Market Commentary

Despite the continuation of President Trump’s aggressive tariff policy, September 2025 went against the grain as an historically weak month for equities as most major markets returned solid gains. Markets were further buoyed by an easing of inflation fears, more resilient economic indicators as well as a rate cut by the Federal Reserve, despite the looming possibility of a US government shutdown on 1 October 2025 with the democrats and republicans failing to agree on a temporary spending bill.

The US markets were positive, as the S&P 500 hit a record high on 22 September, and ending the month higher by 3.5%, while the Dow, which also recorded new record highs, ended the month higher by 1.9%. The Nasdaq outperformed both, ending the month higher by 5.6%, reaching new highs for the sixth month in a row on the back of innovations around AI. US headline inflation for August (CPI) picked up, printing at 2.9% compared to the July print of 2.7%, while core CPI (excluding food and energy), also rose by 2.9% compared to July’s 3.1%. August core PCE, the Fed’s preferred inflation measure, remained steady at 2.9% YoY.

On the economics front, US GDP for Q2 2025 was revised higher, growing at an annualised rate of 3.8%, compared to the previous reading of 3.3%, and the fastest growth since Q3 2023. In addition, the Fed cut its rates in September for the first time since December 2024, with Fed Chair Powell commenting that the US job gains have slowed, the risks on the downside to unemployment have risen, while warning that inflation has picked up. Consumer confidence in September tracked lower with the Fed indicating that there is scope for further cuts, aligning with the futures market pricing in possibly four additional cuts by the end of 2026.

In the UK, the FTSE 100 recorded new record highs, closing 1.8% up for the month, with the inflation print for August unchanged from the July number of 3.8% YoY and close to the highs recorded in January 2024. The GDP reading for Q2 2025, advanced in line with market expectations, printing at 0.3% QoQ. The UK bond market is continuing to test the nerves of policy makers with long-dated gilts climbing in September to levels last seen in 1998 and their 30-year yield touching 5.75%. On the back of wariness of further disruptions, the BoE has slowed its pace of quantitative tightening to avoid unsettling already skittish markets.

Following the trend, European markets recorded their best performance in a September since 2019, with heightened optimism around a resilient US economy, as well as the possibility of lower rates boosting market sentiment. Although the CAC 40 closed the month higher by 2.5%, the Dax slowed marginally, closing softer by 0.1%. On the economic front, headline inflation in August for the Eurozone came in at 2.1%, compared to the July print of 2.0%, ahead of the ECB’s 2.0% inflation target. Unlike their US counterpart, the ECB held rates steady as it continues to struggle with economic uncertainty despite reaching a trade agreement with the US, while European inflation seems to have stabilised.

Asian markets ended the month higher despite still being subject to at least 50% tariffs, China shrugged off economic concerns. The Shanghai Composite ended the month higher by 0.6%, and the Hang Seng leapt by 7.1%. Like the US, tech counters took centre stage as AI innovations created a buzz. Economic data for August indicated a worsening of China’s economic slowdown with industrial output for August printing at 5.2% compared to the July number of 5.7%, the weakest since August 2024. Retail sales also slowed in August, coming in at 3.4% YoY, below the July number of 3.7%, and below expectations despite government subsidies for cars and appliances. Conversely, August manufacturing PMI showed a slight improvement, contracting slower than expected at 49.8 compared to July’s 49.4, but remaining below the 50-mark which separates expansion from contraction. Chinese non-manufacturing PMI printed at 50.0 compared to the July print of 50.3. Property, which has been the Achilles heel of the Chinese economy, continues to remain in crisis after four bruising years, with home sales and prices falling and continuing to deepen the debt woes of local governments. The Chinese government’s attempt to curtail corporate price wars has done little to breathe life into consumption with US trade frictions dragging exports into double digit declines. Chinese growth is expected to continue to weaken into year-end as deflationary pressures linger as consumer prices fell in August and producer price deflation persisted.

In Japan, the Nikkei closed the month higher by 5.8%, with the headline inflation print for August falling to 2.7% YoY, compared to the July number of 3.1% YoY, above the BoJ’s inflation target of 2.0%. Like the ECB, the BoJ kept rates unchanged at 0.5%, in line with market expectations.

South Africa

In South Africa, in September the JSE ALSI had its seventh consecutive monthly gain, up 6.0%, with the RESI-10 up 27.4% and precious metals again in the vanguard. The rest of the local market was constrained as financials were weaker by 2.7%, property weaker by 1.2%, but industrials ended firmer by 1.3%.

Some stock highlights for the month, led by precious metals (gold and platinum) were Valterra Platinum up 52.9%, DRD Gold up 50.9%, SSW up 48%, Northam up 42.4%, Impala up 38.3%, Harmony up 34%, Goldfields up 26%. Stock lowlights for the month were Sappi down by 20%, KAP, weaker by 20%, Santam lower by 13.7% and Sun International declining by 13.6%.

On the economics front, the headline inflation print for August pulled back to 3.3% YoY, from the July YoY print of 3.5% with softer fuel and food costs taking some of the pressure off the index, while core inflation advanced slightly to 3.1% YoY, vs the July print of 3.0% YoY. On the back of this, the SARB erred on the side of caution and like its European and Japanese counterparts, kept the repo rate unchanged at 7.0%, while revising its headline inflation forecast from 3.3% to 3.4% for 2025, and from 3.3% to 3.6% for 2026. Policymakers have also nudged their 2025 GDP forecasts slightly higher to 1.2% from the previous 0.9% on the back of stronger second quarter growth data, despite citing global uncertainties, including the impact of US tariffs.