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Global markets continued to rally in October. They extended gains over the three-month period despite some potential obstacles including the first US government shutdown since December 2018, uncertainties over inflation and tariffs, and worries about an AI stock bubble. Global equities posted gains of 5.5% over the month with strong results across both developed and emerging markets.

Within developed markets, Japan was the best performing region posting a gain of +6.7%. Sanae Takaichi became Japan’s first female prime minister, which was viewed as a market positive given her aims to pursue expansionary fiscal and monetary policies. The US was also a strong performer over the month with the S&P 500 returning 6.1%. This was on the back of strong corporate results, with over 80% of companies on the S&P 500 managing to report positive earnings surprises through the third quarter.

The rally was also heavily influenced by AI speculation which has been a dominant driver of economic activity both in the US and globally. This has particularly benefitted sectors in information technology (e.g. semiconductors, software, data centres) as well as utilities and energy companies that can help meet the future energy requirements for this technology. Throughout the month we did see a growing number of commentators and major institutions, including the Bank of England (BoE) and the International Monetary Fund (IMF), express concerns about an AI bubble and US tech-stock valuations. The collapse of two regional US banks also raised alarm bells about the broader health of US private credit. In the end, October turned into a rather contradictory month where US markets posted positive returns despite an array of gloomy headlines.

The UK and Europe also provided solid results, returning 4.4% and 3.9% respectively. Asia and emerging markets finished the period on a particularly strong note although there was volatility along the way as Trump’s tariff threats in early October escalated to “massive increases” on Chinese goods and the potential cancellation of bilateral talks between the US and China. However, sentiment bounced back after both sides met and agreed a deal that would pause steeper US tariffs and limit China’s export controls on rare earths materials, a key component in the AI supply chain. This boosted markets like South Korea and Taiwan that are heavily reliant on these materials. As a result, the emerging markets indices rose 6.6% by the end of October.

Although returns across bond markets were once again subdued in comparison to equity markets, they were still positive providing a good ballast to portfolios. Rate cuts in the US and controlled inflation were major contributors. The US government shutdown could have stoked concerns, but these were generally overlooked by markets. In the UK, softer than expected inflation data in October coupled with expectations of further rate cuts helped boost Gilts over the month.

One ounce of Gold went past $4,000 for the first time as investors continued to seek out the safe haven asset. Towards the end of the month, gold did go through it’s biggest sell-off for twelve years, but that wasn’t enough to stop it entering November at $4,022 per ounce.

A strong period all round – it is not often we see the central bank cutting interest rates when the economy is not in recession, which is the scenario we’re in with the US. However, this could add fuel to the fire and provide tailwinds for markets later on. It appears the thought of mid-term elections next year, is front and central in Trump’s mind and he is looking to drive the US economy and the stock market to gain support. The risks are that this could contribute to inflation, especially twinned with the impact of the tariffs. So far markets have favoured the positives over the negatives.

Despite lingering concerns from earlier tariff shocks and geopolitical tensions, equity markets rallied on AI-driven optimism, cooling inflation, and expectations of central bank rate cutting. The latter notably from the Federal Reserve in the US. Whilst at the same time, the US showed economic resilience with Gross Domestic Product (GDP) growth for the third quarter, with GDP being revised upwards to nearly 4% on an annualised basis. Positives certainly seemed to outweigh any negatives.

All equity regions delivered positive returns over the month with the best performing being the emerging markets and US posting returns of +4.2% and +2.8% respectively. US President Trump continues to talk down the strength of the dollar, arguing it would be good for US competitiveness. This coupled with interest rate cuts and challenges to the Federal Reserve’s independence all have contributed to a weaker dollar, which declined a further 2% through September. A weaker dollar is normally a positive outcome for emerging markets, and so it proved. Generally it lowers the cost of financing and debt and can be a tailwind for capital flows. Alongside this, we have seen rising consumption and positive news flow from companies in the emerging regions.

Global equities were broadly up +2.1%, with the US +2.8%. Technology and AI-heavy stocks were the leaders on the back of continued euphoria over AI-driver optimism, while expectations of further interest rate cuts could potentially provide a tailwind for markets.

