13 October 2025
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Get ready for a rocky week on the market.
The numbers are in from last Friday's Wall Street sell-off, with $1.6 trillion wiped from tickers all across exchanges. Batten down the hatches: this week might get rough.
In case you were wondering where all the loud noises were coming from, the US had a horror trading day on their Friday of last week.
All in all, $1.6 trillion vanished in a single day. Spooked investors took profit and cautious investors fled to safety (either gold or cash under their mattresses). Either way, it meant it wasn't in the market anymore.
It all started after China threatened to restrict the export of its rare earth metals. Tariffs which had been more or less priced in as the US continues its round of trade deal negotiations, are now well and truly back on the front-burner.
The United States depends heavily on China’s rare earth metals because they are essential for both its high-tech economy and national security. Rare earths such as neodymium, dysprosium and terbium are critical for producing the powerful magnets used in electric vehicles, smartphones, wind turbines, and precision-guided weapons. Yet the U.S. produces only a fraction of what it consumes and still sends most of its mined ore to China for processing. China controls about 70 percent of global rare earth mining and more than 90 percent of refining capacity, according to the U.S. Geological Survey and the International Energy Agency.
Trump responded in kind, threatening new 100% tariffs on China for its actions, starting from November 1.
And it took a toll on markets everywhere. In the US, the Dow was down 2.71% on the last day of their week, closing down at 6552 (from 6748 at the Friday open); the NASDAQ shed numbers, closing at 22,204, down from 23,054 at the open. Abroad, Euro markets suffered with the EUROSTOXX50 dropping 1.68% to 5531; the Nikkei shed just over 1% at 48,088; the Hang Seng closed down 1.73% at 26,290 and ASX futures are tracking down 0.7% ahead of our local open in a few hours.
There is a way to see how jittery traders are on a market these days, and that's thanks to the VIX index.
As I had previously explained in an article just a few months ago:
The CBOE Volatility Index (VIX) - a measure of S&P 500 options pricing - has demonstrated a response to these conflicts categorised by significant investor skittishness. Put simply, when the VIX index goes up, investors are typically moving away from equities and into safer assets like gold or bonds. An upward push in the index is usually triggered by world news that brings with it disruption and uncertainty.
In October 2023 when the Israel-Gaza situation developed into conflict, VIX went to around 25 over oil fears in the region. When Russia first invaded Ukraine in February 2022, VIX jumped to 36 over - again - oil concerns, but also over European supplies of gas and Ukrainian agriculture exports to the rest of the world (or lack thereof).
The sell-off following Trump’s April 2025 tariff announcement spiked VIX to over 50. But these upward reports haven’t been historic highs for VIX. Not by any means. Anything above 50 is considered time to panic, and at the height of the GFC in 2008, for example, VIX spiked to 80. COVID-19 lockdowns forced it even higher to 85.
This morning, the US VIX is now up to 21.66 from a calmer 16.37 before Trump's comments late last week. While it's not the panic we saw during COVID or the Russian invasion of Ukraine, it's still a significant jump.
Australia has its own VIX index, which is currently tracking at a more sedate 10.72. To put that into perspective, however, Liberation Day tariff announcements back in April pushed it to 19. We'll keep an eye on it today.
The US government shutdown is now in its second week, and as a result, data releases are either delayed or just not being issued at all. We'll have to watch the market to try and interpret that particular black box going forward.
In a busy week of Reserve Bank of Australia (RBA) communications, the Board’s September meeting minutes are issued on Tuesday, followed by speeches and fireside chats by RBA Assistant Governors Sarah Hunter (Wednesday) and Christopher Kent (Thursday). Governor Michele Bullock also speaks on Thursday morning in Washington DC.
Also on Thursday, Commonwealth Bank (CBA) Group economists expect the Aussie economy to add around 30,000 new jobs in September, with the unemployment rate steady at 4.2% and the participation rate inching up to 66.9%.
In the US, the much-anticipated consumer price index (CPI) is scheduled on Wednesday ahead of the US Federal Reserve Open Market Committee’s (FOMC) policy meeting on October 28–29. Economists expect the headline and core CPI rates to increase by 0.3%–0.4% in the month of September. But the annual headline growth rate could accelerate to 3.1% from August’s 2.9% pace, with the annual core rate expected to be steady at 3.1%.
In Australian company news, the Bank of Queensland provides an earnings update on Wednesday. Third-quarter production updates are scheduled for Rio Tinto (Tuesday) and Santos (Thursday). CBA hosts an AGM on Wednesday. CommSec estimates about $1.6 billion worth of dividends will be paid to Aussie investors this week.
US third-quarter earnings results are due for:
But here's a glimmer of hope for you at the start of the week: Australia could be better insulated from the global market turbulence this week. That's thanks to a mix of investor behaviour, commodity strength, and our unique trading position between China and the West.
After Trump’s April 10 tariff announcement, capital flooded into Australian equities as global investors sought refuge from the escalating trade tension. That surge helped lift blue-chip stocks such as CBA to record highs, reinforcing the view of the ASX as a relatively stable, dividend-rich market.
Beyond its financial sector, Australia’s resources industry is another key reason markets here could hold steady. The country is one of the world’s largest exporters of rare earth minerals, which are critical to everything from electric vehicles to military technology. These exports are increasingly attractive to U.S. manufacturers looking to diversify supply chains away from China, giving Australia a strategic advantage as the trade rift deepens.
Strap in, folks.
