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Gold surges, stocks mixed as rate cut bets return

Gold rallied to a record high on Tuesday as dovish remarks from Federal Reserve Chair Jerome Powell fuelled expectations for further rate cuts this year, overshadowing concerns over intensified US-China trade tensions and persistent deflation in China. US equities finished mixed as earnings season kicked off, with the Dow Jones gaining while tech shares lagged, and Asian stock markets broadly advanced on Wednesday, led by strong gains in Japan, South Korea and Australia. European bourses struggled as inflation picked up in Germany. Investors remain focused on upcoming US corporate earnings and key inflation prints across the euro area.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Zinsen

Powell said on Tuesday that risks to the US employment outlook have increased, implying that another interest rate cut could be considered at the central bank’s next meeting later this month. Powell indicated that policymakers maintain a meeting-by-meeting approach as they aim to lower inflation without harming the job market, while also noting that official employment data have been delayed by the government shutdown. The Fed is currently relying on private sector data to assess the labour market amid continued uncertainty over the balance between inflation and employment. Powell also suggested the Federal Reserve may soon halt its balance sheet reduction, as ongoing trade-related price increases have had a limited impact on broader inflation.

China remains in deflation

The dovish comments supported Asian stocks, offsetting some of the negative sentiment from ongoing US-China trade tensions. Japan’s Nikkei 225 was up 1.8%, Korea’s Kospi gained 2.5%, and Australia’s S&P/ASX 200 advanced 1%. Hong Kong’s Hang Seng Index was trading 1.4% higher, and mainland China’s CSI 300 was up 0.6%, despite persistent deflation in the world's second-largest economy, as markets looked for more supportive policy measures from the government. China’s consumer price index fell 0.3% year-on-year in September, a sharper decline than anticipated. Official data released on Wednesday highlighted ongoing deflationary pressure, with the producer price index declining 2.3% after steeper falls in August and July. Core inflation reached 1%, its highest since February, but weak domestic demand and trade tensions persist, especially as the threat of a 100% US tariff on Chinese exports looms. While government efforts to limit overcapacity have led to a rebound in industrial profits, price competition and a sluggish housing market continue to weigh on the outlook.

US equities mixed on rate cut hopes

US equities posted mixed results on Tuesday, with the Dow Jones Industrial Average rising 0.4% to close at 46,270.46 points as expectations of further Federal Reserve interest rate cuts outweighed renewed concerns over the US-China trade dispute. The S&P 500 slipped 0.2% and the Nasdaq 100 dropped 0.7%. Some banking stocks, including Citigroup (+3.9%) and Wells Fargo (+7.2%), advanced on strong quarterly results as the third-quarter earnings season kicked off, while other banks, such as JPMorgan (-1.9%) and Goldman Sachs (-2%), saw declines. Shares in critical metals firms surged amid US-China competition for rare earth resources.

Gold hits record as US-China tensions rise

Gold soared to an all-time high just below USD 4190 per ounce on Tuesday, bolstered by heightened US-China tensions and expectations of two additional Federal Reserve rate cuts this year. Silver also reached a record above USD 53 per ounce before retreating, with both metals supported by strong haven demand amid falling US Treasury yields and ongoing geopolitical uncertainty. Lower yields, central-bank purchases and increased holdings in exchange-traded funds further underpinned precious metals prices. US Treasuries yields declined, with the 2-year near 3.5% and the 10-year around 4%.

German inflation reaches 2025 peak

Germany’s annual inflation rate rose to a high this year of 2.4% in September, up from 2.2% in August, as prices for services and several food categories increased sharply, while energy costs continued to drop, though at a slower pace. Despite the slowdown in price pressures since the outbreak of the war in Ukraine, core inflation rose to 2.8%, and many consumers still feel the impact of higher daily costs. On Tuesday, survey data separately showed that financial market participants’ expectations for the German economy improved in October, with the ZEW Indicator of Economic Sentiment increasing to 39.3 points, notably on brighter prospects in export-oriented sectors. However, assessments of the current economic situation remain subdued and sentiment in the euro area weakened, reflecting broader uncertainties such as political tensions in France. European stock indices lost ground on Tuesday. The Euro Stoxx 50 slipped 0.2%, Germany’s DAX fell 0.6%, and France’s CAC 40 shed 0.2%.

Swiss producer and import prices decline in September

The Swiss Producer and Import Price Index dropped by 0.2% in September 2025 compared to August, reaching 105.3 points, according to figures released on Tuesday. The decrease was primarily driven by lower prices for petroleum, natural gas and related products, while green coffee saw significant price increases. On a year-on-year basis, the index fell by 1.8%. The Swiss Market Index dropped 0.4% on Tuesday.

UK labour market steadies as job losses slow

Official figures released on Tuesday indicated that the UK jobs market stabilised over the summer, with payroll employment rising by 10,000 between July and August, although provisional data showed a reversal with a 10,000 fall for September. Unemployment increased to 4.8% in the three months to August, mainly due to higher youth joblessness, while vacancies continued to decline at a slower rate. Wage growth excluding bonuses slowed to 4.4%, its lowest since December 2021, while overall pay including bonuses rose by 4.7%, largely due to stronger public sector awards. The data supported expectations that the Bank of England is unlikely to cut interest rates in the near term, as policymakers await more evidence of easing wage pressures.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from ASML, Bank of America, Morgan Stanley, and Prologis.

Economic data in focus: French Consumer Price Index (08:45), Spanish Consumer Price Index (09:00), euro-area industrial production (11:00), Bundesbank monthly report (12:00), Empire State Manufacturing Index (14:30) and US Fed Beige Book (20:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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