Investor update: December 2025

At a glance:

• In November, most major equity indices experienced a bout of mid-month jitters before recovering in the final week to end flat or slightly positive.
• In fixed income markets, closely watched 10-year US Treasury bonds generated a modest return. The 10-year UK government bond (or 'gilt') was little changed overall.
• The lengthy US government shutdown ended mid-November.
• In the UK, markets took the much-anticipated Autumn Budget in their stride.
• Robust earnings releases from some major tech firms soothed frayed investor nerves.

What happened in equity markets in November?

In what was a fairly volatile month for equities, most major indices finished November flat or very slightly higher.

US equities initially received a boost from the 12 November news that a deal had been reached to end the longest government shutdown in history. However, mounting questions over the sustainability of the AI-driven rally – focused on US tech – then saw equity markets decline, before positive earnings restored investor confidence. Of particular note was Nvidia’s strong earnings, which reassured investors about the outlook for AI and tech.

The S&P 500 ended the month broadly flat, while the tech-heavy NASDAQ, which had experienced heavier selling, failed to fully recoup the losses by the end of the month.

In the UK, the FTSE 100 index charted a similar course. Optimism over the US government shutdown deal nudged the index to a new high on 12 November. The index then declined in the lead up to the Autumn Budget, with investors uncertain what Chancellor of the Exchequer Rachel Reeves’ speech would include. Ultimately, the investor reaction to the Budget’s proposals was positive.

Elsewhere, European equities were little changed over the month. Emerging market equities, more sensitive to risk appetites in general, were generally slightly weaker in November.

How did the bond markets fare?

In the UK, government bond yields, which reflect the level of interest payable to investors in government debt, were little changed in November.

Ahead of the Autumn Budget, there was some speculation amongst UK bond investors that the chancellor, seeking to reduce debt and foster economic growth, might not get the balance right. One of the key concerns was that the amount of ‘fiscal headroom' – essentially the government’s buffer against unforeseen increases in spending – would be too low. If the headroom is too low, investors may infer that the government may need to borrow more, which can impact borrowing costs negatively.

The closely-watched 10-year UK government bond yield rose ahead of the Autumn Budget, before falling back to finish the month almost where it began. The muted response indicates markets took the Budget in stride, which is likely to have satisfied the chancellor.

Inflation data is also important for bond markets, and in the UK, inflation – as measured by the Consumer Prices Index – declined to 3.6% for the 12 months to October 2025 compared to a 3.8% reading for September. This drop in inflation increases the likelihood of a cut to base rates at the Bank of England’s monthly meeting on interest rates in December, which should filter through into lower borrowing costs.

In other bond markets, the 10-year US Treasury yield fell slightly. The government shutdown impacted the availability of ‘higher-frequency’ economic data (data produced regularly, such as inflation). Even so, the picture painted by data produced year-to-date is of a stable US economy. The Federal Reserve is expected to continue its course of cautiously cutting rates, for now.

How are we positioning portfolios?

Overall, we are overweight equities in most J.P. Morgan Personal Investing Managed portfolios. We believe the environment is supportive for equities in general, and believe the earnings outlook for US tech and financials is especially encouraging. We are slightly underweight UK equities, relative to our long-term benchmark. We believe the European recovery is firmly underway, and have built exposure to specific sectors – industrials and banks – where we believe the support is strongest. In China, while we believe the economy as a whole continues to face difficulties, not all parts of the economy are equally sensitive. We have built a small position in China’s tech sector as a result.

In terms of our fixed income positioning, we are generally neutral government bonds, and more cautious on longer-term bonds. We have a slight overweight in high yield corporate bonds, which we believe are more attractive.

About this update: All figures, unless otherwise stated, relate to the month of November 2025. Sources: MacroBond, J.P. Morgan Personal Investing and Bloomberg.

Risk warning:

As with all investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Past performance and forecasts are not a reliable indicator of future performance. We do not provide investment advice in this update. Always do your own research.