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September 2025 Market Summary

Global Market Overview

Despite a weakening labour market in the United States and ongoing inflationary pressures in the UK, equities worldwide have delivered strong returns in the year to 30 September 2025. Japan’s Nikkei 225 stood out, posting a particularly robust month in September with a 6.5% gain.

Global Indices (12 months to 30 September 2025):

  • FTSE 100: +13.32%
  • S&P 500: +15.45%
  • Stoxx 600: +6.40%
  • Nikkei 225: +18.49%

United Kingdom

UK inflation held steady at 3.8% in the 12 months to August 2025, marking a 19-month high. Rising food prices were the main driver, up 5.1% over the year. Fuel prices, while higher between July and August, have generally eased: petrol fell by 8p per litre and diesel by 7p per litre, according to the ONS.

Following the release of UK inflation data, the Bank of England’s Monetary Policy Committee voted to keep interest rates at 4%, as expected. With inflation nearly double the 2% target, reducing rates further is challenging, particularly as households continue to feel the pinch from higher food costs. Governor Andrew Bailey noted that while rate cuts remain possible this year, their “timing and scale” now appear less certain.

The decision reflects caution, and with less than two months until the Autumn Budget, both households and businesses are looking to the government for stability and clearer direction.

United States

For the first time this year, The Federal Reserve made the decision to cut interest rates by 0.25%, the lowest level since 2022. Despite rising pressure from President Donald Trump, who has supported lower interest rates since the beginning of his presidency, the central bank had been cautious about cutting rates, due to uncertainty surrounding the White House’s economic plans, tax cuts and tariffs. However, whilst unemployment remains low, and with the job market weakening, the Fed are now taking what they believe to be the necessary precautions to ensure that the labour market does not stall further, highlighting the growing concern surrounding jobs in the economy.

Asia 

Japan’s Nikkei 225 surged to record highs in September, buoyed by the US rate cut and strong performance from major firms such as SoftBank Group. The company has gained 146% since April, supported in part by its involvement in the Stargate project –  a $500m technology investment initiative in the United States. This underscores the global influence of AI investment on market growth.

In China, economic activity contracted for a sixth consecutive month, raising concerns about the country’s ability to sustain its 5% growth target. Although a stimulus package was introduced in August to support households and businesses, the central bank has so far refrained from further measures following the US rate cut. Trade uncertainty with the United States continues to weigh heavily on sentiment.

Europe

The STOXX 600 enjoyed its strongest month since May, helped by renewed stability following the US-EU trade deal in early August. Industrial and healthcare stocks were key drivers, with construction activity across the euro area and EU rising by more than 3% since June 2024.

Eurozone inflation remained at 2% in August, unchanged since June, signalling stability across the region.

Outlook

As the final quarter of 2025 begins, investors are closely watching the potential for further rate cuts in both the US and UK. With UK inflation still elevated and the November budget approaching, markets will be focused on how the government balances the budget deficit while restoring confidence in the economy.

References

BBC News (2025) UK inflation rate stays at 3.8% but food costs continue to rise steeply. Available at: https://www.bbc.co.uk/ (Accessed: 30 September 2025)

BBC News (2025) UK ‘not out of woods’ on inflation, says Bank as rates held’. Available at: https://www.bbc.co.uk/news/articles/cge2q7wvyz3o (Accessed: 30 September 2025)

BBC News (2025) Fed Reserve cuts interest rates but cautions over stalling job market. Available at: https://www.bbc.co.uk/news/articles/c3e75y90pw0o (Accessed: 30 September 2025)

CNBC (2025) Asia Markets Today: updates on Nikkei-225, Hang Seng, ASX, CSI 300, Nifty 50, 11 September. Available at: https://www.cnbc.com/2025/09/11/asia-markets-today-updates-nikkei-225-hang-seng-asx-csi-300-nifty-50.html (Accessed: 30 September 2025)

Reuters (2025) China factory activity shrinks for a sixth month in September, PMI shows, Reuters, 30 September. Available at: https://www.reuters.com/markets/europe/china-factory-activity-shrinks-sixth-month-september-pmi-shows-2025-09-30/ (Accessed: 30 September 2025)

Reuters (2025) China pledges more financial support for consumption with loan interest subsidy, 13 August. Available at: https://www.reuters.com/markets/asia/china-pledges-more-financial-support-consumption-with-loan-interest-subsidy-2025-08-13/ (Accessed: 30 September 2025)

This article is intended for information only. It is not financial advice or a recommendation and should not be considered as such. If you are
unsure whether an investment is right for you, please seek independent financial advice. If you choose to invest, please remember the value of
investments and any income derived from them can fall as well as rise and you may get back less than you put in.