October was a broadly positive month for the global financial markets, with equities and government bonds both performing well overall. The MSCI All Country World Equity index added another 2.2% (in USD) to its value, advancing for a seventh consecutive month and marking its longest winning streak in over four years. American shares continued to be at the forefront of the global advance, propelled by a mixture of factors: rising corporate profits, resilient economic growth, falling interest rates, easing trade tensions, and fiscal policy boosts. Technology stocks again were the main driver, fueled by the ongoing artificial inteligence (AI) enthusiasm. Indeed, Asian equities, with their significant exposure to China and the tech sector, led gains in October. Shares in Japan rose solidly despite the sharp sell-off in the yen. South Korea equities rose more than 20% in the month (in own currency) and those in Taiwan more than 10%, as both markets are deeply integrated into the global electronics manufacturing, and directly benefited from the investor focus on AI. Shares in China retreated in the month as some macroeconomic data disappointed – employment fell, and manufacturing PMI figures also fell (to a six-month low). Separately, in emerging markets, the overwhelming victory of President Javier Milei in Argentina, shot the MSCI Argentina Index to a remarkable 64% gain for the month (in USD!). Investors showed clear preference for risk in October, as more volatile and higher-beta stocks outperformed in developed markets, notably the United States. The American equity index S&P500 delivered strong return for the month (over 2%) but was outshone by the tech-heavy NASDAQ, which was buoyed by the bubbly excitement over the transformative impact of AI technology. American indices were pushed to new all time highs, as the current bull market chalked up its third birthday – stocks have been on a tear since the autumn of 2022, when ChatGPT was released. Indications of a favorable trade deal with China fueled investors’ confidence, despite the longest government shutdown in U.S. history. Meanwhile, the Federal Reserve (Fed) and the European Central Bank (ECB) struck different tones at their respective October policy meetings. The Fed again cut the policy rate in October. The Fed Chair Powell cast doubt over the December rate cut and markets reacted negatively, as the risk of a slower policy normalisation increased considerably. Across the Atlantic, the ECB left rates unchanged as the Euro area remains in a good place, with inflation hovering around its 2% target.  German equities retreated in October but remained up more than 30% for the year (in EUR). Retail sales were weak and business conditions showed little improvement, while investors looked for evidence of the impact of the government stimuli on the economy. The United Kingdom was one of the stronger markets in Europe as expectations for another interest rate cut by the Bank of England (BoE) grew. The pound remained under pressure as the government budget deficits remained a key focus of investor worries. On the other hand, in fixed income markets, most bond asset classes finished in positive territory. Interest rate decisions from major central banks came quite late during the month – October 29th and 30th, for Fed and ECB, respectively – and their impact was limited. Emerging market debt outperformed in October, supported by a combination of higher real yields and a weaker dollar. Performance was mainly underscored by signs of easing trade tensions between the US and China and (another) solid US corporate earnings season. However, the corporate credit and securitised segments weighed on global bond markets. The Bloomberg Global Aggregate Bond index fell by 0.3% (in USD) during the month. Actually, Japanese government bonds were the worst performers in October, with 10-year yields rising modestly as markets continue to anticipate further policy normalisation from the Bank of Japan. Expectations of a more fiscally expansive agenda under new prime minister Takaichi also contributed to the rising yields (bond prices and bond yields move in opposite direcitons). 
