The world’s equity markets have lifted to fresh highs as signs of easing inflation across major economies intersect with tentative breakthroughs in trade diplomacy. In the United Kingdom, headline consumer price inflation held at 3.8 per cent in September for a third straight month, with higher costs for petrol and airfares being offset by softer food bills and reduced live‑music prices. This moderation, while still above the Bank of England’s 2 per cent target, prompted money‑markets to lift the implied probability of a rate cut in December to around 65 per cent. Meanwhile in the United States, inflation rose by 3.0 per cent, less than expected, which has emboldened hopes that the Federal Reserve may soon loosen monetary policy even as tariff‑related price pressures linger.
Against the backdrop of these inflation developments, trade negotiations between the US and China are again taking centre stage ahead of the first summit between Donald Trump and Xi Jinping since 2019. Reports indicate a “very positive” trade framework was agreed among negotiators, covering key areas such as rare‑earth minerals controls, US operations of TikTok, fentanyl, agricultural trade and shipping fees. In Asia, while tensions remain in certain quarters, trade barriers appear to be loosening, for example the US and Japan discussed reducing export tariffs in return for significant Japanese investment in the US, focussing particularly on defence co‑operation and economic ties.
Together these twin forces, moderate inflation and improving trade outlook, have supported a broad shift in investor sentiment. Major indices in London, New York and Tokyo rose impressively in the week, each posting gains in the 2–3 per cent range as optimism proliferated. Yet this isn’t simply a euphoric rally; underlying the move is a recalibration of expectations: monetary policy may be put on a gentler path, geopolitical frictions may ease, and corporate earnings might benefit from both lower cost burdens and smoother cross‑border commerce.
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