Monthly Review and Outlook October 2025
Global markets advanced in October, with equities and bonds both delivering positive returns. Technology and artificial intelligence (AI) themes continued to drive performance, while policy developments and political events shaped sentiment across regions.
Below is a review of key developments across global markets and our outlook for the months ahead, highlighting opportunities and potential risks.
Company shares
October saw global shares gain ground, led by strong earnings in the US technology sector. Semiconductor and AI-related companies performed particularly well, with notable gains from leading names as demand for advanced chips remained robust. Sentiment was volatile at times, reflecting renewed trade tensions and concerns over US regional banks, though these eased as the month progressed. The Federal Reserve cut interest rates by 25 basis points to 3.75–4.00% and announced an end to its quantitative tightening programme, while signalling caution on further near-term cuts.
- United States: US equities advanced, supported by strong results from technology giants. Semiconductor and AI-related stocks led the way, with continued demand for advanced chips. Market sentiment fluctuated amid trade policy announcements and concerns over regional banks, but stabilised towards month-end as these risks receded.
- Europe: Eurozone shares were steady. French politics remained in focus following the resignation and reappointment of Prime Minister Lecornu amid parliamentary divisions. Sovereign bond spreads widened briefly before stabilising. The European Central Bank left rates unchanged at 2%, while France’s sovereign rating was downgraded to A+ by S&P due to ongoing political instability.
- United Kingdom: UK shares posted modest gains. Policy signals from the Bank of England underpinned gilt markets, with yields declining over the month. The 10-year gilt yield fell to around 4.5%, its largest weekly drop since April, as investors brought forward expectations of rate cuts. Fiscal concerns persisted as government borrowing in the first half of the financial year reached nearly £100 billion, the highest since the pandemic, setting a challenging backdrop ahead of the Autumn Budget.
- Japan: Japanese equities delivered strong gains. Sanae Takaichi became Japan’s first female prime minister, forming a coalition government focused on fiscal stimulus, defence spending, and energy reform. Investor optimism around policy continuity and reform pushed Japanese equities higher, while the yen remained soft as markets anticipated the Bank of Japan would delay further rate rises.
- Emerging Markets: Emerging market equities rose in October, outperforming developed markets, boosted by strong performance from Korea and Taiwan. Korea benefited from industrials, AI demand, and new trade negotiations with the US, while Taiwan continued to see strong investor demand for AI-related technology stocks.
Bonds
Bond markets were generally positive. Government bond markets advanced as yields fell across major developed markets, driven by growing expectations of additional Federal Reserve rate cuts. Investment-grade corporate bonds were mixed, with modest spread tightening in Europe offset by wider spreads in the US, while high-yield debt lagged amid renewed credit concerns. Gilts outperformed other major markets as UK yields declined.
Commodities
Commodities delivered mixed results. Oil prices fell to a five-month low as the International Energy Agency reported a large surplus of crude supply, with Brent trading near $62 per barrel. Opec+ maintained a small increase in output, but prices weakened on higher inventories and easing geopolitical tensions. In contrast, precious metals surged to record highs. Gold rose above $4,000 per ounce, supported by central bank buying and investor demand, before falling back.
Outlook
Strong equity performance, lower interest rates, and positive sentiment in emerging markets have helped reduce uncertainty and boost investor confidence. We continue to see opportunities in global shares, particularly in technology and Asian markets, but remain mindful of ongoing political and economic risks. We maintain a cautious stance on government bonds, with a preference for corporate bonds and gold as diversifying assets.
Asset overview
Our general view of assets in the coming months is summarised as follows. These are our in-house views as at the end of October 2025.
| Asset | Rag Status | Details |
|---|---|---|
Equities | Green | We continue to have a positive outlook on global equities. Markets have delivered strong returns and conditions remain supportive for investors. The risk of a US recession is considered low, and company earnings and fundamentals are robust. We have shifted to a positive stance on European stocks, closed our previous negative view on US stocks, and kept our positive position in China, as signs of improving global growth could help Chinese shares catch up in value. |
Government bonds | Red | We retain a negative view on government bonds over concerns around sticky inflation and the level of rate cuts priced into markets. |
Corporate bonds | Amber | We maintain a neutral stance on corporate bonds. |
Commodities | Green | We retain a positive stance on gold with the exposure being increased during the month. This continues to serve as a diversifying hedge against in an environment of policy volatility, sovereign debt issues and inflation. |
Source: Schroder Investment Management and Schroders Personal Wealth, 11 November 2025.
RAG Status legend
Green - Positive outlook
Red - Negative outlook
Amber - Neutral outlook
Important information
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-October 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.
Schroders Investment Management (SIM) provides investment management and advice services for SPW funds and portfolios respectively.
Schroders Personal Wealth (ACD) is a trading name of Scottish Widows Schroder Personal Wealth (ACD) Limited. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 11722973. Authorised and regulated by the Financial Conduct Authority number 834833.
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