China Maintains 2025 Growth Target Despite Slowest Quarterly Expansion in a Year

Economic

Summary:

China's economy grew 4.8% in Q3 2025, the slowest pace in a year, but officials remain confident in reaching the full-year growth target of around 5% thanks to strong exports and new fiscal support...

Growth Slows but Outlook Remains Optimistic

China’s GDP expanded by 4.8% year-on-year in the July–September quarter, marking the country’s weakest quarterly growth since Q3 2024. Despite the slowdown, the National Bureau of Statistics stated that the cumulative 5.2% growth through the first three quarters forms a solid foundation for achieving the 2025 full-year target of “around 5%.” This statement reflects confidence driven in part by ongoing export strength and recent fiscal stimulus measures.

While external headwinds, including renewed trade tensions with the U.S., have persisted, Chinese authorities remain focused on internal resilience. Treasury Secretary Scott Bessent is set to meet Vice Premier He Lifeng this week in Malaysia to lay groundwork for a Trump–Xi Jinping meeting later this month, which could shape the tone of bilateral trade dynamics heading into 2026.

Divergence in Economic Indicators Reveals Uneven Recovery

The Q3 figures highlight a clear divergence across sectors. Retail sales grew at their slowest pace since November 2024, indicating sustained weakness in consumer demand. Fixed-asset investment saw its first year-to-date contraction since 2020, mainly dragged down by a still-depressed real estate sector. Infrastructure and manufacturing investments also slowed, with the former growing only 1.1% and the latter down to 4%, a sharp drop from earlier highs near 10%.

In contrast, industrial output delivered an unexpected upside, rising 6.5% in September exceeding all forecasts. This suggests that production remains relatively resilient, partially supported by external demand for Chinese goods. It also underscores a continuing disconnect between supply-side capacity and domestic consumption.

Policy Responses and Structural Challenges

Policymakers have taken several steps to stabilize the economy without resorting to aggressive monetary easing. The Ministry of Finance recently authorized provinces to access 500 billion yuan ($70 billion) in unused bond quota under the national debt ceiling. These funds will be used to strengthen fiscal positions, repay company arrears, and support infrastructure investment.

While this fiscal flexibility could revive investment in Q4, economists like Ding Shuang from Standard Chartered caution that it may also reduce the urgency for additional rate cuts this year. Bloomberg Economics similarly argued that the data dampens the need for immediate stimulus but reinforces the need to address structural imbalances, especially the gap between robust production and weak domestic demand.

One of the clearest signals of deeper economic fragility is in nominal GDP, which rose just 3.7% the weakest since 2022. The decline in the GDP deflator for the tenth consecutive quarter confirms the persistence of deflationary pressure, a trend that continues to erode company revenues and consumer confidence.

Fourth Plenum and Long-Term Reform Agenda in Focus

China’s top leadership is meeting this week for the Fourth Plenum, where they are expected to finalize components of the 15th Five-Year Plan. Although the plan may not be formally released until March, early signals suggest that domestic consumption, education, and employment will receive greater attention a strategic pivot accelerated by rising geopolitical pressure, including Trump’s re-election and the evolving U.S. tariff regime.

The Chinese government has voiced its intention to implement more “proactive and impactful” macro policies, with the goal of stabilizing markets, employment, and expectations. However, the depth of structural reforms particularly efforts to reduce reliance on investment and exports remains to be seen.

Despite recording its weakest growth in a year, China remains committed to achieving its 5% expansion goal for 2025, supported by strong industrial output and renewed fiscal initiatives. Yet the widening divergence between industrial performance and domestic demand points to deeper structural challenges that stimulus alone may not resolve. As policymakers finalize the long-term economic agenda during the Fourth Plenum, global investors are watching closely to see whether China will move decisively toward a consumption-led growth model that could rebalance both domestic and global economic dynamics.

Source: Bloomberg

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Economic

Stocks

Markets Buoyed by Eased Trade Rhetoric

Stock futures opened higher Sunday evening as Wall Street reacted positively to U.S. President Donald Trump’s more measured remarks on China. In contrast to his previous threats of “destroying China,” Trump told Fox News he is “not looking to destroy” the country, signaling a potential cooling of the trade war narrative that has roiled markets in recent months.