Japan, Europe and the UK lagged but still posted positive returns. If we take Japan as an example – the Nikkei 225, the index of the largest 225 companies hit an all-time high, passing through the 45,000 level for the first time. More positive news on tariff deals, corporate reforms and share buybacks were some of the drivers. It was a similar situation in our home market with the FTSE 100 also hitting all-time highs. While there remains concerns about what November’s UK budget might bring, this did not hold the market back, and what was particularly pleasing to see was the domestic and small cap parts of the market outperforming large cap shares. Halfway through the month, we also saw Trump make his second UK state visit and agree to invest £150bn in the UK as part of the “Tech Prosperity Deal”.

Though returns across bond markets were subdued relative to the equity markets, they were still positive, providing a good ballast to portfolios. Rate cuts in the US and controlled inflation were major contributors. The US government shutdown could have stoked concerns but was generally overlooked by markets.

A strong month all round. It’s not often we see the central bank cutting interest rates when the economy is not in recession, which is the scenario in the US. This could potentially add fuel to the fire at a later date but is currently providing a tailwind for markets. It appears the thought of mid-term elections next year, is front and central in Trump’s mind and he is looking to drive the US economy and the stock market to gain support. The risks are that this could contribute to inflation especially twinned with the impact of the tariffs. So far markets have favoured the positive interpretation over the negatives.

We’ve seen decent returns across various asset classes over the last three months and again in August. Equity markets showed their ability to climb the “wall of worry” despite complex geopolitical tensions, trade policy developments and monetary policy uncertainty.

European equities continued their strong run returning 1.3% over August and remaining the top performing region in 2025. Europe benefitted from resilient economic activity as illustrated by the Purchasing Managers Index (PMI), which rose to 51.1% on increased manufacturing and loan growth in August. UK stocks also delivered a positive return (+0.5%) despite a mixed economic backdrop. The Bank of England (BoE) cut interest rates last month, but voting was much closer than expected, with the bank’s Governor Andrew Bailey concluding “it was a finely balanced decision.”

Looking more broadly, there was a strong return generated by Japan (+3.9%) while the US fell modestly (-0.9%).  Asia and Emerging Markets equities posted gains of +1.8% and +0.1% respectively.

The macro-economic environment has evolved over the year as the initial shock of tariffs appears to be waning and markets take a less knee-jerk reaction to trade policy decisions made by President Trump. On the tariff front, there were a couple of developments over the month. In late July, the EU & US agreed to a 15% tariff on most EU exports which was higher than previous average tariff but lower than the threatened 30% and includes some exemptions. The US and China extended their trade truce until November 10th, leading to a rally in Chinese equities. Conversely, the US imposed a crushing 50% tariff on Indian goods to punish the country for purchasing Russian oil.

While markets now appear to be shrugging off tariff news, there are growing concerns that inflationary pressures are re-emerging at a time when the US economy is showing signs of slowing and the US government deficit levels continue to grow. To add to this, political noise intensified after Trump’s contested firing of Federal Reserve Governor Lisa Cook, fuelling debate on central bank independence. As a result, investors are demanding more compensation in higher interest rates for holding longer-dated US Treasuries, despite the Fed indicating a higher probability of future interest rate cuts. This has also led to growing demand for precious metals by both Central Banks and investors, resulting in the gold price hitting all-time highs.

Returns across asset classes have been broadly positive so far this year and it has been reassuring to see diversification has helped investors. However, looking forward there are a few things to note. Valuations in the US remain elevated, and Trump’s tariff related uncertainties could reappear even before their legality is addressed in the US Supreme Court in November. At the same time, potential macroeconomic volatility and geopolitical uncertainty are issues to be mindful of. Effective diversification is likely to continue to play an important role.

Despite a lot of political noise and further threats around tariffs, equity markets delivered strong returns in July. After several months of the dollar weakening versus sterling (and other major currencies), the US currency rebounded over the month, delivering additional returns to sterling investors. Global equities posted a sterling return of 5.7%, mainly driven by the US market which posted a healthy 6.9% return. All major equity returns posted positive returns, with the UK market +3.9%.

