Data source: Bloomberg

Global equities rallied in the third quarter, with both developed and emerging markets delivering substantial returns. The gains were primarily fuelled by the continued AI boom, strong corporate earnings, and a Fed interest rate cut. Emerging markets also benefited from the weaker US dollar.

 Sources: Schroeders, Bloomberg, Yahoo Finance, JP Morgan, Reuters

In the US

• US equities rallied strongly, supported by solid growth, AI momentum, and the Fed’s anticipated rate cut.

• The S&P 500 and Nasdaq reached new highs, driven by technology and communication services.

• Energy and healthcare underperformed, but overall sentiment remained constructive.

In the Rest of the World

• Equities across the rest of the world delivered positive returns in Q3, supported by improving sentiment in Asia and strong technology demand.
• Japan extended its rally on yen weakness and corporate reforms, while Taiwan and Korea benefited from AI-driven semiconductor exports.
• China stabilised amid targeted policy support, though structural headwinds persisted.
  

In the US

• In Q3, the Fed cut the Fed funds rate by 25 basis points in September, its first move since 2023, bringing the range to 4.00%–4.25%. Chair Powell emphasized that further easing would be gradual and conditional on inflation progress, noting that “the job is not yet done.”

• Core inflation remained around 2.7%, while the US economy continued to expand at a solid pace, supported by resilient consumption and AI-driven investment.
  

In the Rest of the World

• The BoJ kept its short-term policy rate unchanged at 0.50% during Q3, maintaining a cautious stance as inflation remained slightly above its 2% target. Governor Ueda reiterated that any future tightening would depend on wage growth and domestic demand, while the BoJ continued to gradually scale back bond purchases.
• In China, authorities refrained from further rate cuts but announced targeted fiscal and liquidity measures to stabilise the property sector and sustain credit growth. Economic data showed tentative improvement, though the recovery remained uneven across regions.

• In Q3, the USD regained strength, reversing part of its sharp Q2 decline. It benefited from resilient US growth, renewed geopolitical tensions, and higher relative yields as the Fed signaled a gradual easing path.

• EUR and GBP both lost about 2–3%, reflecting softer economic momentum and cautious central banks.

• JPY weakened further, testing multi-decade lows as yield differentials widened, while the CAD remained broadly stable, supported by firm commodity prices.

• Digital asset markets staged a strong rebound, highlighting signs of growing maturity and institutional adoption. Bitcoin rose by 7% and Ethereum surged by a remarkable 67% over the quarter. The rally was propelled by a dovish Fed stance and institutional inflows, with Bitcoin reaching a new all-time high of $124,500 in August.

• The most consequential development was the passage of the GENIUS Act in July, which finally provided comprehensive regulatory clarity for stablecoins. Ethereum, home to much of this innovation—from stablecoins and decentralized finance to tokenized real-world assets—benefited directly.

• In commodities, the S&P GSCI Index posted modest gains for the third quarter of 2025.

• Precious metals experienced a significant rally, with gold and silver, in particular, posting record-breaking gains.

• The performance of the broader index was weighed down, however, by a relatively flat energy sector.

David Solomon, CEO, Goldman Sachs

“Markets are due for a drawdown over the next 12-24 months as the AI frenzy cools.”

Jerome Powell, Fed Chair

“The outlook for employment and inflation does not appear to have changed much, but growth may be on a somewhat firmer trajectory than expected, policy will react meeting-by-meeting to the evolving balance of risks.”

29-29 October: FOMC Monetary Policy Meeting

The FED votes to lower to Federal Funds Rate by 25 basis points.

What we can expect: 

Federal Funds Rate cut by 25 basis points (0.25%). The new Federal Funds Rate target is 3.75% to 4.0%. This is the second rate cut of the year following a previous rate cut in September.

29-30 October: ECB Monetary Policy Meeting in Rome

The ECB will discuss monetary policy after multiple rate cuts this year.

What we can expect: 

The ECB is likely to be in a pause and assess phase following multiple rate cuts. According to ECB staff the projected growth of the Eurozone is 0.9%, many now expect no further rate cuts unless we see market conditions deteriorating, this meeting is more for monitoring rather than active policy changes.

6 November: Bank of England Monetary Policy Committee Meeting

The Bank of England (BoE) will meet to decide the domestic interest rate for the Pound.

What we can expect: 

UK inflation is currently higher than its peers (and target inflation), therefore the BoE committee is expected to keep rates steady or execute a slight tightening of policy. It is unlikely we see a rate cut immediately as growth and the labor market (thus, inflation) are not at the targeted values.

9-10 December: FOMC Meeting with Summary of Economic Projections 

The FOMC will publish the Summary of Economic Projections and meet to explain it, with a decision on the Federal Funds Rate to follow.

What we can expect: 

Due to rate cuts in September and October, it is unlikely we see another rate cut in December. However, this decision will depend on the results provided by the Summary of Economic Projections. The Federal Funds Rate is expected to remain around the 3.75% to 4.0% target range.

17-18 December: ECB Monetary Policy Meeting

The ECB will meet to decide on changes to Monetary Policy in the Eurozone.

What we can expect: 

Due to rate cuts in 2025, it is unlikely we see an additional cut. Unless market conditions deteriorate, the ECB is expected keep rates steady. The purpose of this meeting will focus on monitoring market demand to assess the effectiveness of 2025 rate cuts.