Last week: US/China trade accord; FED cut -25bps, ECB unchanged; 6th positive month for US stocks; Nikkei surged
WEEKLY TRENDS
US-China trade accord, together with strong earnings outlooks for US firms, led to yet another positive monthly performance for US stocks (6 months in a row). The US-China accord meant that US will resume its exports of Soja to China (25m tons a year set for 3 years)
Strong AI led Q3 corporate earnings and outlooks pushed Amazon and Alphabet stocks (+9% WoW) while Meta (-12%) was hit by increased costs. Note the strong outlook for GSK (+10% WoW) and the poor outlook for WPP and Adidas (-20% and -12% respectively WoW). Corporate credit spreads benefitted from those strong earnings and outlooks
After Japan’s new PM nomination and Trump’s support while visiting Japan, the Nikkei had a stunning performance (+6% WoW or +31% YTD)
The FED/FOMC cut its rates by 25bps, leaving uncertainty for Dec, while the ECB and the BOJ kept their rates unchanged. Next week, the BOE and the RBA should keep their rates unchanged
New Q3 corporate earnings shall continue, with Palantir, AMD, Novo Nordisk, Rheinmetall, to name just a few important market caps releasing their results and most importantly, their Q4 outlooks
MARKETS
Equities
Weekly performances after earnings:
Amazon (+9%), Nokia (+10%), GSK (+10%), Alphabet (+8%), Apple (+2%), Eli Lilly (+5%), Chevron (+1%)
WPP (-20%), Adidas (-12%), Meta (-12%), Microsoft (-2%), Exxon (-1%)
Central Banks meetings: AURBA (4 Nov), UKBOE/MPC (6)
WHAT ANALYSTS SAY
Eurizon Capital: Europe faces change, fundamentals point to a rebound
Indosuez Wealth Management:Stablecoins, a risky bet
Ostrum AM: Tensions in the US credit market are reigniting systemic fears
Eurizon Capital, 31 October 2025
Author: Francesco Sedati, Head of research and Equity portfolio management
Valuations may appear reasonably high, but the macroeconomic environment continues to support the stock markets.
In a context where fiscal and monetary policies remain favourable, corporate earnings remain on a healthy trajectory globally.
The situation in Europe in 2025 was unusual. After a promising start to the year, the market lost momentum compared to the United States. The reason for this was the strength of the euro, which penalised exporters and largely explains the relative underperformance compared to the US market. Combined with tariff uncertainty, which froze certain investment decisions by major global groups, this slowdown pushed investors towards what is known as ‘domestic Europe’: banks, industrial stocks and, among them, aerospace and defence.
The year 2025 was therefore the year of domestic Europe.
2026 presents opportunities for European businesses
By 2026, we anticipate a gradual return to normal. The dollar's depreciation has probably already peaked. If this pressure eases and tariff uncertainties fade, yields should shift towards exporters. This change would coincide with another factor that we are monitoring closely: Europe is the only major market that has not really seen an improvement in its multiples over the past 12 months.
A change in the cycle and fiscal stimulus measures in Germany could act as catalysts for earnings and, as a result, improve valuations. This is true even in the segments most affected in 2025, such as consumer discretionary. We are beginning to see a stabilisation in consumer habits, which should support the recovery of several stocks.
Stock selection remains crucial – Europe is a strategic complement to the global portfolio
This is perfectly reflected in the portfolio of our Top European Research fund. Around 70% of the risk and alpha come from stock selection.
The portfolio, which comprises around 80 positions, truly seeks a balance between styles: we want it to be highly diversified, with both value and growth ideas. The fund should be able to perform in any market environment. The process is designed to be consistent and reusable. We combine in-depth fundamental analysis with quantitative selection in order to detect rotations and risks. The result is a core product that delivers reasonably stable and predictable performance. All this is accompanied by an ESG framework typical of an Article 8 fund. The ‘G’ is central: good management and governance are essential to ensure good returns.
