November Market Update
Markets entered the final stretch of 2025 with a level of stability that contrasts sharply with the turbulence of recent years. Inflation has continued its steady decline across the major economies, giving central banks space to pause and reassess rather than persist with restrictive policy. In the US, the Federal Reserve has already delivered two modest cuts since September, but officials are now signalling that further moves will be slower and more data-dependent. In the UK, the Bank of England has held rates steady while openly acknowledging that monetary policy is becoming sufficiently restrictive. Combined with a global economy still growing at roughly 3%, the foundation for markets has become more predictable — not exciting, but reassuring.
Political developments added occasional volatility but ultimately didn’t derail investor sentiment. The prolonged US government shutdown finally ended in mid-November, clearing the fog around delayed data releases and executive-branch spending. Tensions between the US and China flared early in the period, especially around technology supply chains, but late-October talks softened the tone and helped reduce the risk of escalation. Japan’s change in government brought with it a renewed emphasis on fiscal support and productivity reforms, while in the UK, attention turned to the Autumn Statement and the likelihood of tighter fiscal discipline.
Equities: Strong Momentum Despite High Altitude
Global equities delivered another bout of strength through October. The combination of resilient earnings and expectations that the rate-hiking cycle has peaked kept risk appetite healthy. US markets continued to lead, supported by megacap technology names that remain central to investor enthusiasm around AI and automation. Japan and wider Asia also produced strong gains, with semiconductor-related markets particularly buoyant as global demand recovered. Europe reached new record levels, and UK equities also enjoyed a positive period, helped by lower gilt yields and a softer pound.
However, the rally is now running at high altitude. Major equity indices are trading near historical peaks, and valuations — particularly in the US — are undeniably rich. It’s no surprise that strategists expect more modest returns from here. Goldman Sachs, for example, forecasts around 7.7% annualised returns for global equities over the coming decade: attractive, but a notable step down from the unusually strong performance of the past fifteen years. At such elevated levels, markets don’t need bad news to wobble; they sometimes just need less good news. The brief pullback in mid-November, triggered by firmer central-bank language, was a timely reminder that a correction is always possible after such pronounced gains.
Bonds: A More Constructive Backdrop
Government bonds have quietly staged one of their better periods of the year. Cooler inflation data and the early stages of monetary easing helped yields fall during October before stabilising in mid-November. Gilts rallied strongly as investors began to price in potential UK rate cuts in 2026, while eurozone bonds benefited from inflation essentially returning to target. Credit markets remained orderly, with high-quality issuers continuing to attract demand as yields remain compelling in real terms.
Outlook
As we head into the final weeks of 2025, conditions appear more balanced than they have for some time. Inflation is easing, central banks have stepped back from tightening, and recession risks have faded. Volatility is still likely — particularly given stretched equity valuations — but the broader narrative remains one of cautious optimism. With rates near their peak and corporate earnings holding firm, a disciplined, globally diversified approach continues to serve investors well heading into 2026.