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Investment Update November 2025
- ABP Team
- 2 days ago
- 6 min read
Updated: 1 day ago
Key Highlights:
US equity markets extended their six-month winning streak, with the S&P 500 rising 2.27% in October, supported by robust earnings and optimism surrounding Federal Reserve rate cuts.
The Federal Reserve reduced interest rates by 0.25% to a range of 3.75%–4.00%, marking the second consecutive cut amid signs of a weakening labour market and easing inflation.
European markets outperformed the US, buoyed by ECB monetary easing, falling interest rates, and Germany’s €500 billion infrastructure and defence spending programme.
The UK’s FTSE 100 rose 2.9% in October and is up over 18% year-on-year, supported by strength in sectors including industrials, oil & gas, and consumer staples.
Japan’s stock market surged, with the Nikkei 225 gaining over 17% monthly and 37% year-on-year, driven by technology shares and strong corporate earnings.
New Prime Minister Sanae Takaichi has pledged a ¥13.9 trillion stimulus package and tax reforms aimed at economic revitalisation and innovation.
Chinese equities climbed to near-decade highs, supported by strong corporate earnings, easing US-China trade tensions, and policy backing for AI and technological innovation.
The US-China trade truce reduced tariffs and relaxed export controls, including commitments on soybean purchases and curbs on fentanyl exports.
Global geopolitical risks persist, including the ongoing conflict in Ukraine, though hopes for negotiations continue.
An abundance of liquidity and debt debasement has driven this year’s market gains, although tapering of the debt refinancing cycle in 2026 may increase volatility.
At the portfolio level, equity weightings were maintained, capitalising on market momentum with expectations of further gains into year-end.
Welcome to November. The S&P 500 rose by 2.27% last month, marking its sixth consecutive monthly gain—a pattern that historically suggests a higher probability of continued upward movement. November also tends to be seasonally strong, often ranking as the best-performing month of the year. This bullish momentum is further supported by surging profit margins in the tech sector, which help justify elevated valuations. Importantly, while profit margins typically peak before stock prices do, no such peak has been observed yet, indicating potential room for further growth. Although, there are risks and stretched valuations to consider, as well as geopolitical concerns and rumblings in private credit markets. We examine the key factors in the update that follows.
In November, U.S. stock markets entered their historically strongest month with bullish momentum, extending a six-month winning streak. The S&P 500, Nasdaq, and Dow all posted solid gains in October, fuelled by strong earnings—particularly from tech giants like Amazon and AMD—and optimism around Federal Reserve rate cuts. Bank of America highlighted a “perfect setup” for equity gains, citing easing inflation, resilient consumer spending, and seasonal strength. Sectors such as technology, consumer discretionary, healthcare, industrials, and small-caps were expected to lead the rally, with AI-driven demand and holiday spending acting as key catalysts. Despite some volatility and earnings misses from companies like Netflix, overall market sentiment remained positive, with analysts forecasting continued upside through year-end.
The Federal Reserve cut interest rates by 0.25% to a range of 3.75%–4.00%, marking its second consecutive cut amid signs of a weakening labour market and easing inflation. Inflation held steady at 3.0% year-on-year, while employment growth remained sluggish, with private-sector payrolls shrinking and unemployment edging up to 4.3%. Market-related probabilities point to a 60% chance of a further rate cut in December. Meanwhile, the Dollar Index remained steady during October, ending the month stronger against other major currencies as an overdue trade deal with China emerged.
JPMorgan CEO Jamie Dimon warned that “when you see one cockroach, there are probably more,” highlighting hidden risks in the $3 trillion private credit market where opaque lending and growing risks of default are one real concern in the shadow banking sector. The Federal Reserve’s decision to end QT (quantitative tightening) is designed to assist liquidity in the inter-bank repo market and help prevent collateral issues.
U.S. government operations remain suspended whilst deliberations in Congress over the debt ceiling continue – we expect to see a conclusion during November.
European markets continued their strong performance, building on a year of surprising outperformance relative to the U.S. Equities across the continent benefited from a combination of easing monetary policy by the European Central Bank, falling interest rates, and bold fiscal initiatives—particularly Germany’s €500 billion infrastructure and defence spending plan. Countries like Greece, Poland, and the Czech Republic led global gains, with year-to-date returns exceeding 45% in some cases. While the pan-European Stoxx 600 saw some volatility amid earnings reports and inflation data, investor sentiment remained upbeat thanks to improving economic fundamentals and more attractive valuations compared to US markets. The banking sector showed resilience, with institutions like UniCredit and Deutsche Bank posting strong results. Overall, Europe’s markets entered November with momentum and optimism, positioning themselves as a compelling alternative to tech-heavy U.S. indices.
