Devon Funds Morning Note - 16 October 2025

Friday 17th October 2025

Volatility Rebounds

Global

Trading was volatile overnight as markets struggled for direction. The S&P 500 finished up 0.40%, the Dow Jones closed flat down -0.04%, while the Nasdaq performed better, adding 0.66% to close the session, although tech stocks were down with Nvidia, Palantir, and Microsoft all closing lower – AMD and Intel were notable gainers closing up 9.4% and 4.3% respectively.

A late-session selloff in US equities was triggered after President Trump accused China of committing an “economically hostile act” by halting US soybean purchases and warned of retaliatory trade measures, including potential restrictions on Chinese cooking oil imports.

The comments briefly unsettled investors and reignited trade war concerns, particularly given ongoing tensions over rare earth exports. Equities rebounded later in the session, supported by dovish remarks from Federal Reserve Chair Jerome Powell emphasising the central bank’s willingness to maintain accommodative policy if economic data softened further.

Bessent went on to provide mixed comments regarding the ongoing trade tensions with China. He sharply criticised a lower-level Chinese trade negotiator, describing them as "slightly unhinged" and "disrespectful," while emphasising that the US holds significant leverage to inflict economic damage on China if necessary. At the same time, Bessent struck a more optimistic tone by indicating that the anticipated Xi-Trump meeting is still on track.

US Treasuries traded within a narrow range overnight, the 10-year yield dipped briefly below 4%, touching intraday lows near 4.00%, but was unable to sustain those levels and closed at 4.04%. The 2-year closed at 3.50%.

Gold has continued to climb, up 1.58% and now sitting at USD ~4,200/oz, with the precious metal now up over 57% year-on-year. In contrast, oil remains subdued, Brent crude edged 0.4% lower.

Heading to Europe, equities finished mixed, the AI-linked sectors provided some lift despite ongoing political concerns. The Euro Stoxx 50 climbed 0.95%, Frances CAC 40 rallied 1.99%, boosted by a sharp rebound in LVMH (+12%) after a strong third-quarter growth and political stability following PM Lecornu’s pension reform suspension. London FTSE 100 finished flat inching lower 0.30%.

Looking at Asian markets, the session ended generally higher with the major indices rallying. The Shanghai Composite rose 1.22%, Japan’s Nikkei 225 advanced 1.76%, powered by rebounds in semiconductor stocks, while the Hang Seng finished up 1.84%

Political uncertainty continues to weigh on Japan as Liberal Democratic Party leader Sanae Takaichi seeks backing from opposition parties to bolster her bid for the premiership, following reports that DPP leader Yuichiro Tamaki has gained momentum and could win the upcoming parliamentary vote.

New Zealand

The Kiwi market rebounded modestly with the NZX 50 rising 0.23%, snapping a three-day losing streak. Broad sector gains supported the market lift, led by Scales Corporation, whose shares surged 4.2% after raising earnings guidance for FY25, reflecting strength in the agribusiness sector.

New Zealand bond markets extended their rally yesterday, with yields falling to fresh cycle lows amid a backdrop of easing global rates and sustained demand for fixed income. Hedge funds remained active on the receiving side of short-end swaps, driving rates lower with limited offsetting interest from mortgage-related paying flows. The 2-year swap rate declined by 5 basis points to 2.49%, while the 10-year rate also fell 5 bps to 3.59%. Across the government bond curve, NZGB yields dropped 5–7 bps, with ultra-long maturities slipping below the 5% threshold for the first time since April.

Scales Corporation has lifted its FY25 EBITDA guidance by around NZ$5 million, with underlying earnings now expected in the NZ$125–132 million range, chiefly driven by an exceptional performance in its Horticulture division. Interim results for the first half of 2025 reflected powerful returns from apple varieties targeted for Asia and the Middle East, with underlying EBITDA up 43% year-on-year to NZ$86.7m. The Logistics segment also benefitted from higher freight and handling volumes, while Global Proteins delivered steady results.

Infratil announced news of a landmark deal in the global data infrastructure sector, providing a fresh valuation benchmark for its majority-owned subsidiary, CDC Data Centres. Macquarie Asset Management announced the US$40 billion sale of Aligned Data Centers to a consortium led by BlackRock’s Global Infrastructure Partners, MGX, and members of the Artificial Intelligence Infrastructure Partnership (AIP), which includes Microsoft, Nvidia, and xAI. The transaction, the largest-ever data centre deal globally, values Aligned at roughly US$8 billion per GW of capacity, based on its 5GW of operational and development assets across the Americas.

Finally, SkyCity Entertainment Group has released a comprehensive list of confirmed bookings for the New Zealand International Convention Centre (NZICC), underscoring strong demand for the country's new flagship venue ahead of its February 2026 opening. Next year alone, NZICC will host 95 events, signalling a major uptick in business events for Auckland, while a further 28 international conferences have already been confirmed for future years, extending through to 2028.

Australia

Australian shares advanced for a second straight session, the ASX 200 gained 1.03%, with its best performance in two weeks, boosted by gains in banking. Major banks led the rally after regulators removed a A$500 million capital surcharge on Westpac following its satisfactory completion of a multi-year risk overhaul, sending its shares up 1.8%, with ANZ, NAB, and CBA all adding around 1.5%.

Health Care stocks rallied sharply, led by Telix Pharmaceuticals (TLX), which jumped 16.3% after its third-quarter revenue surged 53% year-on-year to reach US$206 million, well above market expectations, with the company raising its FY25 revenue guidance to US$800–820 million following the inclusion of sales from its newly reimbursed GOZELLIX product.

James Hardie Industries (JHX) climbed 5.4% on the back of persistent strength in US homebuilding activity. Meanwhile, energy stocks lost ground as oil producers Santos (STO -2.2%), and Karoon Energy (KAR -1.0%) dropped, giving up earlier gains as crude oil prices reversed overnight. Copper producers like CSC also pulled back, falling 3.7% as the sector surrendered the previous day’s rally.

Australian government bonds closed mixed, with yields rising by 1 basis point at the 3-year tenor but easing by 1 basis point on the 10-year, leading to a modest flattening of the yield curve as shorter maturities underperformed. The Australian dollar strengthened on the day, appreciating by 0.4% to reach 0.6515 against the US dollar, bolstered by improved risk appetite and supportive global commodity prices.

Comments from our readers

No comments yet