Global markets showed mixed performance in September 2025, despite political and economic headwinds.
Central banks diverged in approach, the US Federal Reserve cut rates for the first time this year, while the Bank of England and European Central Bank held rates steady amid persistent inflation concerns.
Fixed income markets responded favourably, with narrowing spreads and positive returns across sovereign and corporate bonds, while Asia Pacific and emerging markets benefited from tech sector strength and supportive policy signals.
Investment teams across the UK & European, Asian & Emerging Markets, Global, and Fixed Income desks reported mixed but generally positive market developments for September 2025. Equities in most regions advanced, supported by resilient earnings and easing monetary policy, despite ongoing political and economic uncertainties. The US Federal Reserve initiated its first rate cut of the year amid signs of labour market cooling, while the Bank of England (BoE) and European Central Bank (ECB) held rates steady. Fixed income markets responded positively, with narrowing spreads and solid returns across sovereign and corporate bonds. Asia Pacific and emerging markets benefited from tech sector strength and supportive policy signals, while political instability in France and Japan, along with trade tensions, added complexity to the global outlook.
European equities reached new highs, led by technology and industrials, despite mixed economic data and political instability in France. Inflation rose to 2.2%, exceeding the ECB’s target, while services inflation remained elevated. Business activity improved, driven by Germany, though France lagged due to political unrest. The ECB is expected to hold rates steady, and sentiment indicators showed modest improvement. France’s credit rating was downgraded amid budgetary challenges and leadership changes.
UK equities rose on improved global sentiment, but domestic indicators were mixed. Inflation held at 3.8%, with core and services inflation easing slightly. The Bank of England maintained interest rates at 4.00% and slowed its bond-selling programme. Economic growth was flat in July, and wage growth slowed. Consumer confidence dipped ahead of the November budget, and retail sales data was revised downward due to earlier errors.
US equities performed strongly, supported by a Fed rate cut and expectations of further easing. Inflation rose slightly to 2.9%, driven by shelter costs, while core inflation remained stable. Labour market data disappointed, with only 22,000 jobs added and unemployment rising to 4.3%. Consumer confidence and PMI figures declined but remained in expansion territory. Q2 GDP was revised up to 3.8%, reflecting robust consumer spending.
Asia Pacific equities advanced, led by Taiwan and Korea. Taiwan benefited from strong semiconductor demand and AI momentum, while Korea rebounded after early-month tensions. Japan saw gains despite political uncertainty, supported by GDP revisions and resilient inflation. China’s equities rose on tech strength and easing trade tensions, though economic data remained weak. Australia declined due to soft jobs data and rising inflation.
Emerging markets posted strong gains, especially in Asia Pacific and Latin America. China’s policy support and tech sector strength lifted sentiment. Taiwan and India saw early gains, though US visa concerns later weighed on India. Indonesia recovered mid-month after protests, while Latin America benefited from easing inflation and strong earnings. Eastern Europe saw modest gains, and Middle East markets remained stable, supported by rate cuts and solid corporate performance.
The US Fed cut rates by 25bps, prompting positive returns across global bond markets. US Treasuries gained 0.92%, UK gilts 0.66%, and German bunds 0.16%. Corporate bonds saw spread tightening, with US investment grade hitting post-1998 lows. European and UK corporate bonds also performed well, with narrowing spreads across IG and HY segments. The BoE and ECB held rates steady, with the BoE easing its quantitative tightening pace.
We have been a trusted partner in fundamental equity investing for over 75 years, with capabilities spanning regions, investment styles, and market capitalisations. Explore our expertise : Asian & Emerging Markets Equities.
We offer a broad range of Fixed Income strategies designed to meet diverse investment objectives whether you're seeking income, diversification, capital preservation, or total return. Discover more about our Fixed Income capabilities here.
Discover how Collateralised Loan Obligations (CLOs) can offer portfolio diversification, active management, and access to resilient leveraged loans for professional investors.
Unlocking access to a growing asset class with actively managed ETFs.
Find out what objectives a systematic active approach might aim to achieve and how an equity ETF using this strategy fits in between pure passive and traditional active management.