UK markets showed resilience amid global volatility, with the FTSE 100 continuing its upward trajectory following a strong October. The stock market is not the same as the economy. The index rose nearly 2.9% over the previous month and was up over 18% year-on-year, supported by strength in industrials, oil and gas, and consumer staples. Investor sentiment remained cautiously optimistic ahead of the Bank of England’s policy meeting, where rates were expected to hold steady despite rising expectations for cuts. Media and leisure stocks lagged, heavyweight names like Rolls-Royce and British American Tobacco posted impressive year-to-date gains, helping to offset sector-specific weakness. Overall, UK equities continued to attract interest due to their relatively low valuations and strong dividend yields. The UK’s debt is expanding at the fastest rate of any developed economy. The UK government is approaching a crunch point, with a pernicious budget in prospect, whilst sterling and Gilt yields clearly point to a fiscal position under some considerable stress.
Japan’s stock markets surged to fresh record highs, driven by a strong rally in technology shares and robust corporate earnings. The Nikkei 225 climbed to around 52,200, while the broader Topix Index rose to 3,335, reflecting a monthly gain of over 17% and a year-on-year increase of more than 37%. Major contributors included SoftBank, Hitachi, and Socionext, which posted double-digit gains following impressive earnings reports.
Investor sentiment was buoyed by a recovering domestic economy and renewed political stability, despite caution from the Bank of Japan regarding global trade risks. Japan’s equity market continued to benefit from structural reforms, improved corporate governance, and rising shareholder returns, positioning it as one of the standout performers globally. Japan’s new Prime Minister, Sanae Takaichi
has pledged aggressive fiscal expansion to combat inflation and revitalize the economy, including a stimulus package exceeding ¥13.9 trillion and tax reforms to boost household income. Her economic stance blends conservative principles with proactive investment in innovation, defence, and industrial revitalisation, aiming to build a “strong economy” while maintaining long-term fiscal sustainability.
In October, China's stock markets experienced a notable upswing, driven by strong corporate earnings, easing trade tensions with the U.S. following agreement with President Trump, and optimism surrounding the draft 15th Five-Year Plan, which emphasised artificial intelligence and’ tech innovation. The Shanghai Composite Index and CSI 300 both rallied to near-decade highs, reflecting renewed investor confidence and policy support. Sectors such as solar energy, insurance, pharmaceuticals, and technology hardware outperformed, with companies such as Sungrow Power and Foxconn Industrial Internet posting impressive quarterly results. China's economy maintained steady growth, with GDP rising 5.2% year-on-year, and over 5,400 listed companies reporting improved performance and increased dividend activity. Overall, the market outlook remained positive, supported by domestic consumption, structural reforms, and strategic sector rotation favouring innovation and green development.
The U.S. and China agreed to a one-year trade truce that lowered tariffs from 57% to 47% and suspended China’s export controls on rare earth minerals. The deal also included major Chinese purchases of US soybeans and commitments to curb fentanyl exports. A tougher stance from President Trump over Russian oil export sanctions will be supported by China. The Ukraine war drags on but we remain hopeful for negotiations stimulated by sanctions after they have had time to bite.
At portfolio level, we maintained our equity weightings throughout October, benefiting from the market’s upward momentum. Our intention is to remain invested as markets continue to edge higher, likely into year-end. While the journey is not without risk, we remain broadly comfortable with our positioning. The abundance of liquidity and ongoing debt debasement have been key drivers of this year’s price appreciation. However, the rolling 4–5-year debt refinancing cycle is expected to taper off during 2026, which may lead to increased volatility as liquidity recedes. Risk asset values may still rise but increasingly based on their individual merits rather than the broad uplift of a rising tide. Both risk-adjusted and absolute returns from our Alpha Beta portfolios have been strong this year—clearly outperforming much of the competition. We remain vigilant as markets approach the year-end. Written by the Alpha Beta Partners Investment Team.
All sources Bloomberg unless otherwise stated.
