Investor update: November 2025

At a glance:

• Many equity indices saw strong gains in October, in particular emerging markets and tech-heavy indices. South Korean and Taiwanese stocks led global returns.
• 10-year UK government bond yields fell to their lowest level since December 2024, supporting positive returns for fixed income investors.
• The UK economy’s outlook was upgraded by the IMF, with growth expected to be the second-fastest among the world’s most advanced economies in 2025.

What happened in equity markets in October?

It was another positive month for many stock market indices, with tech-related companies being a key driver of performance around the globe. Specifically, it is the theme of investment in artificial intelligence (AI) that continues unabated, pushing many indices higher. The US’s tech-heavy Nasdaq index rose almost 5%.

The AI theme isn’t limited to the US though, and it was returns in some emerging markets that really caught the eye. There are companies based in both South Korea and Taiwan that are global leaders in the manufacturing of semiconductor chips. This type of company may not grab the headlines as much as the AI models themselves which are quickly becoming part of our day-to-day lives. However, semiconductors are essential hardware for AI models to operate.

Taiwanese stocks were up almost 11% over the month, while South Korean stocks were the global leader, up more than 24%, although these indices can be highly concentrated and volatile. For example, the South Korean index has two stocks that represent more than 40% of the index’s market capitalisation. 

Elsewhere, we saw Japanese equities posting significant returns, up over 7%, with a sense of optimism seemingly accompanying political developments. In the UK, the FTSE 100, which reflects the performance of the 100 largest companies listed on the London Stock Exchange, was up more than 4%.

With 10 months of the year now wrapped up, year-to-date returns across many equity markets are well into positive double-digits. Looking at where returns are greater than 20%, we see: the FTSE 100, the Nasdaq, Japan, Europe, emerging markets and Canada, amongst others.

Some markets are beginning to look a little expensive, which is something we are monitoring closely. However, our allocation to equities is still slightly higher than our long-term benchmark. We believe that equities continue to be well supported by the macroeconomic environment – which we’ll take a closer look at shortly.

How did the bond markets fare?

In the UK, government bond yields, which reflect the level of interest payable to investors in government debt, fell in October. The 10-year yield, a key indicator of long-term borrowing costs, fell to 4.4%, down almost 0.3% over the month. This is the lowest level since December 2024. This drop in yields has come with an increase in prices, as they have an inverse relationship.

This change in yields was in part influenced by the possibility for ‘fiscal tightening’ via tax increases. The UK Chancellor of the Exchequer Rachel Reeves has been preparing the public for possible tax increases ahead of the November budget. The budget will be watched closely by market participants for the level of commitment to fiscal prudence it displays.

Elsewhere, global inflation has continued to ease and that has provided scope for further official rate cuts, which we saw in the US in October. This has helped bond markets provide positive returns as bond yields fall.

In terms of our fixed income positioning, our government bond exposure is roughly in line with our long-term benchmark. This means we are not taking a strongly positive or negative view on the asset class either way. The UK inflation rate remains above the Bank of England’s 2% target, but we think wages growth will moderate and lead services inflation and overall consumer price inflation down towards its 2% target in coming years. But the scope for rate cuts is limited if we don’t see inflation continue to moderate as it did in last month’s reading.

What other economic developments are investors watching?

There is a lot going on in the US. The government shutdown that started on the 1st of October ran through the end of the month and into November. This has widespread consequences.

From an investment perspective, something this is impacting is the availability of fresh economic data. Departments usually tasked with monitoring and producing statistics on the economy have been impacted, and so there are fewer new data points available. However, there are still other sources, with qualitative surveys that assess confidence in the economy pointing towards continued moderate growth in activity and employment.

In the UK, there has been some positive news for the Chancellor. The International Monetary Fund, or the IMF, has upgraded its outlook for the UK economy. For 2025, the UK is now expected to be the second-fastest growing of the world’s most advanced economies, even though that growth is forecast at only 1.3%.

On 26 November, Chancellor Rachel Reeves will present the Budget. We will be monitoring developments closely and will keep clients updated.

About this update: All figures, unless otherwise stated, relate to the month of October 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.