In analysing our successes, the banking sector has proven to be a valuable ally. It has been one of the main drivers of profitability for several years: strong capitalisation, attractive valuations and a marked improvement in earnings thanks to interest rates, efficiency and low risk costs. Following their recent rise, we have taken some profits.
Beyond stock selection, the European thesis fits strategically into global portfolios that are overweight in US technology, much of which is linked to the appeal of artificial intelligence. Europe acts as an uncorrelated element in portfolios composed of 60-65% US assets, much of which is linked to AI-related technologies.
Europe now balances global portfolios. It has potential for improvement, with earnings on the rise and multiples that can still grow. At the same time, discipline is key: patient selection, risk control and rigorous governance to protect minority shareholders.
Indosuez Wealth Management, 30 October 2025
Author: Jérôme Van der Bruggen, Chief Market Strategist
In early July, the US Congress passed the GENIUS Act, a law clarifying the regulatory framework for stable digital currencies (known as stablecoins). In doing so, the United States lent credibility to a controversial financial invention, taking a gamble that some have described as bold. But stablecoin issuers have also become important players in the US debt market. By giving them their letters of nobility, the Americans may well have found new captive and long-term buyers for their Treasury bonds.
In order to fully understand the technological – and potentially societal – advances represented by stablecoins, we must first introduce a few concepts and provide some historical context. The movement towards the ‘tokenisation’ of financial assets, which began around ten years ago, follows on from advances in blockchain technology. Blockchain is not only used to create cryptocurrencies (Bitcoin and others); it is primarily a digital validation platform whose ‘blocks’ are akin to hyper-efficient digital notarial deeds, which financial innovators were quick to adopt. These pioneers saw it as a tool to facilitate and reduce the cost of trading, giving rise to ‘tokenisation’: a process that consists of representing an asset in the form of a digital token, making it easier to divide, exchange or own. Works of art, buildings and currencies can thus be ‘tokenised’. This led to the creation of stablecoins: forms of ‘currency’ designed to maintain a stable value, usually by being backed by a traditional currency such as the dollar or the euro and traded on the blockchain. Unlike cryptocurrencies, whose price can vary greatly, stablecoins aim to offer reliability, making them useful for payments, international transfers or as stores of value.
The two best-known stablecoins – USDC (issued by Circle) and USDT (Tether) – have so far more or less fulfilled their promise of stability.
Their success is clear: their total capitalisation (of which USDC and USDT account for 85%) is close to approximately $160 billion and has increased tenfold in five years. It should be noted that this growth is mainly linked to the growth in cryptocurrency transaction volumes, as stablecoins are often used as a ‘gateway’ to access them.
How do their issuers – often private entities – guarantee stability or indexation to the dollar? By maintaining equivalent reserves covering the units in circulation. This is where the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins) comes in: this law requires all US stablecoins to be 100% backed by liquid reserves such as US dollars or short-term Treasury bills, thus guaranteeing their stability and convertibility. Issuers must also publish the composition of their reserves on a monthly basis and provide annual audits if they exceed $50 billion in capitalisation. The text also prohibits any communication suggesting that stablecoins are guaranteed by the US government or covered by FDIC insurance (US bank deposit insurance), thereby enhancing transparency and consumer confidence.
The USDC and USDT already comply with most of the new requirements. Assuming that most of their assets will be invested in treasury bills, their capitalisation of approximately $200bn at the end of 2025 will represent approximately 3.5% of the total treasury bill market.
A drop in the ocean, some might say... But according to the latest available data (April 2025), the Chinese central bank held only $750bn in US Treasury bonds, which is $300bn less than five years ago. These new buyers are therefore very welcome. Most observers agree that the framework created by the GENIUS Act will boost demand for stablecoins. If this demand comes from new buyers (such as those from the crypto sphere), it will provide welcome support for US financing. At a time when the financial world is talking about ‘de-dollarisation’ and worrying about the decline in purchases of US debt, the GENIUS Act could prove to be not only a bold move... but a winning one.
