The week of October 6-10, 2025, showcased remarkable resilience in financial markets despite significant political and economic uncertainties. Markets continued their record-breaking rally with technology stocks leading the charge, while precious metals reached historic milestones. The ongoing US government shutdown, now in its second week, created a data vacuum that complicated Federal Reserve decision-making but failed to derail investor optimism. Major developments in artificial intelligence partnerships reshaped semiconductor valuations, while currency markets reflected growing confidence in US assets despite domestic political tensions. This week highlighted the market's ability to focus on longer-term technological and economic trends while navigating through short-term political disruptions.
Market Indices: The technology-heavy Nasdaq Composite (QQQ) led major indices higher, surging 1.1% to close at fresh record highs above 23,000. The S&P 500 (SPY) gained 0.6% to reach new all-time closing levels at 6,740.28, marking its fourth consecutive day of gains. The Dow Jones (DIA) showed relative weakness, declining 0.5% as investors rotated toward growth and technology names. Despite the ongoing government shutdown entering its second week, major indices demonstrated remarkable resilience, with the S&P 500 up nearly 2% for the week.
Sector Performance: Technology emerged as the clear leader, with artificial intelligence and semiconductor stocks driving significant gains. The consumer discretionary sector also performed strongly, rising 0.9%, while utilities gained 1% as investors sought defensive positioning. Materials stocks experienced the most significant decline, falling over 2%, while energy names showed mixed performance amid geopolitical tensions.
US Dollar: The Dollar Index (DXY) posted its strongest weekly performance in over a year, gaining 1.6% to reach two-month highs near 99.56. The rally came despite the ongoing government shutdown, supported by political uncertainties in Europe and Japan that weakened competing currencies. Markets now price a 95% probability of a 25 basis point Fed rate cut in October, with December odds easing to 80% from 90%.
USD/JPY: The yen weakened significantly after Sanae Takaichi's election as Japan's Liberal Democratic Party leader, putting her on course to become the country's first female prime minister. Takaichi's pro-stimulus stance and dovish monetary policy views pushed the pair above 150, reflecting expectations for continued loose monetary policy.
GBP/USD: Sterling struggled to break out of its short-term trading range near $1.35, caught between $1.3330 and $1.3590 support and resistance levels. The pound faced headwinds from UK economic uncertainties and the broader dollar strength theme.
EUR/USD: The euro weakened against the strengthening dollar as Fed minutes showed officials divided over future rate cuts, supporting dollar strength. Political uncertainties in France also weighed on the single currency.
Gold (GLD): The precious metal achieved a historic milestone, breaking above $4,000 per ounce for the first time in history. Gold reached an intraday peak of $4,014.60 before closing at $4,004.40, marking a nearly 50% gain for 2025. The surge was driven by safe-haven demand amid the US government shutdown, geopolitical tensions, and currency debasement concerns. Goldman Sachs raised its December 2026 target to $4,900 per ounce.
Oil (USO): Crude prices showed mixed performance with Brent futures up 1.5% to $65 per barrel and WTI rising 1.4% to $61.71. OPEC+ announced a modest production increase of 137,000 barrels per day starting in November, maintaining the same gradual approach as October.
Bitcoin (BTC.X): The leading cryptocurrency benefited from government shutdown uncertainty and dollar debasement concerns. Geoffrey, head of digital assets at Standard Chartered Bank, predicted Bitcoin could reach $135,000 soon, noting its correlation with US government risks and Treasury term premiums.
Ethereum (ETH.X): The second-largest cryptocurrency followed Bitcoin's lead, gaining alongside broader crypto market momentum driven by traditional finance uncertainties and safe-haven demand.
Federal Reserve: The FOMC minutes from September revealed significant divisions among officials regarding future monetary policy. While there was broad consensus for the quarter-point cut implemented in September, officials were split on whether to implement two or three total cuts for 2025. Most participants believed further easing would be appropriate for the remainder of the year, but concerns about inflation persistence and tariff impacts created uncertainty about the pace of future reductions.
Government Shutdown: The US government shutdown entered its second week with no resolution in sight. The impasse has delayed critical economic data releases including the jobs report, CPI data, and various regional Fed surveys. This data vacuum complicates Federal Reserve decision-making ahead of the October 28-29 meeting, though markets maintain high confidence in a 25 basis point rate cut.
Earnings Season: Third-quarter earnings season began with mixed results. Levi Strauss (LEVI) reported strong revenue growth and raised full-year guidance but saw shares drop 8% due to tariff-related cost pressures and margin compression concerns. The company implemented strategic inventory building and pricing adjustments to navigate trade uncertainties.
US-China Trade Tensions: President Trump threatened "massive increases" in tariffs on Chinese imports after China announced expanded export controls on rare earth minerals. Trump suggested he may cancel his planned meeting with President Xi Jinping at the APEC summit, citing China's "hostile" actions in threatening export controls on critical materials. Stock markets declined following Trump's aggressive Truth Social posts, with the Dow (DIA) dropping 400 points.
Japan Political Changes: Sanae Takaichi's victory in the Liberal Democratic Party leadership contest positions her to become Japan's first female prime minister. Her dovish monetary policy stance and pro-stimulus views significantly weakened the yen and influenced global currency markets.
As markets head into the final portion of October, several key factors will drive investor sentiment:
The week's events created a complex environment where record-breaking market performance coexisted with significant political and economic uncertainties. This suggests continued volatility as investors balance technological innovation excitement against geopolitical risks and domestic policy challenges in the weeks ahead.