# Roundup of the week: 31 October 2025

_Trump’s Asia trip produced a long-awaited truce in the US–China trade conflict — a win for markets and a sign of easing global tension. Meanwhile, UK economic data continues to improve despite pre-budget gloom, with inflation, retail sales, and borrowing figures all beating expectations. The tone of results season remains upbeat, led by strong bank and tech earnings, and confidence is building that rate cuts may soon follow._

Neil Woodford · 31 October 2025 · 8 min read

![Roundup of the week: 31 October 2025](https://cdn.sanity.io/images/v3acfbvo/production/ae775036cdd57123b81a392a8d9d33f72554cf1b-2301x1580.jpg?w=1600&fit=max&auto=format)

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This has been an action-packed week across the spectrum of politics, economics and financial markets. In the interest of brevity, I will limit my comments to the most important issues as I see them and, as usual, my interpretation of what they mean for the future.

## Politics

### US/China trade

Inevitably, President Trump’s trip to Asia has attracted the most attention this week. Aside from sealing improved trade deals with Japan and Korea, both of which involved lower tariffs alongside commitments to invest in the US, Trump also finally met President Xi for the first face-to-face meeting between these two since November 2018. The “amazing” meeting apparently went very well (as usual, much of the work had already been done ahead of this get-together) and has resulted, in effect, in a one-year truce on trade friction. On the US side, fentanyl-related tariffs will be cut from 20% to 10% in exchange for China’s help in limiting exports of chemicals used to make the drug, bringing the average tariff rate on Chinese goods to a still high 47% from 57%. China has also agreed to suspend its export controls on rare earths for a year and to start buying more US soybeans. The two leaders have agreed to meet in April next year when Trump plans to travel to China, but in the meantime, negotiations on a permanent trade deal and a resolution of the TikTok issue will continue. Trump stated on his way home that he expected the two sides to agree on a trade deal “pretty soon”.

Although the outcome was broadly in line with expectations, the fact that the meeting went well and that a more permanent and comprehensive trade deal is in the making removes a significant risk factor for markets. This is unequivocally good news.

## Economics

### US

Whilst the government lockdown continues (it will soon become the longest in history), important public data series, especially on the labour market, are not being produced. This is creating something of a problem for the Fed, which, as expected, cut rates again yesterday to 3.75%. The problem is that there is little clarity on what’s happening to the labour market, which, based on private data and anecdotal evidence, appears to be getting even weaker. The Fed Governor described this as akin to driving in fog and was the most significant factor behind his statement that rates may not fall again at the December meeting, which markets had started to expect. Reading between the lines, the committee appears to be leaning towards another cut soon, but may wait until the end of January meeting before making that decision. He also announced an end to QT on December 1st, representing a further easing of monetary policy.

Markets were apparently disappointed by this, and a number of commentators made much of this guidance's suggestion that the Fed may not cut in December. My take is that a cut in December or January will make next to no difference to the economy or to financial markets over the medium and longer term.

Listening to Jerome Powell, however, was once again very refreshing. His pragmatism and clarity of thinking are an abject lesson for policy makers everywhere, in my view. It was easy to understand what he was saying and why he was saying it. Noticeable by its absence was any reference to economic theory mumbo jumbo, something that appears all too often in the public utterances of members of the MPC.

### EU

The ECB also met this week but decided to keep rates on hold at 2%, having cut them eight times since June 2024.

The latest GDP data from the EU was a little better than expected, largely due to a surprisingly better outcome in France, which may be the product of lumpy aircraft deliveries. What was noticeable is that Italian and German economies are both lagging the EU average by some margin.

### UK

The seemingly endless debate about what will be in the Chancellor’s budget in four weeks still dominates the financial media in the UK. Much of the speculation is, in my opinion, the equivalent of ill-informed musings, but it still makes for pretty depressing reading. My principal concern has been that the speculation might undermine business and consumer confidence in the economy ahead of the actual announcement and partially puncture what I believe are the early signs of an improving economic backdrop. It appears that my concerns were misplaced because there is unequivocal evidence of this improvement that I have been writing about all year. For example, in the last few weeks, we have seen:

1. Better than expected inflation in September (3.8% rather than 4%)

2. Better than expected retail sales, which rose an unexpected 0.5% in September after growing 0.6% in August. (Analysts expected them to be down in September)

3. A 2.25% upgrade to end Q2 2025 nominal GDP (relative to the OBR’s Spring forecast)

4. Lower food price inflation – in fact, in September, the cost of non-alcoholic drinks and food fell for the first time since May 2024

5. The annual growth in average earnings was 4.7% in the three months to August, down from 4.8% in the previous period, the lowest outturn since Feb to April 2022.

