This cautious language immediately forced a recalibration of investor expectations. The probability of a December rate cut, as priced by the futures market, plummeted from over 90% before the meeting to below 70% by the end of the week.²⁵ The Fed’s stance sent a clear signal that the era of aggressive monetary stimulus is fading, with the central bank’s focus now shifting toward policy “normalisation” rather than continued easing.⁵

This policy pivot had a direct and immediate impact on the U.S. bond market. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, climbed throughout the week, finishing at approximately 4.1%.⁶ This rise in borrowing costs reflected the broader market “resetting” its expectations for the future path of interest rates, an adjustment that could have far-reaching implications for everything from mortgage rates to corporate borrowing costs.¹

Under the Hood: A Rally on Shaky Ground?

While major indices like the S&P 500 and the Dow Jones Industrial Average managed to set new all-time highs mid-week, a closer look at the market’s internal dynamics revealed some potentially troubling signs.¹ The rally appeared to be built on a narrow and potentially unstable foundation.

A key concern was the deteriorating market breadth. On one day, the S&P 500 closed at a new record high, yet an astonishing 80% of its constituent stocks actually declined in price.¹ This indicates that the index’s advance was being driven by outsized gains in just a few mega-capitalisation stocks. By the end of the week, the situation had not improved significantly; only 54% of S&P 500 stocks were trading above their long-term 200-day moving average, the lowest reading since early October.⁷ This narrowing of the rally is a classic warning sign, suggesting that the broader market is not participating and that the indices are becoming dangerously reliant on a small handful of companies to continue their ascent.⁷

This reliance highlights a significant structural risk. The health of the entire U.S. stock market is becoming increasingly conflated with the performance of just five to seven companies. Macroeconomic factors that might be negatively affecting the other 493 companies in the S&P 500 are being masked by the sheer weight of these tech giants. This concentration of influence means that a single piece of negative news specific to one of these behemoths—such as an adverse regulatory ruling, a major product setback, or a competitive disruption—could potentially trigger a market-wide correction, regardless of the underlying health of the broader economy. Other contradictory signals also emerged. While some sentiment indicators, like the Investors Intelligence Bull/Bear ratio, reached levels described as “abnormally bullish,” other metrics painted a more cautious picture, with a rising number of stocks hitting new 52-week lows, suggesting that “near-term cracks are beginning to show”.³²

Divergence Across the Globe: Europe’s Caution and Asia’s Split Personality

While Wall Street was captivated by its tech-driven drama, markets across Europe and Asia told a story of profound divergence. Europe adopted a wait-and-see approach, while Asia presented a starkly split personality, with Japan’s market embarking on a historic tear as China’s continued to falter under the weight of a slowing economy.

Europe on Hold: A Cautious End to a Positive Month

European stock markets largely treaded water during the week, ending the period with a relatively flat performance as investors navigated a landscape of mixed corporate earnings reports and looked ahead to the release of key Eurozone inflation data.⁴ The pan-European STOXX 600 index slipped on Friday, while the UK’s FTSE 100 was flat for the week and Germany’s DAX struggled to break through technical resistance levels.⁴

The week’s trading was characterised by company-specific news rather than a broad, overriding trend. Shares of French materials company Saint-Gobain and Spanish telecom firm Telefonica both fell following disappointing revenue news and a planned dividend cut, respectively, while Denmark’s Danske Bank was a bright spot, rising after its profits beat forecasts.¹³ Despite the lacklustre end to the week, it is important to note that it came on the heels of a strong month for the region. The STOXX 600 gained 3% in October, indicating that the week’s sideways movement was more likely a period of healthy consolidation than the beginning of a downturn.¹³

Asia’s Great Divide: Tokyo’s Boom vs. Beijing’s Gloom

The most dramatic story of the week unfolded in Asia, where the region’s two economic superpowers moved in completely opposite directions. While the broad MSCI Asia-Pacific index (excluding Japan) was on track for both weekly and monthly gains, this aggregate figure completely masked the powerful divergence occurring between Tokyo and Beijing.⁶

