The Pinnacle: September 2025
September 2 0 2 5 • I S S U E 57
Navigating September: Markets Advance Amid Policy Shifts
Introduction
Global markets closed September on a constructive note, with equities advancing across major regions and commodities posting strong gains. Optimism was supported by the Federal Reserve’s first rate cut of the year, resilient corporate earnings, and a rebound in Asian trade, even as inflationary pressures and shifting tariff policies created challenges.
US Markets
US equities posted solid gains in September, with the S&P 500 up 3.5%, the Nasdaq Composite rising 5.6%, and the Dow Jones Industrial Average adding 1.9%. For the quarter, the S&P 500 delivered an 8.1% return. New entrants to the index included Robinhood, AppLovin, and Emcor Group, reflecting the evolving composition of growth sectors. The main driver was the Federal Reserve’s 25 basis point rate cut, which bolstered expectations for a broader easing cycle.
In fixed income, government bonds gained 1.5% over the quarter as short-term yields eased. Investor focus shifted from upside inflation risks toward concerns over slower growth, with labour market indicators showing clearer signs of cooling despite resilient activity data.
Trade policy developments also shaped sentiment. In September, the US introduced 100% tariffs on branded pharmaceuticals, alongside levies of 50% on kitchen cabinets, 30% on furniture, and 25% on heavy trucks. Exemptions were offered for firms investing in US production, and Pfizer secured a temporary waiver in exchange for lowering some prices.
UK Markets
UK equities performed strongly, with the FTSE All-Share up 6.9%. Gains were supported by the index’s heavy overseas revenue exposure, which benefited from both a resilient global economy and a weaker sterling.
Policy commentary also helped shape the outlook. Bank of England Deputy Governor Dave Ramsden reiterated that the central bank can continue to cut rates gradually while guiding inflation toward its 2% target. Since August 2024, the BOE has lowered rates five times, and Ramsden suggested support for maintaining this pace at the November meeting.
UK bonds, however, faced pressure. Still-elevated inflation and concerns about government finances ahead of the November budget pushed 30-year gilt yields to their highest since May 1998. As a result, UK bonds finished the quarter down 0.7%.
Eurozone
Eurozone equities delivered moderate gains, with the MSCI Europe ex-UK index up 2.8% for the quarter. Consumer confidence held steady at -14.9 in September, while consumer inflation expectations eased slightly from 25.8 to 24.
The ECB held rates unchanged, maintaining the deposit rate at 2% in what it described as an appropriate stance given the inflation outlook. Inflation, however, edged higher: annual CPI rose to 2.2% in September from 2% in August, while core inflation remained steady.
Rising energy prices late in the month contributed to the uptick in headline inflation and weighed on industrial margins. At the same time, uneven demand patterns underscored diverging growth across member states. In fixed income, European government bonds slipped 0.2% over the quarter, while the spread between 10-year French and German yields widened to its highest since January as France struggled with a 6% budget deficit.
Asia Emerging Markets
Asia’s emerging markets led global performance. The MSCI Asia ex-Japan Index rose 11.1%, the strongest showing among major equity benchmarks. Chinese technology stocks stood out, with the Hang Seng Tech Index up 22.1% in Q3 and 46% year-to-date, lifted by supportive chipmaker policies, accelerated AI investment, and major product rollouts. Broader sentiment improved on easing US-China trade tensions and expectations that China’s “anti-involution” policy would underpin domestic growth.
The MSCI Taiwan Index advanced 14.7% in the quarter, reflecting its heavy 83% exposure to the technology sector. South Korea’s exports also impressed, surging 12.7% year-on-year in September to $65.95 billion—the fastest pace since July 2024. Semiconductor shipments, representing a fifth of exports, hit a monthly record, while an extra four working days from the timing of the Chuseok holiday supported the data.
Manufacturing trends across the region diverged. Taiwan recorded weaker output and orders amid muted global demand and client hesitancy, while South Korea’s PMI climbed back above 50, with new export orders rising for the first time in six months. China’s manufacturing stayed in expansion, with export orders turning positive for the first time since March. In Southeast Asia, rerouting of supply chains helped boost new orders, as firms looked to avoid higher US duties on Chinese goods.
