Q3 Market Commentary 2025

The third quarter has been a strong quarter on the whole for equity markets. The ongoing ‘noise’ around tariffs, inflation and central bank rates has not eroded investor confidence. Corporate results over the period have been robust as a combination of strong earnings reports and forward-looking investment drove returns.  The gold price continues to reach new highs which offers a cautionary note.

The domestic market

The UK market as measured by the MCSI UK IMI index was up by 11.26%.  For the companies with foreign revenue this has been helpful particularly in the large cap names a weaker pound helped returns. Corporate earnings overall remain resilient, whilst merger and acquisitions have picked up this year from a variety of sources proving value within the UK market and flows from overseas have started to return.  Inflation continues to remain stickier than hoped despite this the Bank of England cut rates by 0.25%.

What about the USA?

Whilst stock market returns have been strong throughout the quarter there remains a fine balancing act for the Federal Reserve. Inflation remains elevated and the long-term impacts of the tariffs may prove inflationary. The current weakness in the labour market is for now the catalyst for change. Smaller companies were boosted through a combination strong earnings and rate cut expectation moving forward.

What’s happening in Europe?

In Europe markets rose with the financial sector standing out. The banking stocks provided much of the gain with strong earnings. Inflation whilst up a little over the quarter remains very close to central bank target. Meanwhile in France, Prime Minister Francois Bayrou was forced to step down as a combination of budget cuts and tax rises to try and balance the countries finances failed to win support.

For extended commentary please see here.

ASAM’s Outlook

Looking at the investment outlook for the long term, we continue to focus on fundamentals and what drives investment returns over investment time frames. Over the last twelve months we have seen indiscriminate moves across markets, sectors, and individual companies which are short term and lacking fundamental support. In the West, rates are now being cut as inflationary pressures ease providing greater stability. We cannot rule out further volatility in the short term due to several reasons. Many short-term markets movements are sentimental and reactionary without long term consideration of how individual companies are performing and adapting to the economic environment. The dislocation in markets presents opportunities for active management

This information is obtained from sources considered reliable, but its accuracy and completeness is not guaranteed by Anderson Strathern Asset Management Limited. Neither the information nor any opinions expressed constitute financial advice. Investments can fluctuate in price, value and/or income and may return less than the original amount invested. Past performance is not necessarily a guide to future performance. Anderson Strathern Asset Management Limited is authorised and regulated by the Financial Conduct Authority.

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