       The US equity market experienced a decent gains of 2.4% in October (S&P500 in USD), buoyed by robust corporate earnings, especially from four of the "Magnificent Seven" technology stocks. Optimism around the huge cost-saving potential of AI and the positive developments in US-China trade negotiations boosted investor sentiment. The agreement to pause steep US tariffs and limit China’s export controls on rare earth minerals—a vital component in AI supply chains—contributed further to this optimism. Economic indicators supported the upbeat mood, with the Purchasing Managers’ Index (PMI) rising and retail sales increasing. Despite the federal government shutdown continuing with no clear resolution at the month end and several companies announcing layoffs, the market remained resilient. Business confidence, especially in the services sector, improved, though consumer confidence dipped, hinting at potentially softer spending in the fourth quarter. Although the delay in economic data caused by the shutdown did not offer any hard data on employment demand, labor market indicators (such as private job growth and jobless claims data) were generally positive. Inflation continued to surprise to the downside, with headline CPI rising slightly from 2.9% to 3.0% in September, largely due to higher gasoline prices, while core inflation eased from 3.1% to 3.0%. The softer inflation environment helped justify the Fed’s rate cut (second consecutive 25 bps cut; target range of 3.75%-4.00%), but the central bank’s cautious outlook suggests rates may remain elevated for longer. Some rate-sensitive sectors like small caps and Real estate underperformed amid uncertainty about the Fed’s future moves. The US dollar strengthened in October, though its ongoing weakness in 2025 has greatly benefited US-based investors. Technology and Utility stocks led the monthly gains, with growth stocks outperforming value stocks. The tech-focused NASDAQ equity index again closed up almost 5% for the month (USD), recovering from mid-month declines triggered by trade tensions. Impressively, 82% of reporting companies beat earnings expectations this season, with profits on average 6.4% above consensus. Thus, over the last three-years of the current bull market, US large-cap stocks have delivered an average annual return of nearly 23%, eclipsing all other asset classes. Nonetheless, investors now are anxious that such performance may not be sustainable going forward – current equity valuations reflect much of the positive news, leaving little room for error. U.S. government bond yields climbed higher across most maturities during October, with most of the rise coming at the month end – following the comments from the Fed Chair J Powell about the increased uncertainty for another rate cut in December. The yield of the 10-year U.S. Treasury finished the month at 4.09%, up from 3.99% at the end of the previous week. The tempering of inflation and the Fed’s cautious approach may support bond markets in the near term, but lingering uncertainty over future policy and economic data could bring future volatility.
       European equities experienced mixed results in October. The pan-European equity index Stoxx600 finished the month 2.5% higher (in EUR). English stocks had a particularly good month – the UK FTSE All-Share index rose by 3.7%, outperforming most developed peers in October. This strong performance benefited most domestic and interest rate-sensitive sectors, as well as the commodity markets that boosted the UK’s mining sector. Additionally, a weaker pound sterling enhanced returns by increasing the value of all British overseas earnings. In contrast, the MSCI Europe excluding-UK Index gained 2.1% but underperformed compared to other developed markets. Factors such as political uncertainty in France and the region’s limited exposure to commodities and AI-related technology contributed to this lagging performance (relative to the UK and Asia). German equities, although flat-ish in October, remained up more than 30% for the year despite muted retail sales and slow improvements in business conditions. Overall, European markets posted modest but positive returns (in EUR), with the United Kingdom standing out as one of the stronger markets, aided by expectations for another interest rate cut by the BoE. European fixed income markets saw notable gains during October. UK Gilts led developed government bond markets, with the 10-year yield dropping approximately 30bps, buoyed by dovish signals from the Bank of England and softer inflation data. These developments, along with a more cautious economic outlook, increased market expectations for rate cuts, with 60bps of cuts now priced in by the end of 2026. Euro area government bonds also performed well, returning almost 1% on aggregate for the month. Italian and Spanish bonds were standouts, with 10-year yields falling by 18bps and 11bps, respectively, and spreads tightening by just over 10bps versus German Bunds (the ultimate risk free asset. The favorable bond environment was supported by easing euro area inflation, which hovered around ECB’s target and even declined slightly from 2.2% to 2.1%, largely due to lower food and energy inflation. Core inflation held steady at 2.4%, as rising services inflation offset declines in goods inflation, although the services component is expected to be temporary due to slowing wage growth.
       October brought some interesting developments on the Bulgarian Stock Exchange (BSE) too, although the results were mixed. The main indices continued to show volatility, with the flagship SOFIX registering a slight decline of 0.5% and the broad BGBX40 – of 0.9% (in BGN). Only the small-cap index, beamX, rose, up almost 2%. One of the interesting news during the month was that on October 20, 2025, the Bulgarian capital market celebrated 25 years since the creation of the SOFIX equity index – the representative benchmark of the 15 most liquid companies on the BSE. Launched in 2000, SOFIX is a symbol of the development of the local capital market, and during this period its value has grown more than tenfold. Also in October, the turnover of the BSE exceeded BGN 1 billion for the first ten months of the year, which is the highest level in the last 12 years. Compared to the same period last year, when the turnover reached BGN 706 million, the growth was 42%. Among the significant movements on the local exchange, the biggest rise for the month was recorded by the share of the technology company Sirma Group Holding AD, which rose by more than 21%, while the worst performer was the share of the agricultural producer and grain products trader Agria Group Holding AD, which fell by more than 17%.

Source: Bloomberg, BSE