Global markets continued to deliver strong growth in September, most notably in the US, UK and Asia. Many indices reached record highs – riding on positive indicators, such as decisions by central banks. However, concerns over public finances (e.g. the upcoming Autumn Budget in the UK) and global trade and politics continue to hang over investors.

UK policy

The government is currently preparing the ground for its hallmark policy announcements on 26 November (when Chancellor Reeves is expected to deliver the Autumn Budget).

One notable idea mooted at the recent Labour Party Conference by Prime Minister Starmer was the introduction of “digital IDs” for Britons – e.g. to help combat illegal migration.

This is partly to differentiate from Reform (currently leading the polls) and to diversify media attention away from the British economy, which is facing mixed performance data.

This follows the announcement of Starmer’s new “One in, one out” UK-France migration agreement, with the first deportation scheduled for 18 September. However, only time will tell whether this will help the government regain control of the narrative on immigration.

Another significant event was US President Trump’s state visit to the UK. This led to the signing of a significant technology partnership, including a potential investment of up to £150 billion in AI-related infrastructure (e.g., data centres).

The UK economy

One of the persistent challenges to the UK in 2025 has been stubborn inflation. Over the last 12 months, CPI inflation has remained over the Bank of England’s (BoE) target of 2%. Despite this, the Monetary Policy Committee (MPC) have made cuts to interest rates in 2025.

This includes a decision made in August to lower the rate by 0.25% to 4.00%. In September, however, the MPC chose to hold the rate steady (7–2 vote split). There are signs of disinflation, yet concerns hang over weaknesses in retail sales and the labour market (e.g. pay growth).

UK government bonds (gilts) are still trading at a premium relative to global peers. Yields have been rising since the third quarter (Q3) of 2025, reaching a level not seen since 1998. Concerns over government borrowing costs will likely be a key focus of the next Budget.

Chancellor Reeves will need to strike a delicate balance in November. If she raises borrowing by too much, she risks sparking a bond crisis reminiscent of Liz Truss’s short-lived premiership in September 2022.

The UK market

Despite concerns over its economy, the UK continues to show remarkable resilience in its equity markets. Since July 2025, the FTSE 100 has been steadily trading above 9,000, exhibiting an upward trend and reaching new record highs.

Some of the leaders of the index include miners (e.g. Fresnillo and Endeavour Mining), which benefited from rising gold prices. Healthcare stocks received a boost after Pfizer confirmed a deal with the US government, alleviating some of the recent uncertainty surrounding pharmaceuticals.

Despite this, business activity has been at a 5-month low in the UK. Many British companies are postponing major decisions about spending and investments, likely due to uncertainty about how taxes might rise in the upcoming Autumn Budget.

The valuation differential (UK equities being relatively cheap) is still cited as a major draw for investors. However, concerns remain over macroeconomic uncertainties, such as global rate paths, trade policy and potential volatility in interest rates.

The Global Outlook

In the US, the Federal Reserve (the “Fed”) has had a challenging time managing the price level. CPI inflation has largely matched expectations, leading to hopes amongst investors of a rate cut. However, the Fed has held it steady.

US inflation remains “sticky.” A premature cut could risk a spike in the price level. Conversely, if the Fed delays a cut (as President Trump has been pushing for), it could stunt US economic growth. Some cracks are already showing, such as a recent decline in job openings.

Trade policy continues to hang over the economy as an uncertainty, with the US government’s aggressive tariff stance (including “reciprocal” tariffs) exacerbating uncertainty for global trade and supply chains.

Amongst all of this, equities in the US have continued to exhibit solid performance. The S&P 500 has continued its steady year-to-date rise in September, recently trading at an all-time high (over 6,740). The Nasdaq Composite also recorded 187 new highs.

Other jurisdictions have exhibited mixed performances. Closer to home, in France, political instability continues to grapple with instability following Prime Minister François Bayrou’s ousting (after losing a confidence vote).

However, there are encouraging signs further afield, such as China and Japan, which have both performed strongly year-to-date. Corporate reforms in the latter have drawn significant interest in Japan’s equity market, whilst investors have been increasingly drawn to the 23% YTD returns of China’s equities.

The content in this article was correct on 08/10/2025.

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