Quarterly Market Report Q3 2025

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Q3 2025 Market Review

Q3 2025 LT Performance

London Tyne Cautious Outperformance: 0.62%

London Tyne Balanced Outperformance: 1.15%

London Tyne Opportunistic Outperformance: 1.60%

LT Cost Conscious

London Tyne CC Cautious Outperformance: 0.56%

London Tyne CC Balanced Outperformance: 1.41%

London Tyne CC Opportunistic Outperformance: 2.04%

LT Performance Since Launch

London Tyne Cautious Outperformance: 5.22%

London Tyne Balanced Outperformance: 6.12%

London Tyne Opportunistic Outperformance: 7.39%

LT Cost Conscious

London Tyne CC Cautious Outperformance: -0.76%

London Tyne CC Balanced Outperformance: -0.2%

London Tyne CC Opportunistic Outperformance: 0.15%

World stock markets returns

Fund Performance¹

Our top performer over the quarter was the Franklin FTSE China UCITS ETF, which returned 23.4%. This fund benefited from a significant rally in Chinese equities, driven by improved policy clarity, strong investor interest in technology and banking sectors, and robust retail flows. Redwheel Next Generation Emerging Markets Equity followed with a gain of 15.3%, supported by broad emerging market strength, especially in Asia and Latin America, where AI-related themes and easing trade tensions uplifted valuations. Fidelity Asian Dividend (11.7%) and Xtrackers MSCI Japan UCITS ETF (9.96%) also delivered solid returns, underpinned by resilient corporate earnings and ongoing reforms in Asian markets.

In developed markets, global dividend and broad equity strategies such as Vanguard FTSE All World High Dividend Yield ETF (8.15%) and SSGA SPDR MSCI World ETF (7.65%) reflected the positive environment for stable, large-cap equities supported by growth and AI enthusiasm.

HSBC FTSE 100 UCITS ETF (7.5%) delivered strong UK market returns, boosted by overseas earnings and a weaker sterling.

Alternative assets were significant contributors. The AQR Managed Futures fund returned 6.7% and Pimco GIS Commodity Real Return 4.9%, benefiting from commodity rallies, particularly in precious metals, and macroeconomic tailwinds. The Jupiter Merian Global Equity Absolute Return Fund, an equity market neutral strategy focused on delivering absolute returns with low correlation to equities and bonds, contributed 2.5%.

Among fixed income, Schroder Strategic Bond gained 2.9%, and various iShares Treasury Bond ETFs delivered returns up to 2.39%, supported by the US Federal Reserve’s rate cut, which boosted bond prices.

The weakest performer was the iShares Core UK Gilts ETF (-0.62%), reflecting fiscal uncertainty and pressure on UK government bonds.

¹past performance is not a reliable indicator of future results

Main Themes

AI and technology stocks led gains, particularly in Asia and the US, driving strong equity returns.
Easing trade tensions and US rate cuts boosted risk appetite and supported global equity rallies.
Alternative strategies, including managed futures, commodities, and market-neutral equity (Jupiter Merian), provided positive, diversified returns.
Fixed income offered stability but lagged equities; UK gilts underperformed amid fiscal concerns.

The Quarter in Summary

Global financial markets delivered strong gains in Q3 2025, driven by enthusiasm for artificial intelligence (AI), resilient corporate earnings, and the Fed’s first rate cut since 2020. The weaker US dollar supported emerging markets, while credit, digital assets, and commodities also performed well, with gold and silver reaching record highs amid geopolitical uncertainty and expectations of further monetary easing.

Global equities advanced across both developed and emerging markets, supported by AI-driven growth and solid macroeconomic data, which helped offset concerns over elevated valuations and persistent inflation. While progress on global trade policy provided some reassurance, uncertainty remains as companies continue to restructure supply chains to reduce reliance on the US and China.

United States

US equities delivered robust gains, with the S&P 500 advancing 8.1% and hitting new record highs over the quarter. Technology and communication services led the advance, bolstered by renewed AI optimism and expectations of additional rate cuts before year-end. By contrast, healthcare and energy underperformed, the latter hindered by falling oil prices.