Ostrum AM, 30 October 2025
Author: Axel Botte, Markets Strategist
Jamie Dimon referred to the risk of a cockroach invasion to describe the credit events that have occurred in recent weeks in the United States. Regional banks are back in the news, two and a half years after the collapse of SVB. In this context, safe-haven assets (Treasuries, gold) are playing their role to the full.
Tricolor and First Brands were the first victims of mounting delays in car loan payments and the sharp rise in customs tariffs on spare parts. Two regional banks now claim to be victims of fraud involving loans to credit funds that are adversely exposed to commercial mortgage securitisation. The opacity of private credit funds has been a source of risk for several years. It is very difficult to assess the systemic risks associated with their activity, but when you see one cockroach, there is probably a colony. The credit minefield may remain contained. The publications of the major regional banks do not give cause for concern, but credit quality will remain a point of attention. The Fed's announcement that it will halt its balance sheet reduction policy suggests that Jerome Powell is particularly attentive to liquidity conditions.
The shutdown is depriving market participants of most economic indicators. This is why investors' attention has turned to these credit events. Manufacturing surveys are mixed, but builder confidence (NAHB) rose 5 points to 37 in October. In the eurozone, inflation was confirmed at 2.2% in September, but excluding volatile items, the rise in prices was revised to 2.4%.
Since the beginning of the fourth quarter, the shutdown and credit risk have reignited the search for risk-free assets. Gold, the ultimate collateral, has soared above $4,300 an ounce, pulling most precious metals in its wake. Central banks and other investors are accumulating gold stocks. The rise in gold prices may have become excessive in the eyes of other market participants, allowing risk-free rates to regain their role as a safe haven.
The yield on the Bund fell to 2.53%, while the T-note broke through the 4% threshold. These movements were accompanied by a slight widening of swap spreads (+3bp on the Bund). The difference lies in the steepening of the US curve. The Fed has room to ease its monetary policy. Long-term Gilts (4.52% at 10 years) are participating in the movement, while $50 billion in savings still need to be identified to restore the budgetary trajectory.
As for sovereign spreads, French Prime Minister Sébastien Lecornu won the confidence of the National Assembly. The OAT spread is down to 78bp. The easing also concerns Greek debt (66bp) and, more generally, the markets of southern Europe. US risk aversion has had no effect on sovereign spreads. This probably reflects reallocations towards the euro, which rebounded to $1.17. The yen and, even more so, the Swiss franc stood out in this environment. The fall in Brent crude to $61 weighed somewhat on 2-year inflation swaps (1.67%). At the same time, the IG credit market absorbed the US news well. The spread remains around 70bp against swaps. High yield remains more vulnerable to changes in risk aversion. The crossover is balanced at around 275bp. In equities, volatility has increased despite strong quarterly results from banks and technology companies. The Nasdaq has lost around 2% in five sessions. European banks are underperforming, but the indices are up.
Contacts
Main office
1-5, № 53, 12 Charents Str., Yerevan, 0025
+374 43 00-43-82
Broker
broker@unibankinvest.am
research@unibankinvest.am
Disclaimer
The information presented in the document contains a general overview of the products and services offered by Unibank OJSC (registered trademark – Unibank Invest, hereinafter referred to as the Bank).
The information is intended solely for the attention of the persons to whom it is addressed. Further dissemination of this information is allowed only with the prior consent of the Bank.
The information is only indicative, is not exhaustive and is provided solely for discussion purposes. The information should not be regarded as a public offer, request or invitation to purchase or sell any securities, financial instruments or services. The Bank reserves the right to make a final decision on the provision of these products and/or services to a specific customer, including refusing to provide products and/or services if such activities would be contrary to applicable law.
No guarantees in direct or indirect form, including those stipulated by law, are provided in connection with the specified information and materials. The information presented above cannot be considered as a recommendation for investing funds, as well as guarantees or promises of future profitability of investments.