YOU AM market commentary – October 2025

The overriding macro theme remains the balancing act facing the Federal Reserve and other central banks: how to support growth and labour markets while keeping inflation in check.  In late October, the Fed cut interest rates by 0.25% but emphasised that further cuts were not guaranteed.  In Emerging Markets, very strong performance in Asian markets outside of China resulted in a stellar month, for instance the Taiwanese stock market was up +12.5%.  Elsewhere, Japan drew global attention when Sanae Takaichi became the country’s first female prime minister in mid-October.  Her election boosted hopes of fresh government spending to support growth, with Japanese shares hitting record highs during the month, and despite the yen weakening the market delivered healthy returns to GBP investors.

Another major driver of markets this year has been spending on AI infrastructure in the hope that it will deliver outsized profits.  In the United States, strong results from Alphabet (the owner of Google) helped push tech shares higher, as spending on cloud computing and artificial intelligence kept growing. In contrast, Meta’s shares sold off heavily as investors took fright at the sheer volume of spending they have planned. Investors are now waiting for Nvidia’s results in November, which many see as a key test of the AI boom’s staying power.