The US economy continued to show remarkable resilience. Revised GDP figures revealed a 3.8% annualised expansion in Q2 2025, driven by solid consumer spending while core inflation largely remained contained . The Fed’s 25 basis point rate cut in September, its first since the pandemic, reinforced investor confidence, though an anticipated government shutdown at the start of Q4 introduced a note of caution.

UK

UK equities had their strongest quarter since late 2022 with the UK FTSE All-share returning 6.9%, supported by a robust global backdrop and a weaker pound. The FTSE 100 benefited in particular from its internationally focused constituents, while basic materials gained on the back of higher gold prices. The London Stock Exchange also witnessed a resurgence in initial public offerings.

CPI inflation remained sticky at 3.8% year over year in August, however, the Bank of England delivered its third rate cut of the year, reducing the Bank Rate by 0.25 percentage points to 4.0%. The Bank also announced a slower pace of quantitative tightening, which should help ease borrowing costs and stabilise yields.

Europe ex-UK

Eurozone equities advanced modestly in Q3 2025 with the MSCI Europe ex-UK index rising 2.8%, led by the financials and healthcare sectors. Bank stocks benefited from resilient earnings and an improved macroeconomic tone. The services sector expanded across Germany, Italy, and Spain, although France lagged amid heightened political uncertainty.

ECB President Christine Lagarde confirmed that inflation has largely normalised, aligning with the 2% target in August. Although September’s reading is expected to slightly exceed this, the ECB held rates steady, signalling that the current easing cycle may be complete.

In France, political instability persisted as Prime Minister François Bayrou resigned following parliamentary opposition to his fiscal reform package. His successor, Sébastien Lecornu, now faces the challenge of restoring confidence amid a sovereign credit downgrade by Fitch.

Overall, while growth remains subdued, stabilising inflation and contained fiscal risks have tempered investor concerns, though Europe continues to lag other developed markets.

Japan

Japanese equities posted exceptional gains with the TOPIX returning 11.0% over the quarter reaching record highs. Strength was driven by cyclical sectors such as non-ferrous metals, energy, and semiconductors, reflecting global AI demand and firmer commodity prices.

Corporate results were robust, and the continued focus on governance reform, share buybacks, and dividend growth enhanced investor confidence. The yen’s weakness provided additional tailwinds to export-oriented sectors, while anticipation of political leadership changes lifted sentiment further.

Despite occasional volatility linked to monetary policy uncertainty, Japan’s reform momentum and improving corporate culture remain key pillars supporting the market’s medium-term outlook.

Emerging Markets

Emerging market equities outperformed developed peers, with the MSCI EM Index posting a return of 10.9%. Gains were concentrated in China, Taiwan, and South Korea, which benefited from strong AI-related demand and the Fed’s rate cut.

China’s market was buoyed by progress in US-China trade discussions and policy support for its domestic semiconductor industry. Taiwan and Korea both enjoyed surging demand for chip and memory-related stocks, while South Africa and Egypt benefited from higher precious metal prices.

In contrast, India and ASEAN markets underperformed due to tariff pressures and limited exposure to the AI theme. Brazil lagged amid political uncertainty, though Saudi Arabia rebounded late in the quarter after authorities signalled plans to lift the 49% foreign ownership cap on listed equities.

Overall, emerging markets were notable beneficiaries of a softer US dollar and rising investor risk appetite.

Asia ex-Japan

MSCI Asia ex-Japan equities rallied11.1%, led by North Asia’s technology-heavy markets. Taiwan and South Korea outperformed sharply, fuelled by AI-driven semiconductor demand and strong capital inflows. China also registered impressive gains as investors grew more confident in its industrial self-reliance and easing geopolitical tensions.

By contrast, India and the broader ASEAN region lagged amid softer domestic growth and tariff concerns. The Philippines was the weakest market in the region, trading well below its long-term average.

Overall, accommodative global liquidity and higher commodity prices, particularly gold, silver, and copper, underpinned an impressive quarter for Asia’s technology-focused markets.

