September 2025
September was characterised by cautious optimism amid significant risk. US equity markets advanced due to expectations of monetary easing and robust corporate earnings. However, persistent inflation, geopolitical tensions, and fiscal uncertainty sustained volatility across bonds, commodities, currencies, and cryptocurrencies.
Geopolitical tensions significantly influenced global risk dynamics. China increased its participation in international governance forums, seeking to alter established trade and diplomatic norms and reduce reliance on US influence. An Israeli strike in Doha targeting Hamas leadership intensified instability in the Arab world and heightened diplomatic challenges in the Gulf region. In Eastern Europe, drone incursions, hybrid conflict tactics, and Russian activities continued apace. While the transactional US foreign policy under President Trump further strained traditional alliances and introduced uncertainty regarding future global coordination.
Global economic growth decelerated. Forecasts projected a weaker second half of 2025 as fiscal stimulus diminished and trade frictions reemerged.
In the US, the Fed cut interest rates by 25 basis points, lowering the Fed Funds target to 4-4.25%, justifying it as a defensive move amid rising downside risks. The updated “dot plot” suggested that further cuts might come later in 2025, depending on incoming data. Outside the US, central banks adopted divergent approaches. The ECB maintained interest rates, emphasising a data-dependent policy framework. Several emerging markets retained existing policy rates or moderated balance sheet adjustments.
In this environment, equities remained broadly resilient through the month, buoyed by the Fed’s rate cut and strong earnings, particularly in sectors tied to AI and cloud infrastructure. By close, the S&P 500 was up 3.6% and the tech-heavy Nasdaq was up 5.6%. European markets were more sanguine, with the FTSE 100 up 1.8% and the Dax flat. In Asia, the Shanghai Composite Index rose 0.7% and the Nikkei surged 5.2%, driven by a combination of stimulus hopes, export strength, and yen weakness.
Commodity markets exhibited significant divergence across sectors. Precious metals, particularly gold, reached record highs, supported by safe-haven demand, a weakening USD, and expectations of additional interest rate cuts. Silver and platinum also experienced positive momentum, albeit with increased volatility. By the close of the month, gold had risen 11.7% and silver 14.8%. Base metals demonstrated mixed performances, with copper prices increasing due to tighter global supply expectations. In energy, oil prices declined as OPEC+ indicated potential output increases, with WTI down 2.4% and Brent down 0.7%.
In the currency markets, the Fed’s shift toward a more accommodative stance exerted downward pressure, although responses varied across different currency pairs. Both the EUR and GBP marginally strengthened against the USD.
In the cryptocurrency market, volatility was high, and the asset class remained largely unmoored from the broader equity rally. Bitcoin and Ethereum both experienced periods of weakness, largely due to leveraged positions being liquidated amid macroeconomic uncertainty. A notable regulatory development came when the SEC and CFTC issued a joint statement clarifying that existing law does not prohibit registered exchanges from facilitating certain spot crypto products, a move that boosted hopes for clearer rules around leverage and margined trading. At the same time, a consortium of European banks announced plans to launch a euro-denominated stablecoin, hinting at deeper integration of digital assets into traditional financial infrastructure. By the end of the month, Bitcoin was up approximately 5.6%.