Commodities
Commodity markets saw strong moves in September. Copper prices gained on expectations of tighter supply following disruption at a major Indonesian mine, reinforcing concerns in a market already vulnerable to production shocks. Copper’s role in data centres, electric vehicles, smartphones, and power grids has kept demand resilient, with futures up 18.5% year-to-date.
Oil prices were steadier, with major Wall Street banks leaving their forecasts broadly unchanged. Brent crude is expected to average $63.56 per barrel and WTI $60.36 in Q4. OPEC+ signalled an additional 137,000 barrels per day of supply for November, though geopolitical risks from Russian disruptions to Middle East tensions continue to provide support.
Gold rallied strongly, rising 11% in September and 47% year-to-date, closing at $3,828.42 per ounce. The metal benefited from falling real yields, safe-haven demand, and strong ETF inflows. Silver also extended its gains, ending the month around $46 per ounce, supported by renewed industrial demand from solar and electronics alongside favourable financial conditions.
Central Banks Hold Steady as AI Infrastructure Accelerates
Central Banks: Careful Shifts in Monetary Policy
September 2025 was marked by cautious central bank decisions as policymakers balanced persistent inflation pressures with signs of moderating growth.
In the United States, the Federal Reserve delivered its first rate cut of the year, trimming the federal funds rate by 25 basis points to a range of 4.00%–4.25%. While one policymaker favoured a larger cut, the majority of the committee preferred a measured step. Officials described the move as an “insurance cut,” signalling that while inflation is trending lower, risks to employment and economic momentum remain. Markets interpreted this as the potential start of a gradual easing cycle, with analysts suggesting further cuts could follow if data supports the case.
Across the Atlantic, the European Central Bank opted for a pause. On 11 September, the ECB held its main policy rates steady: the deposit facility at 2.00%, the refinancing rate at 2.15%, and the marginal lending facility at 2.40%. Inflation in the bloc has eased from its peaks but remains close to target, prompting policymakers to maintain flexibility. With the euro area economy showing resilience despite trade pressures, the ECB signalled that future moves would remain strictly data-dependent.
The Bank of England also left its benchmark rate unchanged at 4.00%. Two members of the Monetary Policy Committee argued for a small cut, but the majority voted to hold while continuing quantitative tightening through a £70 billion reduction in government bond holdings. Policymakers face a delicate balance: inflation has moderated but remains higher than desired, while signs of slower growth have prompted calls for more accommodative policy.
Taken together, September’s central bank meetings illustrated a cautious, finely balanced approach. The Fed has begun easing, while the ECB and BoE remain more reserved. All three central banks emphasised patience, underscoring their focus on incoming data rather than committing to a fixed path.
AI and Technology: A Surge in Infrastructure Investment
The technology sector pressed ahead at full speed. September was packed with announcements about artificial intelligence infrastructure, reflecting how rapidly the industry is expanding.
One of the biggest stories came from OpenAI, which is working with partners Oracle and SoftBank on its massive “Stargate” project. In September, they revealed plans to build five new U.S. data centres. These sites will add enormous computing power — measured in gigawatts (GW), the same unit used for electricity plants. In simple terms, it shows just how much energy is needed to run the huge servers powering AI. The project now has close to 7 GW of planned capacity, moving toward a target of 10 GW. That amount of power is equivalent to several large nuclear power plants.
Alongside new sites, OpenAI also struck partnerships with South Korean chipmakers to secure the advanced semiconductors needed to train AI models. This helps reduce reliance on just one or two suppliers and adds resilience to its supply chain.
The battle over AI chips also intensified. NVIDIA extended its partnership with OpenAI, pledging to supply vast amounts of high-performance systems in the years ahead. At the same time, AMD signed a five-year deal with OpenAI, aiming to challenge NVIDIA’s current dominance in the AI chip market. These agreements highlight how vital specialist hardware has become for sustaining AI’s growth.
Another major deal came from CoreWeave, a fast-growing cloud infrastructure company. It signed a $14.2 billion agreement with Meta to provide AI computing power through to 2031. This long-term partnership underscores how demand for AI-ready data centres is reshaping the global technology landscape.
Beyond the U.S., investment momentum is spreading worldwide. A consortium in Scandinavia announced plans for a renewable-powered AI campus, ensuring the industry’s energy demands are met sustainably. Meanwhile, telecom groups in South Africa began exploring AI-grade data centres to expand capacity across Africa, showing that this trend is becoming truly global.