November monthly investment update - Reflections on September and October 2025

In our last update, we mentioned that September is historically known as one of the more challenging months on the stock market calendar. However, this year, it did buck the trend.

Global equities continued their steady progression during the month, and throughout October, reaching further new highs from those already seen in July and August. Those of our funds that are more invested in equities have benefitted from these gains, and produced healthy gross returns during this period.

It’s a stark contrast from where investment markets were in April in the days following President Trump’s Liberation Day reciprocal tariff announcements. Back then, global equities fell significantly as countries grappled with the enormity of just how much more it was going to cost them to trade with the US.

The continued buoyancy in stock markets (despite trade tariffs) reflects investors’ feeling that they now know 'what to expect' rather than 'fearing the unexpected' (as was the case in April). But are investors justified in feeling this positive?

If we delve a little deeper into the details: In mid-September, the Federal Reserve (the Fed) in the US, finally cut interest rates – the first since December 2024. We say ‘finally’ because it’s well publicised that President Trump has been a staunch critic of Fed Chair Jerome Powell for not lowering rates sooner.

At the end of October, US interest rates were cut by another quarter percent, despite the Fed not having key government data available to help justify their decision. The reason for the lack of data is that on 1 October, the US government went into shutdown - bringing a halt to much of its key operations. A move triggered by Republicans and Democrats being unable to reach an agreement to extend federal spending beyond the 30 September fiscal year end.

This event not only affects US citizens, but it also has implications for investors, as it stops the flow of key economic data coming out of the US (such as important US job market data and potentially US inflation data, too). This key information helps investors, and policymakers, to assess how the biggest economy in the world is performing. So, in the absence of it, the positive investor sentiment (mentioned earlier) becomes more reliant on what companies are saying about the health of their own businesses, and their view of the global economy.

US regional banks’ 'bad debt' causes shivers

The US came under further scrutiny in October when a handful of bad debts at regional banks made headlines. This sent shivers across bond markets (related to private debt) as concerns grew that it could spill over into wider investment markets and trigger another global banking crisis (think the 2008 financial crisis, and Silicon Valley Bank’s collapse back in 2023). Investor resilience, and the lack of (obvious) contagion, appeared to calm the waters, and markets quickly recovered from this latest ‘wobble’. But what it does show is how ultra-sensitive investment markets have become.

Global fiscal positions

The fiscal positions of global governments were in the spotlight again in late September, as quarter two figures released by the IIF (Institute of International Finance), showed that global debt sat at nearly $338 trillion. Countries like China, France, the US, Germany, Japan and the UK, all recorded the largest increases.

Fiscal strains could get worse, still, for some countries. For example, France saw a sell off of its government bonds recently (something we’ve mentioned before) as investors lost confidence in its ability to deal with its political woes. In September, France swore in a new Prime Minister, Sebastien Lecornu. After surviving two no-confidence votes, and just 26 days in office, on 6 October, he resigned. However, only days later, he was reappointed by President Macron but faces an uphill task to restore the country’s finances.

As the French government was busy doing the Hokey Cokey on the global stage, here in the UK, it was government debt and the high cost of government borrowing that was keeping us all on our toes. Official figures from the Office for National Statistics (ONS) showed that the UK government’s borrowing in September was over £20bn (a rise of £1.6bn from the same time last year) and the highest it has been, for the month, in five years.

Chancellor Rachel Reeves’ dilemma, ahead of the 26 November Autumn Budget, is how she can keep voters happy, stay on track to meet her fiscal targets, and avoid losing the confidence of the UK bond market. If successful, the Chancellor may be able to get government borrowing costs down in the months ahead, which would be good news for investors in our lower-risk funds that have a heavier weighting in UK government bonds.

US and China lock heads and AI tech investment surges

It seems the US and China were still dancing around the issue of trade tariffs in September, as ongoing tensions between the world’s two super-powers continued with both sides trying not to blink first. The US threatened tariffs of 100%; in turn, China threatened to restrict access to rare-earth minerals, of which the country currently accounts for 90% of the world’s refining capacity, 69% of global rare earth mining production and 98% of magnet manufacturing.

At the end of October, progress was made as President Trump met with China’s President Xi Jinping in South Korea, where a consensus seems to have been reached on some (but not necessarily all) of their key issues relating to trade between the two nations.

Rare earth minerals might just be President Trump’s Achilles heel. In early October, he made several counter deals with lesser-known producers such as Australia, Japan and Malaysia – helpful in reducing China’s dominance in the sector, in the long term, but clearly not an overnight fix.

The US, of course, has more than a vested interest in rare earth minerals: They’re essential for producing vital components for cars, smart phones and many other items. But they’re also critical for producing batteries, and key components that power AI.

AI tech continues to dominate investment markets as multi-billions of dollars worldwide are now being invested in it. As an illustration of the fervour surrounding it, microchip giant, Nvidia, recently smashed through a stock market valuation of $5 trillion, for the first time. As long-term investors, we continue to have concerns about how much of this multi-billion-dollar investment will generate healthy returns. We doubt we are alone, and there are fears creeping in that we could be heading for some form of an AI bubble (like the .com bubble of the late 1990s). The very fact it is being debated though, is arguably good news as it means investors are on their guard.

In the meantime, our team of Fund Managers and Investment Analysts are busy analysing company results as we are right in the middle of the third quarter reporting season – this includes paying close attention to what companies are saying about their own AI spending plans.