MARKETS LOSE THEIR FOOTING AS GLOBAL MOMENTUM SPLINTERS
MONTHLY HIGHLIGHTS
- Global equity markets shifted into a more defensive mode mid-November with the negative market sentiment linked to high valuations in the technology sector, combined with rising scepticism that the Federal Reserve (Fed) would cut interest rates imminently. For instance, the S&P 500 and the Nasdaq Composite saw declines of around 1.5% and 3.5% respectively, reflecting the shift in sentiment.
- Behind that, some analysts referenced two key considerations; firstly, that many of the tech/AI names may have run ahead of fundamentals; secondly, that the strong job market and inflation in the US were reducing the probability of rate relief in December.
- A tremor emerged in the UK sovereign debt and currency markets when the UK bond market moved lower (15+ year Gilts sold off by 2.7%) following reports of fiscal policy adjustments by the Rachel Reeves-led Treasury. The Chancellor reportedly abandoned plans to raise the headline income tax rate ahead of the 26 November budget which is a reversal where it puts into question the transparency and credibility of the government’s fiscal framework.
- In China, the latest data reflected continued economic challenges: fixed-asset investment fell by 1.7% year-on-year in the first ten months of 2025, marking a decline since the pandemic’s deep phase. Meanwhile, new home prices in October dropped 0.45% month-on-month.
- Equity fund flows were consistent with a more cautious tone where according to LSEG Lipper data, global equity funds drew net inflows of only about US$4.1 billion in the week ending 12 November, compared with US$22.3 billion in the prior week.
- Coming into November, markets were still digesting a late-October 25bp cut by the Federal Reserve that lowered the policy range to 3.75–4.0%, but Fed Chair Jerome Powell signalled that further policy easing is not guaranteed.
EQUITY MARKETS
US equity indices more broadly recorded modest but widespread declines, indicating that the pressure was not isolated to a handful of large stocks. Mid-cap, small-cap and flagship benchmarks all weakened, pointing to a gradual reduction in risk-taking behaviour across the market spectrum. The softness also suggests that investors may became more defensive amid mixed macroeconomic signals, diminishing expectations of imminent rate cuts, and sector-specific headwinds in areas such as cyclicals and consumer-sensitive industries. European equity markets also experienced a weaker tone, although the extent of the declines varied by region. Large markets such as Germany, the Netherlands and the UK registered relatively mild losses, while others, particularly across Central and Eastern Europe, demonstrated greater resilience. This pattern highlights a Europe where defensive sectors performance varied by region, partly reflecting sector differences and domestic factors contributed to some markets appearing relatively more resilient, even as broader global sentiment turned more cautious.
Asia displayed a largely uneven performance, with Japan and Taiwan facing weakness. Both markets saw negative shifts, which analysts linked to sensitivity to global growth expectations, currency dynamics, and renewed valuation concerns in sectors such as semiconductors and export-oriented industries. Meanwhile, major Chinese indices continued to reflect fragile confidence, with softer readings that align with ongoing economic challenges and subdued investor enthusiasm. Despite the broader risk-off tone, several emerging and frontier markets delivered positive results, illustrating how regional performance can diverge during periods of uneven global leadership. Markets such as India, Indonesia, Romania and Brazil posted gains, hinting that local factors including strong corporate earnings, improving macro conditions and domestic investor flows offered insulation from global volatility. These regions may have benefited from being less exposed to the stretched valuations seen in developed-market technology. Latin America stood out positively, led by a notable performance from Brazil, where equity markets delivered notable gains relative to peers in the period. The strength likely reflects a combination of attractive valuations, favourable commodity dynamics, and improving domestic inflation trends, allowing Brazil to act as a bright spot at a time when developed-market equities were pulling back.
