Monthly Securities Market Summary
What happened in the securities markets? – 2025 October
Monthly report on government securities markets
2025. October
Domestic government securities market
Inflation remained unchanged at 4.3% year-on-year in September compared to August, as did core inflation at 3.9%. Industrial production fell by 2.3% in August compared to the previous month, with the year-on-year decline accelerating to 4.6%. Retail sales rose above expectations, up 2.4% year-on-year, while gross wage growth moderated slightly to 8.7%. Preliminary third-quarter GDP figures showed quarter-on-quarter stagnation compared to the expected slight growth, with the year-on-year indicator rising to 0.6% from 0.1% in the previous quarter, but falling short of the 1.0% expectations.
Contrary to the central bank's messages emphasizing stability and anticipating interest rate maintenance, both the prime minister and the minister of national economy called for interest rate cuts. The prime minister also took a stand against the introduction of the euro in Hungary. The EURHUF exchange rate jumped to headline levels, but then strengthened again in a favorable international risk sentiment and closed the month at around 387, a level not seen since May 2024. At the press conference following the MNB's interest rate decision meeting, as expected, it clearly ruled out any interest rate cuts expected by the end of the year, leaving the base rate unchanged at 6.5%, and did not confirm expectations priced in for the beginning of next year.
Auction DKJ yields remained above 6.20, with longer-term yields tending to move sideways, but interest in the auctions remained strong. The MAX index gained 0.67% and the RMAX index 0.50
US and European government bond markets
There were numerous political and trade war developments during the month, but none of them had a serious, lasting impact on the market beyond the strengthening of the dollar. The French prime minister resigned before taking office due to resistance to the composition of his cabinet, French spreads shot up, and the euro weakened. In an extraordinary move, S&P downgraded France's credit rating to A+ due to budget concerns. China announced plans to restrict exports of rare earth metals, prompting Trump to impose a 100% surcharge and, to increase the pressure, to float the idea of a meeting with President Xi – which took place at the end of the month, with China agreeing to suspend the restrictions and and to purchase soybeans, while the US also reduced the previous tariffs, which had been raised to 55% in June. The possibility of a Trump-Putin meeting in Budapest was raised, but later dissipated due to resistance from Ukraine and the EU.
The Fed cut rates by the expected 25 basis points to 3.75%, but there were also votes for a larger cut and for holding rates steady, and Powell left the December rate cut on hold. Dollar yields trended downward until the middle of the month, then jumped on the mixed message from the meeting and closed only a few (3-8) basis points lower. Similar movements occurred in developed markets, with the British market seeing a larger-than-expected drop in yields in anticipation of an interest rate cut following lower-than-expected inflation. The ECB signaled a wait-and-see approach the day after the Fed, and the Bank of Japan also left rates unchanged, with December meetings likely to set a new direction based on divergent inflation outlooks.
Monthly report on stock markets
2025. October
Domestic and Central-Eastern European stock markets
October was another strong month for regional stock markets, both in absolute and relative terms. We saw outstanding returns in the case of the Hungarian BUX index, which rose by 8.54% in its own currency, but the Polish WIG20 rose by 5.78%, the Czech PX by 2.84% and the Romanian BET by 5.53%, which was also very good. The cyclical sectors dominating the regional indices typically performed well, with oil and gas stocks rising alongside banks. Analysts slightly lowered their figures for Romanian and Hungarian GDP growth for 2026, while raising their figures for the Czech Republic slightly following strong data in the recent period. As a result, expectations for next year stand at 1.9% for the Romanian economy and 3.3%, 2.2%, and 2.5% for the Polish, Czech, and Hungarian economies, respectively. During the month, the Polish central bank implemented a 25 basis point cut.
Global emerging stock markets
October was a favorable month for stock markets. Market turmoil was caused by mutual threats prior to the US-China meeting (restrictions on rare earth exports by China, repeated tariff increases by the US), but as has been the case so far this year, the parties pulled back from the brink of a “collision” and agreed on a further one-year trade truce, which calmed the markets once again. The MSCI Emerging Market Index, which represents the emerging market asset class, rose 4.18% in dollar terms, and as the dollar also strengthened against the forint during the month, this represented a 4.99% increase in domestic currency terms. Among the larger markets, South Korea (+24.13%) and Taiwan (+11.43%) also performed exceptionally well. The Chinese market closed the month down (-2.42%) due to tensions over negotiations and the relative lack of events at the party congress. The Indian (+5.26%) and Indonesian (+5.42%) stock exchanges also rose, while South American markets showed more subdued performance.
Developed stock markets
The results published in the third quarter reporting season took center stage across the United States and Europe. US listed companies are on track to achieve 8% overall profit growth, driven by both revenue growth and improved profit margins. The reporting season also brought positive surprises in Europe, although expectations were much lower than overseas. Stagnant profit expectations were common among European listed companies, so even the average overall growth of a few percent was enough to trigger a positive price reaction in the days following the report. In the United States, we saw a slight decline in consumer confidence, which could lead to a slowdown in the short term, and data showed indirect signs of a further slowdown in the labor market. As a result, most developed stock markets continued to rise during the month. The best-performing sectors during the period were technology and chip manufacturing, while the weakest performers were industrial materials and commodities, real estate, and financial sector stocks.
We would like to draw the attention of our esteemed readers and interested parties to the fact that this information contains data that was current and available on the date of its preparation, and does not constitute investment advice.
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