This softening of tone mirrors previous patterns where markets responded swiftly to Trump’s messaging. Just last week, equities staged a strong rebound after he urged investors not to “worry about China,” reassuring markets amid tariff escalations. Futures tracking the Dow Jones Industrial Average rose by 54 points (0.12%), while S&P 500 and Nasdaq futures climbed 0.15% and 0.20% respectively, reflecting renewed investor confidence.

Bond, Currency, and Commodity Markets Stay Stable

Beyond equities, the broader market picture remained relatively calm. The yield on the 10-year U.S. Treasury held steady at 4.011%, suggesting no immediate shift in expectations for Fed policy. Meanwhile, the U.S. dollar showed only marginal movements down 0.06% against the euro and up 0.14% versus the yen.

Gold rallied 1% to $4,253.10 per ounce, supported by persistent underlying demand for safe-haven assets despite the improved trade rhetoric. Oil markets were largely unchanged, with U.S. crude futures at $57.55 and Brent holding near $61.27, reflecting balanced sentiment as geopolitical tensions ease but underlying demand concerns remain.

High-Stakes Week Ahead: Trade Talks, Earnings, and Inflation Data

Investor focus is now shifting to a crucial week that combines geopolitical developments with key economic and corporate catalysts. Treasury Secretary Scott Bessent is scheduled to meet Chinese Vice Premier He Lifeng for further trade negotiations, setting the stage for a highly anticipated meeting between Trump and Chinese President Xi Jinping at the end of the month in South Korea.

The third-quarter corporate earnings season is also intensifying. Following strong results from major banks, attention turns to top tech names: Netflix and Texas Instruments report Tuesday; Tesla and IBM follow on Wednesday; and Intel rounds out the week on Thursday. These results will provide critical insight into the performance and guidance of companies that have powered much of the market’s gains.

Simultaneously, the Labor Department is set to release September’s consumer price index (CPI) report on Friday, despite an ongoing government shutdown. Economists expect a 0.4% monthly increase and a 3.1% annual rise, up from 2.9% in August. These inflation readings will directly inform future interest rate decisions and cost-of-living adjustments, including for Social Security recipients.

With a lighter tone from President Trump offering short-term relief and volatility subdued across key asset classes, markets are entering the week with cautious optimism. However, with high-impact earnings, inflation data, and trade talks all converging, sentiment could shift rapidly. Investors will be watching closely not just for numbers, but for tone, forward guidance, and policy signals that could define market direction heading into the final stretch of 2025.

Source: Yahoo Finance

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Pepperstone

Forex

Political

Economic

WHERE WE STAND – A rather famous old market adage is ‘there's nothing like price to change sentiment'. I might change that a bid, to ‘there's nothing like a TACO to change sentiment'.Yes, that's right, after participants spent the back end of Thursday brushing up on funding markets and fretting (unnecessarily) about the state of US regional banks, a couple of positive trade-related snippets from ‘The Donald', and signs of easing money market stress stateside, were good to spark a bout of optimism as we moved into the weekend.

Fine, conditions were still incredibly choppy, and yes it wasn't as if the risk-on vibe that took hold was the most convincing of things that you're ever going to see, but at least participants appear to no longer be pointlessly worrying about insignificant financial institutions that nobody has ever heard of, and re-focusing on what remains a constructive setup for risk assets as we move towards year-end.I'll get to that in a second, but first just want to touch on the banking sector. Last week's jitters appeared to stem from a couple of relatively small banks writing off bad loans – one of these was Zions Bancorp, who took a $50mln write-down on a fraudulent loan, but have a $90bln (with a ‘B'!) balance sheet, which at best makes that seem ‘small beer'.

In many ways, those jitters last week were a bit of a ‘perfect storm', with idiosyncratic loan write-downs coinciding with sizeable funding pressures stemming from the California tax filing deadline, as well as Treasury auction settlements, thus creating notable tightness in funding markets. Said tightness subsided on Friday, with no institutions tapping the Fed's SRF, while in any case the Fed are alert to the lack of ‘wriggle room' that they now have, with RRP usage basically zero, and Chair Powell having already flagged that balance sheet run-off will probably wrap up sooner rather than later. December is the base case on that front, though risks skew towards it happening sooner.

