Monthly Review and Outlook November 2025

November saw global shares remain broadly steady, with sector leadership rotating as investors responded to evolving macroeconomic signals and policy expectations. Volatility was elevated in certain areas, particularly technology and defence, as market participants weighed earnings resilience against shifting monetary and fiscal backdrops. Regional performance diverged, reflecting differences in economic momentum, policy developments, and geopolitical factors.

• United States: US equities experienced heightened volatility, particularly within AI-linked and defence-related names, as investors reassessed earnings durability and near-term policy direction. Shifts in labour-market, inflation, and confidence indicators contributed to uncertainty, though broader index-level moves remained steady. The prospect of further rate cuts supported sentiment, despite intermittent risk-off periods.
• Europe: Eurozone shares recorded modest gains. High-frequency survey data indicated a gradual improvement in services activity heading into year-end, while manufacturing continues to face headwinds, especially in Germany.
• United Kingdom: UK equities advanced in November, supported by falling government bond yields and a weaker sterling. Softer inflation and labour-market data contributed to a decline in longer-term gilt yields, reinforcing expectations of additional Bank of England interest rate cuts. The Autumn Budget was well-received by the market, with greater-than-expected fiscal headroom and lower projected gilt issuance supporting market sentiment. Energy-linked sectors benefited from firmer commodity prices, while several domestically focused segments delivered more muted returns.
• Japan: Japanese equities delivered mixed but resilient performance. The TOPIX Total Return Index rose 1.42% while the Nikkei 225 declined 4.12%, reflecting global valuation concerns in AI and defence-related stocks and rising Japan–China tensions that weighed on inbound-exposed areas such as hotels and retailers. Solid first-half FY25 earnings underpinned the broader market. The government’s ¥21.3 trillion fiscal stimulus package reinforced an accommodative stance but raised concerns about Japan’s substantial debt burden, contributing to Japanese government bond underperformance.
• Emerging Markets: Emerging market equities declined in November, following strong performance during the second half of 2025, despite a weaker US dollar and declining Treasury yields. 

Government bond markets were broadly steady in November. US Treasuries outperformed as market expectations for additional Federal Reserve rate cuts strengthened amid an ambiguous macro backdrop and intermittent risk-off sentiment. Corporate bond performance was mixed: US investment-grade and high-yield markets held up relatively well performing more strongly than UK and European credit.

Commodities delivered varied returns. Oil prices strengthened modestly over the month, supporting energy-linked equity sectors. Industrial metals were mixed, reflecting divergent demand conditions across major economies. Precious metals consolidated following earlier strong performance.

Schroders continue to forecast constructive global growth as global demand may be further supported by ongoing monetary and fiscal stimulus. In addition, constructive US-China discussions have reduced the uncertainty around tariffs.  Global inflation has so far remained contained and is expected to ease gradually over the next year or so.

Schroders remain vigilant to two areas of potential risk in particular, concentration risk emanating from the US equity markets and the technology sector along with the trajectory of long-term government bond yields due to rising government debt levels. However, given the backdrop of ongoing global economic momentum Schroders remain positive on equities via Europe and Emerging markets to include the US and Japan. This is complimented by an underweight position in US government bonds to reflect the view that market expectations of future interest rate cuts have gone too far. 

Corporate bonds and commodities, especially gold and energy, remain important diversifying assets in portfolios.

Forecasts of future performance are not a reliable guide to actual results, neither is past performance a reliable indicator of future results. The value of investments and the income from them can fall as well as rise and are not guaranteed, and the investor might not get back their initial investment.

Any views expressed are our in-house views as at end-November 2025. Investment markets and conditions can change rapidly, and the views expressed should not be taken as statements of fact nor relied upon when making investment decisions. This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.

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