Some of our clients enjoy keeping up with how investments have performed over the last quarter. This market commentary is designed to provide a summary of key developments across global markets, including equities, bonds, and economic trends.
While the content is more technical in nature and may appeal most to those with an interest or background in investing, we hope it offers useful insights for anyone curious about how current events are shaping financial markets.
Key Moments of the Quarter
- Global equities delivered strong returns in Q3, largely driven by the continued strength of major technology companies.
- The Federal Reserve cut interest rates in September for the first time this year but signalled caution as inflation remains above target levels.
- The European Central Bank and Bank of England also hinted at potential policy easing, reflecting signs of slowing growth and moderating inflation pressures.
- Energy prices rose modestly during the quarter amid supply constraints and geopolitical tensions, while volatility in commodity markets remained contained.
- Gold reached another record high in Q3, as central bank gold purchasing ramps up
Equities
Global equities performed well over the quarter, though results varied across regions.
In the United States, equities continued to outperform, fuelled by the mega-cap technology stocks and sectors supported by resilient consumer spending. This strength was underpinned by falling short-term interest rates and generally upbeat corporate earnings. Nvidia, Apple, and Alphabet extended their strong momentum from Q2, with Nvidia becoming the first company in history to reach a $4 trillion market capitalisation. While fundamentals for these businesses remain solid, valuations and market concentration levels continue to warrant caution.
European equities lagged as growth stagnated, energy concerns persisted, and consumer confidence softened. Emerging markets were mixed, with China’s property sector weakness weighing on sentiment. However, select economies with stronger domestic demand, such as India and Brazil, showed relative resilience.
UK equities posted positive returns despite a challenging domestic backdrop. Many UK-listed companies derive a significant share of their revenues from overseas, and the weaker pound during the quarter provided a tailwind to returns. UK smaller companies struggled however due to growing concerns surrounding the Chancellors budget in November.
Global smaller companies outperformed however, likely benefiting from the shift towards monetary easing, which tends to improve borrowing conditions and risk sentiment for smaller businesses.
Fixed Income
Bonds were generally positive in Q3. After peaking earlier in the summer, bond yields fell towards the end of the quarter, boosting prices and total returns for both government and investment-grade corporate bonds.
Credit spreads between corporate and government bonds remained stable, reflecting strong balance sheets and healthy corporate earnings across many sectors.
High-yield bonds delivered steady performance, supported by low default rates and investors’ continued preference for quality credit exposure, particularly in short-duration instruments.
Outlook
The gradual shift towards monetary policy easing across developed markets should continue to support both equities and fixed income in the near term. However, central banks remain cautious, particularly around persistent wage and services inflation.
While the volatility seen earlier in the year from trade disruptions and tariff concerns has eased, geopolitical risks, including the US election cycle and ongoing tensions in global supply chains, remain potential headwinds for sentiment and investment flows.
The recent rally in equities, especially among large technology firms, has benefited most investors. Still, the growing concentration of returns in a handful of mega-cap companies raises concerns about market breadth and sustainability.
Meanwhile, gold’s record highs, as central banks help to reduce their reliance on the dollar. This also could suggest that investors are simultaneously seeking safety, reflecting underlying nervousness about global growth and policy uncertainty.
Conclusion
We understand that not everyone finds market updates helpful, and that’s okay. The purpose of this commentary is to support informed decision-making and provide transparency around the factors influencing investment performance. If you have any questions or would like to discuss how these developments relate to your own financial plan, please don’t hesitate to get in touch.
Disclaimer:
This commentary is for general information only and does not constitute personal financial advice. You should seek advice tailored to your individual circumstances before making any investment decisions.
Past performance is not a reliable indicator of future results. Investments can go down as well as up.
Market conditions can change rapidly. The views expressed are based on current market conditions and may change without notice.
References to individual companies are for illustrative purposes only and do not constitute a recommendation to buy or sell.
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