Japan’s Nikkei 225 index was the world’s standout performer. The benchmark surged 1.9% on Friday alone, bringing its gain for the week to a remarkable 6%.⁶ This capped a monthly rally of 16.4%, the index’s best single-month performance since 1990.⁶ In the process, the Nikkei shattered the 52,000 level for the first time in its history, continuing a stunning run that has caught many global investors by surprise.³³ This historic rally was fueled by a perfect storm of positive catalysts:

• A Weak Yen: The Japanese yen continued to trade near its weakest levels of the year against the U.S. dollar, providing a powerful tailwind to the profits of Japan’s large, export-oriented corporations.¹⁵
• Supportive Policy: The Bank of Japan maintained its dovish monetary policy stance, holding interest rates steady and reassuring markets of its continued support for the economy.¹⁵
• Political Optimism: Sentiment was further buoyed by expectations of a new round of fiscal stimulus from the government of new Prime Minister Sanae Takaichi.⁶
• Global Tech Enthusiasm: The global excitement surrounding artificial intelligence directly benefited Japan’s market, lifting the shares of key players in the semiconductor and technology supply chain, such as Advantest and SoftBank Group.¹⁵

In stark contrast to Tokyo’s euphoria, markets in mainland China and Hong Kong deepened their slump. The blue-chip CSI300 index and Hong Kong’s Hang Seng index both fell sharply on Friday, with the Hang Seng losing over 3% for the week.⁴ This weakness was not driven by sentiment but by hard data. The official Purchasing Managers’ Index (PMI) revealed that China’s factory activity contracted in October for the seventh consecutive month, and did so at the fastest pace in six months.⁶ This bleak report confirmed investor fears about persistent structural headwinds, weak domestic demand, and an ongoing crisis in the property sector, completely overshadowing any mild optimism that may have been generated by the U.S.-China trade truce.⁴

This extreme divergence between Japan and China is likely more than just a reflection of their respective local conditions. It points to a significant reallocation of international capital. As global investors seek growth and policy stability, China is currently offering neither. Japan, on the other hand, is presenting a compelling narrative of a weak currency, supportive policies, corporate reforms, and direct exposure to the booming AI theme. It is highly probable that a substantial flow of capital is moving out of Chinese equities and into Japanese equities, amplifying the divergent performance. Furthermore, this market action may be a leading indicator of a deeper, long-term restructuring of global manufacturing and trade. As companies continue to de-risk their supply chains and adopt a “China plus one” strategy, Japan and other technologically advanced Asian economies like South Korea and Taiwan—which also saw gains this week—are positioned as natural beneficiaries.⁹

Emerging Markets and Oceania: A Mixed Picture of Profit-Taking and Policy Pivots

Beyond the major economic blocs, markets in India and Oceania charted their own distinct paths, driven more by local factors like profit-taking, regulatory changes, and domestic inflation data than by the global tech narrative.

India Takes a Breather: Profit-Taking After a Stellar Month

Indian equity benchmarks, the BSE Sensex and the NSE Nifty 50, concluded the week on a negative note, with the Nifty 50 closing down approximately 0.6%.¹⁸ However, this weekly decline must be viewed in its proper context. It came immediately after a powerful rally that saw both indices surge by around 5% during the month of October, marking their best monthly performance since March.²⁰ The week’s downturn was therefore widely seen not as a reversal of the trend, but as a healthy and expected period of profit-booking and consolidation.²⁰

The selling pressure was most pronounced in the influential private banking and financial sectors. This weakness was partly attributed to a reaction to the Securities and Exchange Board of India (SEBI) tightening eligibility norms for certain derivatives, which impacted sentiment around banking stocks.²⁰ As a result, market heavyweights such as HDFC Bank and ICICI Bank were among the week’s top laggards.¹⁸ Despite the pullback, the broader market outlook among analysts remains bullish. The consolidation is being interpreted as a “technical breather” following a sharp 1,500-point upswing in the Nifty over the preceding four weeks, providing an opportunity for investors to accumulate positions in fundamentally strong companies at more attractive levels.³⁵ This measured response from investors, characterised by strategic “buy on dips” thinking rather than panicked selling, suggests a maturing market with growing confidence in the underlying strength of the Indian economy and its corporate earnings trajectory.

