Markets enter a pivotal phase, Natixis IM Solutions notes
29 OCT, 2025
By Joanna Piwko from RankiaPro Europe
Garret Melson, Portfolio Strategist at Natixis IM Solutions, believes global markets are now entering what could be “the most crucial stretch of the year”, with several high-impact events likely to define investor sentiment through the remainder of 2025.
“This week could set the tone for markets until year-end,” says Melson. “The October FOMC decision on Wednesday will be followed by earnings from Alphabet, Meta, and Microsoft, ahead of Thursday’s much-anticipated Trump–Xi summit and, finally, Apple and Amazon’s results after the close.”
By the end of the week, investors should have greater clarity on the three dominant market drivers: Federal Reserve policy, the momentum of the artificial intelligence boom, and the trajectory of U.S.–China trade relations.
Federal Reserve Policy in Focus
Markets have already fully priced in two rate cuts for the remainder of the year. While Fed Chair Jerome Powell is unlikely to commit to a December cut, Melson notes that “hawks have all they need to continue guiding policy rates toward neutrality.” This suggests that even a cautious Fed stance could support risk sentiment, provided it aligns with expectations.
The AI Growth Narrative
On the corporate front, all eyes remain on the “Magnificent Seven” tech giants. “For markets, what matters is confirmation that AI momentum is intact,” Melson says. Strong earnings from these leaders would reinforce the theme that continues to power equity performance and investor optimism.
U.S.–China Relations: More Noise Than Shock
Among the week’s key catalysts, Melson sees the Trump–Xi summit as the most anticipated – but potentially the least impactful. “Markets have long become immune to fluctuations in trade rhetoric,” he explains. Unexpected headlines can still cause temporary disruptions, but the overall trend suggests stability rather than escalation.
He refers humorously to what he calls the “TACO” principle – Trump Always Chickens Out – implying that despite tough rhetoric, de-escalation tends to prevail. Following encouraging statements from both sides after preliminary talks in Malaysia, investors expect tariffs to remain capped and for China to possibly ease restrictions on rare earth exports.
A modest easing in tensions – through tariff reductions on fentanyl-related products or renewed Chinese purchases of U.S. agricultural goods – could offer a minor lift to sentiment. But as long as the direction continues toward détente, trade issues are unlikely to be a major market driver.
A Checkpoint, Not a Turning Point
“In summary,” Melson concludes, “the next 48 hours are critical for market direction, but largely about ticking the boxes. If all these events unfold in line with expectations, the path looks increasingly clear for markets to continue advancing into year-end.”