In the corporate world, Cisco reported revenue and earnings ahead of analyst expectations in mid-November, showing an encouraging return to top-line growth and a shift towards higher-value AI-related infrastructure. Revenues rose year-on-year and earnings came in ahead of expectations, which could have been helped by a rebound in networking product demand and a sizeable pipeline of AI-driven orders. Disney’s quarterly update painted a mixed picture. While group revenues were broadly flat, profitability exceeded expectations, helped by stronger performance across the streaming division. Disney+ and Hulu subscriber numbers edged higher, and the direct-to-consumer business continued narrowing its losses as content spending became more targeted. Analysts cited traditional networks as a potential headwind, where advertising weakness and audience migration persist. Early November commentary highlighted JPMorgan´s role in the financial system and ongoing investment plan. The bank’s earlier results continued to influence sentiment, with analysts noting its capital position, diversified earnings base and willingness to deploy significant sums into areas such as consumer finance, corporate lending and long-term infrastructure. Meta remained in investor focus throughout early November as traders monitored the company’s progress in advertising recovery, AI-powered content recommendation and the long-term investment in immersive technologies. Although no formal earnings were released within the window, the stock continued to trade heavily as markets assessed Meta´s ongoing focus on spending priorities and profitability. NVIDIA remained one of the closely watched mega-cap names ahead of its scheduled earnings later in the month. Questions remained over the durability of recent demand trends like AI chips, data-centre accelerators and clous-infrastructure upgrades. In Tesla news, Musk’s newly approved long-term performance-linked compensation framework where shareholders gave the green light in early November 2025 for a plan that could be worth up to US$1 trillion over roughly a decade, assuming ultra-ambitious targets are hit (such as a market cap of US$8.5 trillion, 20 million vehicles sold, 1 million humanoid robots and 1 million robot-taxis).
CREDIT MARKETS
Long-dated government bonds continued to experience more notable moves of market repricing, with the steepest declines concentrated largely in the extended-maturity segment across both the UK and the US. Weakness in longer tenors is amidst fiscal pressures, inflation uncertainty, and the prospect that policy rates may remain restrictive for longer than initially assumed. Duration-heavy exposures therefore remained vulnerable as investors demanded higher compensation for long-term risk. European sovereigns delivered a broadly softer performance, although the declines were typically milder than those seen in the Anglo-Saxon markets. This suggests that investors are differentiating between regions, with the euro area benefiting from relatively more stable rate expectations and fewer immediate fiscal shocks. Nonetheless, the spread compression observed earlier in the year reversed modestly, indicating that even ostensibly defensive sovereign markets were not immune to the shift in global duration sentiment.
Investment-grade credit recorded controlled but noticeable declines, particularly in the sterling and euro corporate sectors. These moves point to a cautious tone among credit investors as funding costs remain elevated, and macro headwinds linger. While spreads did not widen dramatically, price action implied a steady drift towards risk reduction, with investors preferring shorter tenors and higher-quality balance sheets. This environment underscores that the credit cycle is entering a more delicate phase, with fundamentals becoming increasingly scrutinised. US dollar investment-grade bonds held up comparatively better, showing only shallow losses relative to longer-duration and higher-beta peers. This resilience suggests ongoing demand for high-quality dollar assets, supported in part by strong balance sheets, ample liquidity, and global investors seeking defensiveness. The underlying message is that credit markets remain functional and well-supported, even if total returns were modestly negative over the period.
High yield markets exhibited a more mixed profile, but generally proved more resilient than investment grade, with declines in European and US high yield remaining contained. The stabilisation in spreads indicates that investors still believe default risk is manageable and that corporate earnings, while cooling, remain broadly supportive. Interestingly, the lower-rated segment in Europe posted a small gain, hinting that selective risk-taking persisted in pockets of the speculative-grade universe despite the broader risk-off tone in rates. Emerging market bonds produced a varied outcome, blending small losses in investment-grade EM debt with mild gains in high yield EM, reflecting a split between countries exposed to rate-sensitive funding conditions and those benefiting from domestic improvements or supportive commodity dynamics. This dispersion highlights the importance of country-level differentiation, as broad EM exposure is increasingly too crude a tool in a world of diverging inflation paths and policy responses. Short-dated government and money market instruments remained as a stable corner of fixed income, delivering flat to mildly positive returns and reaffirming their appeal as a haven during bouts of volatility. The relative steadiness of this segment continues to attract investors prioritising capital preservation and yield without meaningful duration risk.