6. The budget deficit was downgraded by £4bn in the latest data, although still above the OBR’s Spring forecast, were better than expected. More than three-quarters of the £7.2bn overshoot was due to local authorities and the Bank of England. This is likely due to phasing issues rather than signs of central government overspending. Importantly, debt interest payments were bang in line with the OBR’s Spring forecast, and my guess is that in the budget, the OBR’s expectations for future debt interest payments will be downgraded, not upgraded, as an ill-informed consensus believes.

7. Very good results from several leading UK-focused businesses, including Next, Barclays, NatWest and Lloyds. Importantly, the banks’ data clearly shows a pick-up in loan growth. (see below)

![Roundup of the week: 31 October 2025](https://cdn.sanity.io/images/v3acfbvo/production/3369fd49c3957076486a0ffcab4fb4e97dd9a2dd-1443x729.png?w=1600&fit=max&auto=format)

This is from the Bank of England’s Money and Credit Report, September 2025.

I have written about the upcoming budget in a number of recent blogs and will not repeat the analysis here. However, what I believe is increasingly clear is that as the gloom about what will be in the budget increases, not only is the economy shrugging it off, but it is also demonstrating clear signs of picking up.

## Markets

### Mag7 and tech results

This has been a busy week for results, and there is more to go. Apple and Amazon are reporting today at the close, hot on the heels of Alphabet, Microsoft and Meta. Once again, investors are focused on the AI infrastructure investments these businesses are committing to, which remain huge and growing. For example, in Q3 alone, Microsoft, Meta and Alphabet invested just shy of $80bn in AI infrastructure. The market, however, responded in different ways to the numbers. Meta fell by 8% on its numbers principally because the scale of its AI investment in the absence of cloud computing revenues is beginning to cause some concern, Microsoft fell about 3% apparently because of the upgrade to its planned AI investment, and Alphabet actually rose despite its higher AI investment, largely because its cloud revenues grew so strongly.

Elsewhere, SK Hynix’s results were excellent and, if anything, exceeded already lofty expectations. The company stated that it had already “sold out” of next year’s semiconductor production because of the boom in AI investment. (It is a leading supplier to Nvidia.) Operating profit jumped 62% year on year, and revenues were up 39% over the same period.

Interestingly, demand for SK Hynix’s leading-edge HBM chips is booming, and the company is also seeing increasing tightness in the inventory of its more traditional DRAM and NAND memory chips. In a further sign of the strength of demand, the company highlighted its recently signed contract with OpenAI to supply HBM chips for its Stargate data centre project. Hynix said the demand for these chips from this project alone would exceed (effectively double) the industry’s current HBM capacity.

### UK banks

The Q3 results season for the UK banks sector has continued this week. After consensus-beating numbers from Barclays, Lloyds and NatWest last week, this week both Standard Chartered and HSBC reported better than expected underlying results. Encouragingly, the numbers demonstrated good underlying trends in net interest income, fee income (from wealth management typically), costs, provisions, capital generation, loan growth and returns.

Next also reported Q3 results this week. Once again, they were significantly better than expected across the board. The standout, though, was Next’s international online business, which delivered sales growth of 39% YOY against a budget of just over 19%. Interestingly, the traditionally cautious CEO stated there was “no evidence of consumer stress” in the UK, which bodes well going into the peak Christmas trading period.

### Mercedes-Benz Group

MBG produced impressive Q3 results this week that comfortably beat expectations. For obvious reasons, this is a challenged business right now, but it appears to be coping with those challenges as well as I could have hoped. Of particular note was the outstanding free cash flow in the quarter, which has triggered speculation about a resumption of the share buyback. Perhaps of more significance to the business's future, management again outlined the ambitious roll-out of new models and further cost reductions over the next two years.

## What to look out for next week

I am hoping that next week is a little quieter. The results season will start to taper off, although once again, a number of the companies I follow will be reporting, and I will comment on those in next week’s Round Up. (As well as on the remaining Mag7 stocks that report later today and the US inflation data that comes out tomorrow)

In the UK, there is a 2029 gilt auction on Monday, but more significantly, the results of the MPC meeting on Thursday. Some argue that the meeting’s proximity to the budget means there will be no change, whilst others, including Goldman Sachs, are calling for a 25bps cut. If I were voting, I would vote for a rate cut. I think the committee has been too slow to cut rates, albeit inflation has been well above target for some time. Now that inflation has peaked below expectations, and the committee must see that it is about to fall significantly (just looking at base effects), there seems to be no point in hanging around. My message: **please just get on with it!**