Markets Weekly Outlook - Tesla, Netflix Earnings, US CPI and China's Five-Year Plan in Focus as US-China Tensions Simmer

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Week in review

Another week has passed by and the US government shutdown continues. Despite this the week was still full of volatility as markets grappled with the ongoing US-China stalemate as well as concerns around the US banking sector later in the week.

As a result safe havens continued to thrive with Gold prices soaring to near $4400/oz before falling around 2.7% on Friday. The drop in Gold came about as President Trump provided a sliver of hope on US-China relations saying "not sustainable" and that he would meet with Xi Jinping in South Korea in a few weeks.

US equities enjoyed a mixed week and struggled on Thursday weighed down by Banking Stocks. US banks borrowed nearly $15 billion from the Federal Reserve's Standing Repo Facility (SRF) on Wednesday and Thursday, the largest borrowing over a two-day period since the Covid-19 pandemic. Market participants were concerned about US credit markets as a result and whether that could affect valuations across markets.

The selloff on Thursday rippled through Asia overnight and weighed on European stocks on Friday wiping out weekly gains.

These concerns came about after major US banks reported stellar earnings earlier in the week.

Despite the mixed week for US and global equity markets, equity funds attracted inflows for a fourth straight week through October 15, as dovish comments from U.S. Federal Reserve Chair Jerome Powell reinforced expectations that the central bank will cut interest rates at its meeting later this month.

Across the globe, investors bought about $2.17 billion worth of stock funds this past week, a figure similar to the week before. This money mainly flowed into U.S. and Asian stock funds, which saw nearly $1 billion in inflows each.

Conversely, European stock funds saw a significant outflow of $1.62 billion, ending a ten-week period of continuous buying. Within the market, interest in funds focused on specific sectors surged by nearly 50%, with the Technology and Healthcare sectors leading all investments.

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Source: LSEG

Next week the US reporting season heats up and could set the tone for global equity markets. After major banks reported this past week, next week will feature results from several major household names, including Tesla and Netflix which are among the most closely watched reports. We will also get reports from other big names like Procter & Gamble (P&G), Coca-Cola and aerospace giant RTX and tech veteran IBM.

How has the US Dollar Performed?

The U.S. dollar is finishing the week with losses against major global currencies.

The overall dollar index, which tracks the US currency's value, is on track for a 0.44% weekly slide, its largest drop since late July despite a small gain of 0.26% on Friday.

The dollar weakened against the safe-haven Swiss franc, falling 0.1% to its lowest level since mid-September.

Meanwhile, the euro was set for its best weekly gain against the dollar in nine weeks, even though it dipped slightly by 0.22% on Friday.

Finally, the dollar was flat against the Japanese yen, which is also on track to notch a weekly gain, and the British pound (sterling) was down slightly by 0.2% but still poised for a weekly gain.

This week also saw rate cut expectations rise with market participants now pricing in around 51 bps of rate cuts through December 2025, up from around 44 bps earlier in the week.This is based on the LSEG data.

The Week Ahead

Next week will definitely be a busier one as we did have a bit of a data break this week. Obviously the US Government shutdown has hampered US data releases but there was also a lack of high impact data from around the world. .

The week ahead brings a host of high impact data releases from around the globe including inflation data from the US, China and Canada. While we also have a host of Central Bank policymakers speaking.

Let us take a look at some of the key data releases which could shake markets next week.

Asia Pacific Markets

China is facing a pivotal week that will set its economic direction for the next five years, even as new data is expected to confirm a recent slowdown.

From Monday to Wednesday, the Fourth Plenum meetings will be held, with the main goal of discussing China's important 15th Five-Year Plan for the years 2026 to 2030. Key priorities that are expected to be highlighted include boosting consumer spending, driving technological innovation (especially in areas like AI and semiconductors to achieve self-reliance), and generally shifting toward "high-quality development" to secure long-term growth.

Separately, critical economic data is due on Monday:

Loan Prime Rates: The central bank is expected to keep these key interest rates unchanged.

GDP and Property: Official data is likely to show China's third-quarter economic growth slowed substantially to around 4.5% for the year. Key monthly data on retail sales and factory output are also expected to show a deceleration. Additionally, data on property prices is expected to confirm the market is still weak, as the government has not yet announced any major new stimulus to turn the sector around.

With the Bank of Japan's interest rate decision coming up on October 30th, two key pieces of economic data are highly important this week: trade and inflation figures.

Japan's exports are expected to rebound and grow by 4.0% compared to a year ago, mainly because shipments of goods like cars and chip-making machinery are returning to normal following the recent 15% tariff deal with the US At the same time, imports are likely to decrease slightly by 0.5%, largely because global commodity prices are lower. Analysts expect exports to continue normalizing in the coming months due to the September trade agreement.

The overall inflation rate is expected to rise to 2.9% for September, with core prices likely remaining above 3.0%. The main reason inflation has slowed down recently is due to temporary factors, specifically government subsidies for energy and social welfare programs.

Tariffs, Tariffs and More Tariffs

Due to the ongoing US government shutdown, there is a serious lack of clear information on how the economy is actually performing.

The government's statistical agencies are closed, meaning key reports are delayed, and even when the government reopens, it will take weeks to properly collect and process the missing data.

However, one important piece of information, the September inflation report (CPI) has been confirmed for release. This is not for the Federal Reserve's benefit (even though they need it for their October 29th meeting), but because the number is legally required to calculate the Social Security cost-of-living increase for 2026.

Experts still expect the report to show a small rise in overall prices (0.4% for the month) and a modest increase in core prices (0.3%). Even if tariffs start making inflation more obvious, the Fed's biggest concern right now is the weakening job market, meaning a small rise in inflation will not stop them from making a planned quarter-point interest rate cut later this month.

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Chart of the Week - US Dollar Index

This week's Chart of the week is the US Dollar Index (DXY)

From a technical perspective, the DXY has broken a three-day losing streak finding support at the 100-day MA on Friday.

The daily candle closed as a hammer candle setting up the potential for further upside on Monday.

If this level holds on Monday the DXY could continue its rise in the early part of next week. This will also depend on US-China developments.

CPI data will be due on Friday though and market participants may be slightly hesitant to commit to any major moves ahead of the data release.

This could potentially lead to some choppy price action in the early part of the week, something to consider.

Immediate resistance rests at 99.57 before the psychological 100.00 handle comes into focus.

Looking at support and a break below the 100-day MA could lead to a retest of the 97.70 or 96.90 support levels.

US Dollar Index (DXY) Daily Chart - October 17, 2025

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Source:TradingView.Com (click to enlarge)

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