CENTRAL BANKING, THE ECONOMY AND GEO-POLITICS
Over the first half of November, the ECB adopted a cautious and stabilised stance, emphasising that its current interest-rate setting is “appropriate” but firmly data-dependent. A senior board member underscored that inflation across the euro-area is converging towards the 2 % target and that the Council remains comfortable with keeping policy unchanged for now. Moreover, the ECB reinforced that active fine-tuning of policy in response to small inflation deviations could inadvertently introduce volatility, i.e. in other words, the bank is signalling it prefers a steady course rather than reacting to every short-term blip.
In the United States, the Fed’s commentary in this period began drifting away from the expectation of imminent accommodative moves. Although the Committee cut the funds-rate range to 3.75-4.00 % in late October, several senior officials in early November signalled that further cuts cannot be taken for granted. One key policymaker highlighted that inflation remains materially above mandate, while labour-market evidence is weakening but not decisively so, meaning the central bank faces a delicate balancing act between its price-stability and employment mandates. The combination of these signals has introduced a tone of guardedness: markets might have been leaning toward a December rate cut, but the Fed is emphasising that policy is not on a preset path and that the next move depends on fresh data. Officials emphasised a data-dependent approach, noting that future policy direction remains uncertain. Although the BoJ did not make an extraordinary policy shift during this interval, the commentary around Japan’s inflation, wage dynamics and external trade pressures became more pointed. Officials acknowledged that inflation remains above 2%, yet underlying wage growth is still patchy and not yet firmly self-sustaining. With export headwinds emerging and global trade tensions persisting, the BoJ reaffirmed its intent to monitor wage settlements and inflation transmission before committing to further tightening. Meanwhile, the Japanese Prime Minister publicly urged the BoJ to secure “wage-driven inflation,” underlining the government’s desire for a more sustained pickup in domestic price pressures. In essence, the BoJ remains in a watch-and-wait mode: policy unchanged for now, but the lens trained sharply on the next labour-market and inflation prints.
Over the first half of November, energy markets became a vivid reflection of broader geopolitical tension with regions critical to oil and gas production experienced heightened instability, while commodity channels and export routes came under increasing scrutiny. This has led to market participants to reassess not only supply-side capacity, but the broader economic ripple effects including inflation pressure, potential growth slowdowns and increased safe haven flows into gold and other non-correlated assets. The interplay of strategic risk and economic vulnerability is clearer than ever.
According to recent central‐bank surveys, uncertainty around policy direction, trade dynamics and geopolitical risk is now ranking higher among stability concerns than conventional economic indicators. Financial institutions and regulators alike are flagging that the fragmentation of global trade, the resurgence of fiscal stress and the erosion of policy predictability present a more serious challenge than standard macro volatility. For investors and portfolio managers, this means that shock scenarios are no longer tail-risk curiosities as they now warrant attention as key inputs into asset-allocation decisions.
At the same time, macro-economic readings revealed some early signs of softening in key economies with US private sector job-growth indicators and lay-off data suggested decelerating momentum, while Chinese export figures slipped, pointing to international demand challenges. Though growth remains positive, the nuance is clear as the tailwinds of the past two years are fading, and structural headwinds (such as supply-chain realignment, demographic shifts and elevated debt burdens) are increasingly visible. This may influence market expectations depending on investor objectives and risk tolerance.
The notion that defence and security are separate from economic planning is becoming outdated. Governments are boosting expenditure in areas such as cyber-security, critical-minerals supply chains and climate-resilience infrastructure, emphasising that security-driven investment is now a cornerstone of economic policy. may affect capital allocation and fiscal outcomes over time.
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