Global
US equities closed October on a strong footing, with the S&P 500 rising 2.30% and the tech-heavy Nasdaq jumping 4.70%, supported by easing trade tensions, a solid earnings season, and lower interest rates.
A milder-than-expected inflation print gave the US Federal Reserve (Fed) confidence to deliver another 25 bps rate cut, bringing the policy rate to 3.75%–4.00% at its FOMC meeting in October.
However, Fed Chair Jerome Powell struck a more cautious tone, emphasising that further cuts are “not a given” and reiterating that policy decisions will remain data-dependent. US Treasury yields drifted lower, with the 10-year yield easing 7 bps to close the month at 4.08%.
Another notable news was the Fed’s announcement that it will end quantitative tightening (QT) on 1 December 2025—earlier than expected—citing tightening liquidity conditions and sufficient reserve balances in the banking system. Ending QT removes a source of balance sheet contraction and is generally supportive of risk assets.
Late in the month, we also saw progress emerged on US-China trade negotiations. While no binding agreement was reached, sentiment improved after both sides agreed to a temporary trade truce during the APEC Summit. The US reduced tariffs on fentanyl-related goods from 20% to 10% in exchange for China’s cooperation on curbing smuggling in the opioid supply chain.
Additionally, the US paused certain “reciprocal tariffs” for one year and delayed the planned 100% tariff on Chinese exports, while China agreed to increase soybean purchases and postpone new export controls on rare earth minerals and magnets.
The concessions were modest, but the tone shifted meaningfully. Both governments have committed to twice-yearly reviews, reducing the risk of sudden policy shocks and providing much-needed clarity to markets heading into year-end.
Japan stood out as one of the strongest performers in October, with the TOPIX index gaining 6.20%. Sentiment surged after Sanae Takaichi became Japan’s first female Prime Minister and president of the Liberal Democratic Party (LDP). A close protégé of former PM Shinzo Abe, she is expected to continue the pro-growth “Abenomics” playbook—marked by aggressive monetary easing and reflationary fiscal stimulus.
Across the region, the MSCI Asia ex-Japan index rose 4.50% in October. Technology-heavy markets led gains with Taiwan and Korea vaulting 9.3% and 19.9% respectively, underpinned by continued optimism around AI and semiconductor supply chain.
China was the regional laggard, with the MSCI China index declining 4.0%. Investor focus centred on the Fourth Plenum—Beijing’s closed-door policy meeting that outlines the country’s next 5-year economic agenda. While policy continuity remained clear, with emphasis on advanced manufacturing, innovation, and technology self-sufficiency, policymakers struck a notably more supportive tone toward consumption and the property sector.
On the domestic front, the KLCI ended October largely unchanged at –0.20%. Sentiment was steady as markets digested key trade development during the ASEAN Summit in Kuala Lumpur, where U.S. President Donald Trump met Prime Minister Datuk Seri Anwar Ibrahim.
Malaysia signed the Agreement on Reciprocal Trade with the United States, under which up to 1,711 Malaysian export products will enjoy a 0% tariff, including palm oil, rubber, cocoa, pharmaceutical components, and aerospace parts. These products collectively represent an estimated USD 5.2 billion (RM 21.96 billion)—approximately 12% of Malaysia’s exports to the US.
The US administration also indicated that Malaysia would be given favourable consideration in future semiconductor-related tariff decisions under Section 232, although no details were disclosed.
In the bond market, the 10-year Malaysian Government Securities (MGS) yield rose 5 bps to close at 3.50%. Budget 2026 was tabled and was viewed as broadly market neutral. The government projects GDP growth of 4.0%–4.5% in 2026, versus 4.0%–4.8% in 2025, reflecting moderation from external headwinds while domestic consumption and infrastructure spending should remain supportive. Net supply of government securities is expected to fall to RM77 billion in 2026, down from RM87 billion in 2025, providing a supportive backdrop for the bond market.
