October proved to be a rewarding month for investors, with both equities and bonds extending their gains amid a supportive policy backdrop. Global markets were buoyed by expectations of further central bank easing, resilient corporate earnings, and steady consumer spending, even as some signs of economic softening emerged. The combination of lower energy costs, ongoing AI-driven investment, and increased fiscal activity, particularly in Europe and China, has continued to underpin growth. Against this backdrop, our Chief Investment Officer, Jeff Brummette, explores how these forces are shaping opportunities across asset classes, from equities and fixed income to commodities and alternative investments, while considering the implications of shifting policy, energy demand, and geopolitical developments for the months ahead.
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October delivered another strong month for risk assets, with most global equity markets positing gains, led by the tech-heavy U.S. indices. Fixed income also performed well as investors largely ignored France’s downgrade, focusing instead on expectations of further rate cuts by the U.S. Federal Reserve Bank and the Bank of England.
Equity Markets
Source: Bloomberg
Fixed Income Markets
Source: Bloomberg
Alternative Investments Markets
Source: Bloomberg
The overall environment remains favourable for risk assets, even as financial media highlight this time of year as seasonally weak, suggesting an imminent correction. The Federal Reserve cut rates by another 25 basis points and announced that they would end their balance sheet reduction (QT) on December 1st. Meanwhile, oil prices remain subdued around the $60-65 per barrel level and energy prices in Europe are back to levels that prevailed before the Russian invasion of Ukraine. This represents a significant boost to businesses and households across Europe.
Eurozone Imports of Fossil Fuels, in % of GDP
Imports of fossil fuels including oil, natural gas and coal, in % of Eurozone GDP
Source: Eurostat
Despite some recent softening in the U.S. labour market, retail sales remain healthy and business investment (driven by AI capex) remains strong. Fiscal policy is still loose, which is a double-edged sword for some like the U.S. and France where debt concerns are growing. In Europe, increased defence spending, particularly in Germany, is boosting activity. At the same time, China is pursuing a powerful combination of an ultra-loose monetary stance and significant deficit spending. President Trump has eased trade tensions by agreeing a truce with China following a period of sharp exchanges. However, tariff levels remain elevated, and the administration views the revenue raised as a key instrument to managing the deficit.
U.S. Tariff Rate and Duties Collected
Source: Census Bureau, U.S. Treasury, J.P. Morgan
Trump’s tariffs have not yet triggered significant inflationary pressures. While that may still happen, Federal Reserve Chair Jerome Powell suggested it would be a one-off price adjustment and expressed little concern during his latest press conference. He seemed more worried about the labour market, though he was noncommittal regarding a potential rate cut in December. Our view is that if labour conditions weaken further, the Federal Reserve will cut again regardless of inflation levels.
Third-quarter earnings have generally been strong so far, and there is no indication that the mega-cap tech firms are reducing their AI spend. In fact, all have committed to increasing their spending in 2026. The magnitude of this investment may be masking weakness in other areas of the U.S. economy.
Change in Capex Estimates for AI Hyperscalers
AI Hyperscalers Include AMZN, GOOGL, META, MSFT, ORCL
Source: FactSet, Goldman Sachs Global Investment Research
In addition, this ongoing investment is increasing electricity demand as newly constructed data centres require significant power.
U.S. To Lead Data Centre Energy Consumption
Source: IEA
We have never experienced anything on this scale before, so here’s some context to illustrate the magnitude of data centre demand.
Sky High Data Centre Energy Demand
Source: Enerdata, IEA
Our confidence in mining exposure has strengthened as the demand for copper and other essential materials, which are all vital for electricity grids, renewable energy projects and data centres, is far outpacing supply, witnessed by the copper price rising over 25% so far this year.
We continue to avoid long-duration government bonds in our portfolios, given that no major governments are signalling spending restraint. We expect yield curves to steepen further, with the most attractive returns likely at the short end as central banks respond to softening labour markets. The upcoming UK budget could prompt the Bank of England to lower rates, even with inflation still well above its 2% target.
AI-related capital expenditure is expected to keep growing and we continue to have exposure in that space. Similarly, we expect sustained demand for gold, silver, copper and other metals, supporting continued strong performance from our mining holdings.
European defence spending is in the early stages of ramping up, and we believe our defence positions will continue to benefit from this emerging secular tread.
Despite a recent modest rebound in the U.S. dollar, we continue to favour stocks outside the U.S. and hold fewer U.S. dollar-denominated holdings than we have in the past.
The price and value of investments and any income that might accrue may fall as well as rise and is not guaranteed. You may not get back the amount of your original investment.
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Hear more from the Oakglen experts
Our investment team continue to provide interesting and informative content to help keep you in the loop on recent global news and market trends. See below for some key highlights from around the world which some of the investment management team have recently covered:
Read more:
- October 2025 Investment Summary
Jeff Brummette, Chief Investment Officer
- Q3 2025: Discretionary Investment Management Service Update
Myles Renouf, Senior Investment Manager
- Beyond the Parade: China’s Silent Arsenal, the Doctrine of Unrestricted War and its potential implications on the West
William Lamond, Investment Director and Nigel Smith, Business Developement Executive
You can read other articles from the team on our News & Insights page.
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