Fixed Income

Fixed income government bond returns

Fixed income sector returns

Bond market performance was mixed; the Bloomberg Global Aggregate Index returned 0.6%. US Treasury yields ended the quarter lower following the Fed’s 25 basis point rate cut to 4.0–4.25%, while UK, German, and Japanese yields all rose. Early in the quarter, concerns about Fed independence prompted yield curve steepening, but this reversed after the policy decision reaffirmed confidence in the central bank.

Eurozone yields moved higher as tariff uncertainties eased and fiscal spending plans in Germany supported growth expectations. French government bonds underperformed amid political instability and Fitch’s downgrade of France’s credit rating.

UK Gilts sold off as investors focused on sticky inflation and deteriorating fiscal metrics, while Japan’s government bonds weakened following the ruling coalition’s political setbacks and hints of a more hawkish stance from the Bank of Japan.

Credit markets performed strongly. Investment grade and high yield spreads tightened across the US, UK, and Europe, reflecting solid corporate balance sheets and persistent investor demand for yield. Emerging market debt also benefited from the weaker US dollar, gaining 4.4% over the quarter.

Asset class and style returns

Commodities

Commodities ended the quarter higher, with the Bloomberg Commodity Index gaining 3.7%. Precious metals were standout performers; gold and silver surged to record levels amid global uncertainty and expectations of looser monetary policy.

Energy markets were relatively flat, with oil prices slipping 0.8% as supply concerns gave way to expectations of oversupply. Industrial metals, including copper, benefited from robust manufacturing activity and AI-related infrastructure investment.

Broader risk sentiment, supported by trade de-escalation and the Fed’s dovish pivot, drove gains across most commodity segments.

Outlook

As Q4 2025 begins, global markets enter the final quarter of the year with momentum, supported by moderating inflation, renewed monetary easing, and ongoing optimism around AI-driven growth. The Fed’s recent rate cut has strengthened confidence in a soft landing for the US economy, while improving liquidity conditions continue to support sentiment across risk assets.

We remain cautious on US equities, where enthusiasm for AI and resilient data have sustained performance, though we believe underlying risks remain underappreciated. Valuations and concentration risk suggest a more measured stance is appropriate at this stage of the cycle.

We maintain an overweight position in Asian equities, where stronger earnings momentum, attractive valuations, and structural tailwinds from semiconductor demand and supportive policy provide a more compelling outlook. These markets also stand to benefit from a softer US dollar and improving trade dynamics.

Within fixed income, we are overweight government bonds, which we expect to perform better as growth moderates and central banks pivot toward further easing. We remain underweight corporate and high-yield credit, preferring higher-quality duration exposure in this environment.

Returns Disclosure

Figures refer to model past performance and that past performance is not a reliable indicator of future performance. Returns are net of holdings’ management fees and expenses based on the cheapest share class available; however, they do not include the fees charged by the manager (estimated to be 0.35% per annum), the adviser or the Platform. Returns are calculated assuming a single trading date in relation to any changes to underlying holdings which will not necessarily be the date that actual platform transactions occurred. Therefore, platform performance may vary from actual performance. For periods longer than one-year, cumulative performance has not been annualised. Movement in exchange rates may affect the value of some underlying investments.

Disclaimer: This document is intended to be communicated solely to persons that fall within the FCA classification of Professional Client. This document is for information and discussion purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase interests in any portfolio managed by Sturgeon Ventures LLP trading as London Tyne. Nothing in this document should be construed as a recommendation, representation of suitability or endorsement of any particular security or investment. Prospective investors should seek their own legal or tax advice. The information contained in this document has been compiled from sources believed to be reliable, but which have not been independently verified. Forward looking information is provided for illustrative purposes only and is not intended to serve as and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Simulated and actual past performance is not a reliable indicator of future performance. All marketing materials are distributed in the United Kingdom to professional investors by London Tyne, a trading name of Sturgeon Ventures LLP utilised under license. Sturgeon Ventures LLP (FRN: 452811) is authorised and regulated by the Financial Conduct Authority (FCA).