Anyway, markets already appeared on surer footing as those fears subsided, before we got a ‘TACO' for lunch to help steady things up even more. That, of course, came by virtue of comments from President Trump, who continued to dial down the rhetoric in terms of US-China trade tensions, confirming that he will be meeting President Xi in a fortnight, that high tariffs on Chinese goods are ‘not sustainable', and again noting that things will be ‘fine' with China in due course. Treasury Sec Bessent confirming he'll meet his Chinese counterpart this week provided a bit of a helping hand as well.

Given the above, equities on Wall St ended the week in the green, with this rally resulting in the major benchmarks notching a weekly gain, despite what was quite the rollercoaster ride over the last five days. Though conditions have clearly been turbulent, I remain an equity bull, with earnings growth solid, underlying economic growth resilient, the monetary backdrop becoming looser, the present round of trade tensions likely to soon be de-escalated, corporate buybacks being on the verge of resuming, as well as the typical FOMO/FOMU buying into year-end. All that feels like a very powerful force that I'd not want to fight.

Speaking of powerful forces, relentless selling pressure was felt across the precious metals complex as the week wrapped up, with spot gold falling back towards $4,200/oz, and spot silver notching its biggest one-day drop in half a year. It must be said that there wasn't anything especially obvious to drive these moves, besides perhaps a combination of fading haven demand coupled with an unwind of relatively fresh momentum-based longs, in a market that had undoubtedly come a very long way, in a very short space of time.

I'm not going to sit here and call a ‘top' in the complex, not least considering that the bull case which has underpinned a 60% YTD gain in gold, and near-80% YTD gain in silver, continues to hold water, amid the risk of inflation expectations un-anchoring, continued runaway DM fiscal spending and, most importantly, incredibly high levels of physical demand. That said, if Friday's moves were to prove the start of a pullback in this uptrend, you'd initially be looking for support at $4,000/oz in gold, and $50/oz in silver, where I'd be keen to buy into any dips – one to keep on the radar for the week ahead.

Speaking of buying dips, I was reassured by the way in which the dollar not only snapped a 3-day losing run as the week wrapped up, but how the DXY held above both the 50- and 100-day moving averages as well. Although conditions in the G10 FX space have become akin to watching paint dry in recent weeks, the Fed's ‘run it hot' approach skews risks towards us returning to the RHS of the ‘dollar smile' as risks to the US economic outlook increasingly tilt to the upside.

That same approach, though, should tilt risks to Treasuries, especially at the long-end, to the downside as well, however that's not a call I'd have especially much conviction in for the time being, not least until we can be confident that sentiment is on much steadier footing.

LOOK AHEAD – As the US government shutdown rolls on, the economic calendar remains something of a mess, with market participants continuing, by and large, to operate in a data vacuum.

That said, we will at least get the September US CPI figures this week, with that print on Friday highlighting the data docket. Both headline and core CPI are seen having risen by 3.1% YoY last month, as tariff-induced price pressures continue to make themselves known, though it's very tough indeed to imagine the data materially altering the Fed policy outlook, with 25bp cuts this month, and in December, effectively locked in amid mounting downside labour market risks.For those curious, the CPI data is being released due to it being required in calculating the annual Social Security cost of living adjustment, no other BLS-calculated figures will be released until the shutdown comes to an end.

Elsewhere, we also get inflation figures from here in the UK this week, with headline CPI seen having risen to 4.0% YoY in September, and services CPI pushing 5.0% YoY once more. The BoE expect that this will be the peak in price pressures this cycle, though are unlikely to take any more steps to remove policy restriction until they are sure of that fact, meaning my base case is now that the ‘Old Lady' stands pat until delivering a 25bp cut next February. Meanwhile, ‘flash' PMIs from pretty much every major economy, as well as Canadian inflation, and US consumer sentiment are also due.

