Markets Today: Euro Area Business Activity Hits 18-Month High, Gold Slips 1.5% Ahead of US CPI Data. FTSE Hovers Near Highs

Most Read: Nikkei 225: Bullish trend remains intact for another potential all-time high of 50,860/51,030

Asian stock markets rose sharply on Friday, lifted by strong earnings from Wall Street companies like Intel and encouraging signs that the US and China might ease trade tensions. Japan's Nikkei index jumped 1.4% as the new Prime Minister promised economic stimulus.

Overall sentiment improved significantly after the White House confirmed President Trump would meet with Chinese President Xi Jinping next week.

Chinese stock indexes also climbed, with the main Shanghai index up 0.4%, with semiconductor stocks leading the gains, reflecting China's focus on building its own technology.

In other news, the Canadian Dollar suddenly dropped after President Trump threatened to stop all trade talks with Canada over a trade-related ad by the Ontario government.

UK retail sales volumes unexpectedly rose by 0.5% in September, marking the fourth straight month of growth and reaching the highest level since July 2022, which defied forecasts that sales would fall.

This growth was mainly driven by a rise in non-food stores, especially clothing shops, and strong performance by online retailers. Online sales, which reached their highest level since February 2022, were notably boosted by online jewelers reporting high demand for gold.

Overall sales volumes for the third quarter were 0.9% higher than the previous quarter and 1.0% higher than last year, thanks partly to good summer weather that helped clothing sales and online shopping. The value of online sales, in particular, has now grown for eight months in a row.

The Eurozone economy grew faster than expected in October, with the HCOB Composite PMI rising to 52.2, showing the quickest expansion since May 2024.

This growth was mainly thanks to the Services sector, which reached a one-year high, while the Manufacturing sector unexpectedly avoided shrinking. Companies received more new business, mostly from domestic customers, which offset a drop in export orders. This led firms to hire more workers and stopped the drop in backlogs of work for the first time since April 2023. Although the cost of supplies rose less than before, companies raised their own prices at the fastest rate in seven months.

However, business confidence for the future dropped to a five-month low. Overall, these results confirm that the European Central Bank (ECB) is in a good position, strongly suggesting that interest rates will remain steady for the foreseeable future, despite the possibility of a further cut not being completely ruled out.

European stocks climbed on Friday, continuing their rally as investors were cheered by positive corporate earnings and hopes for a breakthrough in US-China trade relations. The main STOXX 600 index rose 0.3%, building on the previous day's record high, which had been driven by energy stocks following new US sanctions on Russia.

Sentiment was lifted after the White House confirmed that President Trump will meet with his Chinese counterpart next week to address escalating trade tensions and an upcoming tariff deadline.

In other news, sectors like technology and financial services saw gains, and unexpectedly strong British retail sales provided positive data.

Meanwhile, investors are looking ahead to today's US inflation report, which will offer clues before the Federal Reserve's meeting next week.

Among companies, Sanofi rose 3.3% on better-than-expected profit, Saab jumped nearly 6% after raising its sales forecast due to increased military spending, and NatWest gained 4.4% after reporting a 30% profit increase and raising its yearly goals.

On the FX front, The US Dollar was steady on Friday and was set to end the week up by a small amount (0.5%) against other major currencies.

The Canadian dollar barely moved, showing the market's main focus was on the upcoming meeting between President Trump and Chinese President Xi Jinping next week.

The Euro was flat for the day and was on track for a slight weekly loss, despite a survey showing that business activity in the Eurozone grew faster than expected in October, led by the services sector.

Meanwhile, the British pound was down slightly, even though the UK reported stronger-than-expected retail sales, which were helped by people buying gold online.

Currency Power Balance

Oil prices barely moved on Friday, steadying after the sharp rise they had the day before. However, they were still on track to finish the week higher.

This stability came after the US. put new sanctions on Russia's two largest oil companies, which continues to raise concerns about the global oil supply.

Brent crude was up 0.2% at $66.11, and US West Texas Intermediate crude rose 0.3% to $61.95.

Gold prices dropped more than 1.5% on Friday and were on track to break a nine-week winning streak, recording their biggest weekly percentage decline since November 2024.

This sharp fall was triggered by investors choosing to lock in profits after the metal's recent strong rally, coupled with signs that trade tensions between the US and China were easing.

This reduction in global uncertainty lowered the immediate demand for gold as a safe-haven asset, causing spot gold to be down 1.5% at $4,063.46 per ounce.

Read More:

• WTI Oil: Crude rallies above $60 on fresh US sanctions and US million-barrel purchase
• GBP/USD Slide Continues After UK Inflation Data. Is the Door Open for December BoE Rate Cut?
• Gold (XAU/USD) tumbles lower, now flirts with key level of $4,000: Is the rally over?

Markets are optimistic once more following the announcement of a meeting between Chinese President Xi Jinping and US counterpart Donald Trump on October 30. Sentiment has been boosted ahead of some key data releases, though we have seen constant flip-flopping in policy and rhetoric from the Trump administration.

This would mean that market participants should exercise caution on a potential US-China trade deal and further changes ahead of next week's meeting cannot be ruled out.

The US session today will be a busy one. A welcome change of pace following the last few weeks. There is a host of data being released including PMI but all focus will be on the US CPI release.

The US is releasing its inflation report (CPI) for September today, which is the first major economic data release since the government shutdown ended.

However, I don't expect this report to cause big swings in currency markets.

My forecast for the core inflation rate is 0.3% for the month and 3.2% for the year, which is nearly the same as what most other experts are predicting. For the overall inflation rate (headline CPI), I tend to agree with the general prediction of 0.4% for the month and 3.1% for the year.

From a technical standpoint, the FTSE 100 has printed fresh all-time highs around 9610.

A slight pullback since then does leave the index vulnerable for a slightly deeper correction but the overall risk-on tone may keep bulls on the offensive.

The FTSE has dropped below the overbought region on the period-14 RSI which could be a sign that momentum may be shifting. However, as discussed above with overall sentiment remaining largely positive a deeper correction may face challenges.

Immediate support rests at 9525 before the 100-day MA at 9472 comes into focus.

FTSE 100 Index Daily Chart, October 24. 2025

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