Weekly Market Recap: SEP/OCT 29-03, 2025

Introduction

The first week of October 2025 saw global markets rattled by the U.S. government shutdown, rising stagflation risks in the U.K., mixed PMI data worldwide, and fresh inflation figures from Europe.
The shutdown, which began on October 1 after Congress failed to pass a funding bill, created delays in key U.S. economic data such as non-farm payrolls (NFP)and initial jobless claims, leaving investors with limited insights into the health of the labor market.

Amid the heightened uncertainty, gold prices surged to a new all-time high, while U.S. equities fell and the dollar weakened. Across other regions, the Reserve Bank of Australia (RBA) kept interest rates steady, the Eurozone’s inflation edged higher but near target, and the U.K. economy continued to struggle with stagflationary pressures.

This weekly market recap provides a detailed breakdown of the latest economic data and central bank decisions, along with their implications for global markets.

Table of Contents

1. U.S. Government Shutdown 2025 and Market Impact
2. Federal Reserve Data Delays and U.S. Labor Market Weakness
3. RBA Interest Rate Decision – Australia Holds Steady at 3.60%
4. U.K. GDP Growth and PMI Data: Stagflation Persists
5. Eurozone Inflation and PMI: ECB Interest Rate Outlook
6. U.S. Manufacturing PMI: Ongoing Contraction
7. U.S. Services PMI: Mixed Signals in Expansion and Contraction
8. Market Outlook: Gold, Equities, and the U.S. Dollar
9. Conclusion & Outlook for the Week Ahead

1. U.S. Government Shutdown 2025 and Market Impact

The U.S. government shutdown officially began on October 1, 2025, after lawmakers failed to reach a deal on government funding. This political deadlock halted several key economic releases, leaving investors without critical insights into the U.S. economy.

Market reaction was swift:

• Gold prices hit an all-time high as investors sought safe-haven assets.
• U.S. stock markets declined, reflecting rising uncertainty.
• The U.S. dollar weakened, pressured by fiscal instability and lower growth expectations.

2. Federal Reserve Data Delays and U.S. Labor Market Weakness

Despite the lack of official data releases due to the shutdown, private-sector reports pointed toward a softening labor market:

• JOLTS Job Openings rose to 7.23M, beating forecasts, but the broader downtrend signals weakening labor demand as high interest rates weigh on businesses.
• ADP Employment Change showed a decline of 32k, well below expectations of +50k. The steepest job losses were in professional and business services (-13k) and leisure and hospitality (-19k).

This underscored growing concerns about the U.S. labor market slowdown, adding pressure on the Fed’s policy outlook.

3. RBA Interest Rate Decision – Australia Holds Steady at 3.60%

The Reserve Bank of Australia (RBA) left interest rates unchanged at 3.60%. Policymakers noted that while inflation has eased, it is expected to exceed earlier forecasts, with the labor market remaining resilient. This cautious stance signals that the RBA is prepared to hold rates steady in the near term, while monitoring inflationary risks.

4. U.K. GDP Growth and PMI Data: Stagflation Persists

The U.K. economy continues to face stagflationary conditions:

• GDP Growth (QoQ): Expanded 0.3%, matching the previous quarter but offering little momentum.
• Manufacturing PMI: Printed at 46.2, firmly in contraction as production fell and new orders dropped sharply.
• Services PMI: Slowed to 50.8, below the forecast of 51.9, marking the weakest expansion in five months. Employment declined for the 12th consecutive month due to weak sales and higher cost pressures.

With inflation remaining elevated and growth stagnating, the outlook highlights persistent stagflation in the U.K.

5. Eurozone Inflation and PMI: ECB Interest Rate Outlook

• Inflation (CPI): Rose to 2.2% from 2.0%. Services inflation accelerated to 3.2%, while energy costs narrowed to -2%. Despite the rise, inflation remains close to the ECB’s 2% target, supporting expectations of unchanged interest rates.
• Manufacturing PMI: Improved slightly to 49.8 from 49.5, with Spain and the Netherlands in expansion, while Germany, France, and Italy stayed in contraction.
• Services PMI: Softened marginally to 51.3, still in expansion but slightly below forecasts.

Overall, the ECB’s interest rate outlook remains neutral, with policymakers likely to hold rates steady in the upcoming meeting.

6. U.S. Manufacturing PMI: Ongoing Contraction

The manufacturing sector continues to weaken under the pressure of high interest rates and tariffs:

• S&P Global Manufacturing PMI: Registered 47.7, signaling contraction.
• ISM Manufacturing PMI: Improved slightly to 49.1, above forecasts but still below the 50 threshold.

The data confirms that U.S. manufacturing remains in contractionary territory.

7. U.S. Services PMI: Mixed Signals in Expansion and Contraction

The U.S. services sector offered a mixed picture:

• S&P Global Services PMI: Rose to 54.2, above expectations of 53.9, supported by foreign demand. However, growth was tempered by softer new work inflows and persistent cost pressures.
• ISM Services PMI: Dropped to 50.0, down from 52 and below forecasts of 51.7, as business activity slowed and employment contracted further.

The divergence highlights the growing headwinds for the U.S. services economy.

8. Market Outlook: Gold, Equities, and the U.S. Dollar

Looking ahead, global markets remain highly sensitive to developments in the U.S. government shutdown:

• Gold prices are likely to remain supported as investors hedge against uncertainty.
• U.S. equities face downward risks amid weak labor data and slowing business activity.
• The U.S. dollar could extend its decline if political deadlock persists.
• Central banks in Europe and Australia are expected to maintain steady policy stances in the near term.

The coming weeks will be shaped by political negotiations in Washington, delayed U.S. economic data, and inflation trends across major economies

Conclusion & Outlook for the Week Ahead

As markets move into the second week of October 2025, the U.S. government shutdown will remain the dominant risk factor. The absence of key economic reports, particularly the non-farm payrolls (NFP), will keep traders navigating with limited visibility.
Any signs of progress, or further stalemate in Washington, could drive sharp moves in gold prices, the U.S. dollar, and equities