From a policy perspective, the FOMC are now (mercifully!!) in the pre-meeting ‘blackout' period, though plenty of ECB speakers will fill that particular void. We also receive the first ever set of minutes from an SNB decision this week, where comments on the valuation of the CHF are likely to be of particular interest.Earnings season also steps up a gear this week, with 90 S&P 500 set to report this week, including notable releases from the likes of Netflix (NFLX), Tesla (TSLA), and Intel (INTC).Finally, focus will of course also remain on incoming trade and tariff news flow, especially with Treasury Secretary Bessent meeting his Chinese opposite number in Malaysia at some point this week.

As always, the full week ahead calendar is below.

Source: Pepperstone

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Gerik

Economic

India Emerges as Safe Haven for Global Financial Investment

A new wave of foreign capital is targeting India’s banking sector, with recent billion-dollar deals highlighting the country’s rising appeal as a financial growth hub. Emirates NBD’s $3 billion investment in RBL Bank Ltd. marks the largest foreign infusion into India’s banking space to date. It follows earlier moves such as Abu Dhabi’s International Holding Co.’s $1 billion investment in Sammaan Capital Ltd. and Sumitomo Mitsui’s $1.6 billion acquisition of a 20% stake in Yes Bank Ltd.

Altogether, foreign-led deals in India’s financial services industry have reached $15 billion this year, signaling sustained investor interest even as the global backdrop grows increasingly unstable. These flows stand in stark contrast to rising fears in the U.S. credit market, where recent collapses at Tricolor Holdings and First Brands Group have rattled confidence.

India’s Financial Reforms Attract Capital Amid Global Uncertainty

India’s appeal is underpinned by more than just growth momentum. Regulatory reforms, improved credit discipline, and structural overhauls have strengthened the country’s financial sector since the shadow bank crisis that shook markets seven years ago. The Reserve Bank of India (RBI) has tightened oversight, discouraged excessive risk-taking, and pushed for better capital adequacy across lenders. These changes appear to have had a causal impact on investor confidence, reinforcing India’s credibility as a long-term investment destination.

Foreign investors, particularly those from Japan, the Middle East, and Europe, are increasingly drawn to India’s under-banked population, digital banking adoption, and consumption-led economy. As global capital searches for yield in a high-risk environment, India’s relative insulation from external volatility enhances its attractiveness. According to Vivek Ramji Iyer of Grant Thornton Bharat, India’s domestic focus and low correlation with global financial cycles make it an ideal entry point for long-horizon capital.

Skepticism Remains Over Execution Risks and Competition

Despite the influx of capital, historical performance raises questions about the profitability of foreign ownership in Indian banks. Independent analyst Hemindra Hazari notes that past acquisitions have rarely translated into outsized profit or revenue growth, largely due to entrenched competition and regulatory complexities. The intense retail competition and dominance of domestic players mean that capital alone may not guarantee market share or operational success.

Nonetheless, the scale of current deals shows renewed confidence in India’s long-term trajectory. CEO of RBL Bank, R. Subramaniakumar, emphasized India’s stable financial system and regulatory robustness as key selling points to global investors.

Policy and Market Signals Point to Further Deal Activity

With record-high performance from key banks like HDFC and ICICI, and the Nifty Bank Index surging over 13% year-to-date, investor sentiment continues to build. Policymakers are reportedly evaluating proposals to simplify foreign ownership norms in public sector banks and possibly extend banking licenses to large corporations both of which could unleash further waves of foreign deal activity.

Meanwhile, Mitsubishi UFJ Financial Group is actively scouting targets and is in advanced discussions to acquire a stake in Shriram Finance Ltd., while a forthcoming government stake sale in IDBI Bank Ltd. is expected to attract multi-billion dollar bids.

These developments suggest that foreign investors are not simply responding to short-term dislocations but are placing strategic bets on India’s evolving financial architecture.

