Investor sentiment remained positive over the month of September, with most major assets posting gains as trade tensions eased, enthusiasm for artificial intelligence stayed high and expectations for interest‑rate cuts increased. Growth shares outpaced value, and emerging markets led developed markets, helped by a rebound in parts of Asia. Bonds were mixed as politics and fiscal questions came into focus, but positive returns were generally seen.
UK equities rose over the month, helped by their global revenue exposure and a softer pound. Domestic economic conditions remain a concern and long‑dated gilt yields reached multi‑decade highs in September as investors focused on above target inflation persisting and fiscal risks ahead of the November Budget. Corporate bonds held up with support from healthy balance sheets.
In the US, equities advanced on resilient economic growth and a solid earnings season. Headline inflation ticked up, but evidence of a cooling labour market allowed the Federal Reserve to begin a measured easing cycle, which supported risk assets into quarter‑end. Interest rate sensitive areas of the market and smaller companies were supported as policy expectations shifted towards further rate cuts. US Treasuries enjoyed a modest rally as yields eased on the shift in Fed expectations. Corporate bonds outperformed broadly, with investment-grade credit leading to the gains as spreads tightened and fixed income demands strengthened.
European equities made gains but lagged other regions. Subdued performance from German markets weighed on regional returns, while France continues to navigate a period of political uncertainty alongside ongoing fiscal consolidation debates. Government bonds were broadly weaker in Europe, with dispersion across countries reflecting local political and budget dynamics.
Japan delivered strong equity performance, supported by a weaker yen, stronger corporate governance and improved export prospects. Domestic policy signals and higher government bond yields created headwinds for bonds, but equities benefited from firmer earnings and reform momentum.
Across emerging markets, Asia ex‑Japan led, with Chinese technology shares rallying on policy support for domestic chipmakers and accelerating AI investment. Taiwan’s technology‑heavy market was buoyant, and a softer US dollar aided emerging market debt. Performance across other EM regions was more mixed as local policy and growth paths diverged.
Commodities were slightly higher over the quarter. Gold gained as investors weighed geopolitical risks and the prospect of lower real yields. Oil eased despite elevated tensions, reflecting expectations of adequate supply, while industrial metals were volatile as growth and policy headlines shifted.
Markets head into the final quarter of the year balancing optimism about earnings and monetary policy support with risks from politics, persistent inflation and elevated valuations in some areas. Diversification across regions and asset classes remains the most practical way to manage these risks, with high‑quality bonds generally playing an important role in portfolios, alongside equities and selective real assets.
| Market Performance | 2025 Year to Date |
| FTSE All-Share | +16.58% |
| FTSE World ex-UK | +10.43% |
| FTSE Actuaries UK Conventional Gilts All Stocks | +1.87% |
| FTSE Actuaries UK Index-Linked All Stocks | -1.89% |
Total returns in GBP to 30/09/2025
| Key Rates | |
| Bank of England Base Rate | 4.00% |
| Inflation (Retail Price Index/Consumer Price Index)* | 4.1%/3.8% |
*September 2025
Source of data: FE Analytics, www.bankofengland.co.uk, www.ons.gov.uk This commentary in no way constitutes a solicitation of investment advice and should not be relied upon in making investment decisions. Past performance is not a reliable indicator of future results. The value of your investments can fall as well as rise and are not guaranteed.