[Image source: White House Gallery]
Written by Ilaria Massei
The event that received the most attention last week was the deal between Donald Trump, President of the United States of America, and Xi Jinping, President of China. They met at the Asia‑Pacific Economic Cooperation Summit 2025 in South Korea and reached a one-year trade deal, with China agreeing to postpone export controls on rare earths (metallic elements essential in smartphones, laptops, electric vehicles and defence equipment) and semiconductors and the US to ease tariffs on shipping and fentanyl-related goods (chemicals, ingredients, and equipment used to make or distribute fentanyl), to improve cooperation with China in controlling the illegal production and flow of fentanyl. Both leaders emphasised a shared vision of “prospering together” in their first such meeting in years. While investors viewed the agreement as potentially temporary, it was warmly welcomed by markets eager for stability – freeing global equity markets to move higher with the MSCI All Country World Index up + 1.7% over the week.
While equity markets were buoyant, bond markets were more cautious as the Federal Reserve (Fed) delivered an expected 25-basis-point rate cut but Fed Chair, Jerome Powell, tempered expectations, stating that another cut in December is “not a foregone conclusion.” The news was not well received by the US Treasuries market with long-dated Treasuries (as represented by the Bloomberg US Treasury 20+ Years) declining -1.2% in USD on worries that there might not be enough rate cuts in the future to support the economy.
While tariffs and monetary policy dominated US headlines, this week’s earnings announcements provide important context for assessing the health of corporate activity. European banks continued to perform well – with Crédit Agricole & Santander among the standouts – while UK Banks like NatWest reported their highest quarterly profits since 2008. In contrast, US technology firms faced a volatile week as investors struggled to reconcile enthusiasm for AI with concerns about excessive spending. None of Google (Alphabet), Meta, or Microsoft are willing to stop spending on AI yet and together have spent nearly $80 billion last quarter on AI infrastructure. While Alphabet’s shares rose on record revenues and increased capital spending plans for 2025, Meta and Microsoft declined as profits have come under pressure due to increasing costs on AI-related expenses. Hyperscalers – such as Microsoft, Google, and Meta – are the largest cloud and technology companies investing heavily in building and expanding AI infrastructure. Nvidia, on the other hand, is a key supplier to these players, providing the advanced graphics processing units (GPUs) and hardware needed to power AI applications. While hyperscalers are seeing pressure on profits due to their massive capital spending, Nvidia continues to benefit as long as this investment cycle in AI infrastructure remains strong – at least for now.
During weeks characterised by high news flow and market volatility, we think that adopting a global investment perspective is essential. It enables the identification and capture of opportunities across diverse markets, rather than restricting exposure to a single region.
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