Monthly Income monthly commentary - Review of November 2025

US equities finished the month broadly flat in US dollar terms, but this again equated to a 0.8% loss for sterling-based investors due to US dollar weakness. November saw a strong Q3 earnings season with 81% of the biggest US companies beating expectations. However, this was not enough to extend the rally as investors questioned the high valuations and ambitious growth expectations for mega-cap tech companies even after upbeat results from Nvidia. Elsewhere, signals from the labour market were mixed and the prolonged government shutdown delayed key data releases, amplifying uncertainty. Meanwhile, falling inflation data late in the month lifted rate‑sensitive and defensive sectors such as healthcare and consumer staples.  

European ex UK equities were volatile early in November but ended up by 0.7%, supported by growing expectations of a US rate cut and resilient services activity offsetting weak manufacturing, notably in Germany and France. The leading sectors were financials, healthcare, and communications services, with banks buoyed by stronger earnings. Autos and consumer‑related areas were softer, reflecting cautious demand. Overall, defensives led as investors prioritised stability over cyclicality.  

UK equities edged higher in November ending the month up by 0.5%. Softer inflation and labour‑market data increased expectations of Bank of England rate cuts, easing financial conditions. The Autumn Budget was well received with greater‑than‑expected fiscal headroom and reduced projected gilt issuance stabilising sentiment. Defensive areas including healthcare and consumer staples outperformed, while domestically focused consumer and selected industrials lagged amid uncertainty over longer‑term tax and spending plans. Energy-related stocks were resilient despite ongoing weakness in gas and oil prices.

Emerging market equities fell by 3.2% in November, underperforming developed markets despite a weaker US dollar. Technology‑heavy Korea and Taiwan retreated as investors took profits in AI and semi-conductor leaders. Meanwhile, China was broadly in line amid profit‑taking and a sluggish recovery backdrop. India posted slight gains on strong growth and limited tech concentration, while Indonesia, Malaysia, and the Philippines also rose, as did Mexico and South Africa. The consumer discretionary and communication services sectors lagged on lagged as concerns persisted around Chinese consumer demand. Energy, financials, and healthcare delivered gains thanks to a more defensive earnings profile and improving dynamics in parts of the energy sector.

Global bonds delivered a small positive return of 0.4% in November. US Treasuries outperformed (up 0.6%) as shorter‑maturity yields fell and the yield curve steepened. Markets increasingly priced in a rate cut by the US Federal Reserve (the Fed) in December amid mixed labour data and softer consumer confidence, whilse investors demanded higher compensation for holding long-term bonds amid fiscal and inflationary concerns. Corporate bonds were mixed as US investment‑grade and high-yield bonds did better than Europe and the UK. In the UK, gilt yields initially climbed into the Budget but fell after issuance projections were cut and gilt returns were near flat (up 0.1%) over the month.