In an era marked by geopolitical tensions, credit fragility, and uncertain monetary policy across developed economies, India’s financial sector has become a beacon for global capital. Recent billion-dollar investments are not only a testament to India’s growth story but also a reflection of investor demand for structural safety, regulatory clarity, and long-term opportunity. While execution risks remain high in a fiercely competitive banking environment, the scale and pace of foreign inflows indicate a broader recalibration of global investment priorities with India now firmly at the center.

Source: Bloomberg

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Samantha Luan

Stocks

Forex

Economic

Renewables specialist FairWind is set to boost its Asia-Pacific (APAC) presence and accelerate global growth by reaching agreement to acquire Cosmic Group, a leading Australian wind installation and maintenance provider.This strategic acquisition reinforces the company's existing presence in Australia and expands its footprint into New Zealand and Japan. The transaction is expected to close in Q4 subject customary regulatory approval, and will see the Brisbane-based business and its team of 100 technicians become part of FairWind.

Together with Cosmic, FairWind will be able to leverage local expertise while aligning the team with its global systems, standards, and strategic direction. The business will become the regional hub for FairWind's APAC operations with one of its founders, Matt Crossan, appointed as Regional Director. Cosmic, will continue to operate under the Cosmic name - ensuring continuity for its existing projects and clients.Stewart Mitchell CEO FairWind said: "This collaboration with Cosmic is a significant step in our growth strategy. There are great synergies between the two organisations, with shared values and unwavering commitment to safety. By joining forces with a team known for delivering to the highest standards, we're extending our geographic reach while strengthening our capability to support customers wherever they operate.

"Together, our deep technical expertise and track record in onshore and offshore wind create a powerful platform in our mission to help advance the global energy transition. We look forward to working closely together and unlocking new opportunities across the region's renewables landscape."Matt Crossan commented: "With the installed turbine base set to continue to increase and the next generation of wind turbines being introduced to the region by our customers, there is significant potential for growth across Asia Pacific.

"We are proud of what we have built at Cosmic to become one of the leading wind services providers, by joining FairWind we have a partner who enhances our existing capability and we are excited for the next phase of the business."FairWind has a workforce of more than 2,000 people in more than 40 countries across Europe, North America, South America, Asia, and Oceania. The business provides complete lifecycle solutions for the installation and maintenance of onshore and offshore wind turbines around the world.

Source: TradingView

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Economic

Growth Slows to Lowest Pace Since Q3 2024

China’s GDP growth decelerated to 4.8% year-on-year in the third quarter of 2025, marking the weakest expansion since the same period in 2024, according to official data released Monday. This follows a 5.2% annual growth rate in the second quarter and signals mounting challenges for the world’s second-largest economy as it grapples with both external and internal pressures.

The slowdown is driven by a combination of intensifying trade friction with the United States particularly after President Donald Trump’s imposition of new tariffs and persistent weakness in domestic demand. Despite these headwinds, cumulative growth for the first nine months of 2025 remained at a relatively stable 5.2% pace, bolstered by earlier quarters.

Trade Holds Up, But Demand Falters

While U.S.-China relations have become increasingly strained in recent months, China’s export sector has shown notable resilience. Exporters have managed to partially offset U.S. market losses by redirecting goods to alternative destinations, helping to stabilize the country’s external performance. This development reflects a shift in trade dynamics rather than a full substitution of lost U.S. demand, highlighting the adaptability of Chinese supply chains.

However, on the domestic front, consumption and investment have remained lackluster. Retail sales and fixed-asset investment figures have shown only marginal improvement, if any, indicating that household confidence and private-sector investment are still under pressure. The causal relationship between consumer weakness and slowing GDP growth is particularly evident this quarter, as lackluster domestic demand directly weighs on output and services activity.

The 4.8% GDP growth in Q3 confirms that China’s post-pandemic recovery is losing momentum under the strain of geopolitical risk and insufficient internal demand. While export resilience offers some relief, the underlying fragility in household consumption and business investment suggests deeper structural issues. As Beijing continues to navigate its economic challenges amid a contentious global environment, the focus now shifts to whether more aggressive fiscal or monetary support will be deployed to bolster growth in the final quarter of 2025.