Oceania’s Split Decision: Inflation Woes in Australia, Momentum in New Zealand

The markets of Oceania presented a split verdict for the week, with Australia’s performance diverging sharply from that of its neighbour, New Zealand.

Australia’s S&P/ASX 200 index endured a “grim week,” falling 1.5% and significantly underperforming its global peers.²¹ The primary catalyst for this downturn was a single piece of domestic economic data: a hotter-than-expected inflation report for the September quarter.²¹ The report immediately forced investors to reassess the likely path of monetary policy from the Reserve Bank of Australia (RBA). Hopes for near-term interest rate cuts were quickly extinguished, replaced by concerns that the central bank might have to keep policy tighter for longer to combat persistent price pressures.²¹ This rapid pivot in interest rate expectations hit the most rate-sensitive sectors of the market particularly hard. Consumer discretionary and real estate stocks were described as having been “hammered,” with both sectors falling by more than 4.5% for the week.²¹

In contrast, New Zealand’s benchmark NZX 50 index continued its quiet but steady climb. The index rose 1.2% for the week, closing out its sixth consecutive month of gains.²³ It added 1.9% for the month of October, demonstrating resilient positive momentum driven by broad-based gains in sectors like real estate.²³ The performance in Australia and India serves as a powerful reminder that while global narratives provide an important backdrop, local macroeconomic data and domestic policy decisions often remain the primary drivers for these markets. An investor focused solely on the global AI story or the U.S. Fed would have completely misunderstood the forces shaping the price action in Sydney and Mumbai this week.

Conclusion: Navigating an Uncertain Path Forward

The final week of October left investors navigating a global market landscape characterised by powerful but conflicting forces. On one hand, record-breaking performances in the U.S. and Japan showcased the market’s capacity for powerful rallies fueled by technological optimism and supportive policy. On the other hand, underlying signs of weakness—from deteriorating market breadth in the U.S. to concrete evidence of a manufacturing slowdown in China—painted a far more cautious picture.

These market dynamics are unfolding against a backdrop of a slowing global economy. The International Monetary Fund projects that global growth will decelerate from 3.3% in 2024 to 3.2% in 2025, with its outlook describing prospects as “dim” and noting that risks are clearly “tilted to the downside”.³ This sobering forecast provides essential context for the week’s record-breaking stock market highs, suggesting that the path forward may be challenging.

As markets head into November, investors are confronted by a complex and uncertain environment. The week’s events have made it clear that the global market is increasingly dependent on the performance of a few technology behemoths, whose massive investments in AI present both immense opportunity and significant near-term risk. Central banks are signalling a tougher and less predictable policy environment, and the economic chasm between the apparent resilience of the U.S. and the persistent struggles of China continues to widen. The profound divergence seen this week—between regions, between countries, and even between stocks within the same sector—is not an anomaly. It is likely to be a defining feature of the investment landscape for the foreseeable future.

Disclaimer

This report is for informational purposes only and is based on publicly available data and sources believed to be reliable as of the date of publication. The information provided herein does not constitute financial, investment, legal, or tax advice and should not be relied upon as such. Market conditions are subject to change without notice. The performance of stock market indices and individual securities discussed in this report is not indicative of future results. Investing in financial markets involves risk, including the possible loss of principal. Readers should conduct their own research and consult with a qualified financial professional before making any investment decisions.

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