Markets demonstrated their ability to climb the “wall of worry” despite complex geopolitical tensions, trade policy developments and monetary policy uncertainty. They were buoyed by a successful US earnings season, with 80% of US companies beating consensus estimates. Major US banks did particularly well as, according to Morgan Stanley CEO, Ted Pick, corporate clients and boardrooms now “appear more accepting of ongoing uncertainty”. While on the trade policy front there were some major developments, with Trump’s administration agreeing deals with Japan, Europe and Vietnam, and a deal in principle with China, reduced fears of an escalating trade war. Trade uncertainty has driven volatility since the initial announcement on 2nd April. The average US tariff rate has risen to 18% from the 2% level on 1st April but markets responded positively with policy clarity, particularly after the passage of the “One Big Beautiful Bill Act” (OBBBA), which supported risk sentiment. It was a busy month from a legislative perspective with Trump also signing the cryptocurrency related GENUIS Act and three executive orders on AI as part of the US’s AI Action Plan.

The UK equity market delivered healthy returns, with the large cap section of the market (FTSE 100) leading the charge. A significant number of the index has global exposure so the strength of the dollar over the month contributed to performance.

While markets breathed a sigh of relief over tariff policy clarity, there were certain areas that were hit quite hard. Copper saw an intra-month fall over -20%, as Trump imposed a 50% tariff on certain copper products. As soon as July finished, we got to see the final (for now at least) tariff rates. Brazil, Canada and Switzerland were struck with particularly aggressive rates. Latin America’s largest country was given a 50% rate for purely political reasons as Trump retaliated over the charges facing his ally, the former Brazilian President Jair Bolsonaro.

With the market in “risk-on” mode and equities delivering positive returns, it was no surprise to see bond markets were generally flat over the month, with the exception being emerging market bonds finished up 5% – in keeping with the “risk-on” narrative.

Returns across asset classes have been positive so far this year and it’s reassuring to see diversification demonstrating its benefit to investors. However, looking forward there are a few things to note. Valuations in the US remain elevated and income growth is skewered in favour of a small number of ginormous firms.

There are no guarantees tariff dramas won’t return.  All while potential macroeconomic volatility and geopolitical uncertainty are very much issues to be mindful of and underscore the need for effective diversification.

As we move into what’s looking like a really hot summer and take stock of the year so far, there’s been plenty of interesting developments.

Despite concerns around President Trump’s trade policies and escalating conflicts with Iran, most major asset classes delivered positive returns over the quarter. While this is encouraging, we have seen significant market volatility along the way.

Starting in the US, Trump’s policies had a meaningful impact on markets given the scale and unpredictability of his actions in recent months. Most equity markets took a sharp downward tumble after Trump’s “Liberation Day” tariff announcements at the start of April. A week later, this led Trump to delay some tariffs and reduce others, and US equities recovered to finish the quarter up 5.7%, with a 2.8% increase in June.

So far, regional diversification has really benefitted portfolios in 2025. In the last quarter, we saw strong gains from Europe (6.5%), the UK (5.2%), Japan (4.7%), Asia (+7.8%) and Emerging Markets (5.8%).

Year to date, most regions outside of the US have generated gains, while the US has lagged, particularly in sterling terms as the US dollar has depreciated against the pound. We believe there are several factors driving this shift. First, the valuations of many international companies had been trading at more attractive levels than their US counterparts. In Europe, we’re seeing a move away from austerity to fiscal stimulus which should help accelerate economic growth. In Emerging Markets, we have higher growth rates and an expanding consumer base which is attractive relative to other developed markets. As a result, we continue to see good opportunities outside the US and want to maintain exposure to fund managers that can take advantage of these investments.

Bonds generally delivered strong returns over the period, led by Global and UK corporates delivering 4.3% and 27% respectively. UK Gilts also rose the quarter by 1.8%. Politically, June was a bit of a mixed bag here in the UK, as we saw separate trade deals with the US and Gulf States announced, a £500mn investment in quantum computing and Rachel Reeves’ welfare cuts being countered by rebels throwing her budgetary plans up the air. Conversely, Global Bonds fell -2.2% due mainly to the impact of falling US Treasuries. In the US, rising fiscal concerns led to a downgrade of the US sovereign credit rating by Moody’s and the selling of long-dated bonds pushed yields higher.

It is encouraging to see markets recover significantly since the April lows, however, there remains considerable uncertainty around Trump’s policies and the impact they will have over time. In June alone, we saw Trump very publicly fallout with Elon Musk, deploy the National Guard in Los Angeles, and go back on his campaign trail promises by turning interventionist, and bombing Iranian nuclear sites. While these challenging times of geo-political uncertainty continue, diversification remains key.