Source: AP

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Sharp Drop in Futures Reflects Renewed Investor Caution

French 10-year bond futures fell by 35 ticks to 122.80 during early Asia trading, reacting to S&P Global Ratings’ unexpected downgrade of France’s credit rating from AA- to A+. This unscheduled decision followed a prior downgrade by Fitch in September and now places France below the double-A threshold used by many conservative funds to guide investment. Although the euro remained stable, the bond market's pronounced move contrasted with a more restrained reaction in German securities, highlighting country-specific investor anxiety.

The downgrade comes at a time when France is already under financial market scrutiny. By losing its AA status at two of the three major agencies in under two months, France risks triggering rebalancing activity in portfolios bound by minimum average credit quality requirements.

Political Gridlock and Budget Fragility Erode Fiscal Credibility

S&P’s downgrade underscores growing doubts over France’s fiscal management capacity as Prime Minister Sébastien Lecornu attempts to advance the 2026 budget through a fractured National Assembly. His political survival last week came at the cost of suspending President Emmanuel Macron’s flagship pension reform — a reform viewed as essential to strengthening long-term public finances.

This compromise provided temporary political stability but introduced a clear fiscal cost. The rating agency explicitly cited the pension reform’s suspension as a contributing factor to the downgrade, reflecting a causal link between political concessions and weakened consolidation efforts. This political backdrop has become a central risk driver for French debt markets.

According to S&P, France is now experiencing its deepest political instability since the birth of the Fifth Republic in 1958. The lack of clarity on long-term fiscal policy, especially ahead of the 2027 presidential elections, is creating uncertainty that could further pressure borrowing costs and deter investment.

Widening Risk Premium and Yield Spread Pressures

The downgrade has also intensified structural pressures on French yields. The spread between 10-year French and German bonds — a key risk barometer in the eurozone has widened from under 50 basis points before the 2024 snap elections to nearly 90 basis points earlier this month. Although the spread narrowed slightly to 78 basis points last Friday, it remains elevated and reflects lingering concerns over France’s creditworthiness relative to peers.

French bonds now yield more than those of some lower-rated eurozone nations, such as Greece and Portugal — a sign that investors are pricing in political and fiscal risks over pure credit metrics. Former PIMCO CEO Mohamed El-Erian warned that the downgrade could place upward pressure on these spreads and undermine regional confidence at a time when the euro area needs deeper reform and cohesion.

Implications for Institutional Investors and Market Liquidity

The downgrade presents a risk of partial disinvestment by highly conservative funds, including central banks, reserve managers, and pension funds that manage products benchmarked to double-A ratings. Institutions such as BlackRock, Vanguard, and Legal & General operate products with mandates to maintain specific credit quality averages, and France’s fall below AA at two major agencies may force asset reallocation, even though French bonds remain investment-grade.

This potential for forced selling is more than symbolic. While the majority of institutional holders are likely to retain exposure, rebalancing flows could still dent liquidity and exacerbate price volatility. The broader reputational effect of a second major downgrade could also weigh on foreign demand.

Budget Process and Moody’s Verdict Now in Focus

Looking ahead, market attention will shift to the upcoming budget negotiations. Prime Minister Lecornu has for now abandoned the use of Article 49.3 — a constitutional mechanism that allows budgets to pass without parliamentary votes. This decision, while intended to respect democratic norms, raises the risk that the 2026 budget may fail to pass, particularly amid a divided legislature.

The other critical juncture will be Moody’s credit review on Friday. Moody’s currently rates France at Aa3 — the lowest tier of the double-A category. If it joins S&P and Fitch in downgrading France, the move would cement a broader consensus of deteriorating credit quality, increasing the likelihood of substantial reallocation by rating-sensitive funds.

France’s latest credit downgrade by S&P marks a pivotal moment in the nation’s fiscal narrative, shifting focus from market-friendly reforms to short-term political survival. As the suspension of pension reform derails fiscal consolidation, bond markets are responding with spread widening and elevated risk premiums. Although France’s debt remains investment-grade, its appeal to the most risk-averse investors is diminishing. With a volatile budget season ahead and Moody’s review on the horizon, the coming weeks may determine whether France can regain control of its fiscal path or face deeper market dislocation.