Q3 2025 Market Commentary

If Q2 was defined by tariff shocks and political theatrics, Q3 has been shaped by a truce between markets and policymakers. Investors entered the quarter braced for escalation but were instead rewarded with an “everything and everywhere” bull market.

Trade tensions with China eased despite the expiry of Trump’s 90 day pause on reciprocal tariffs. Markets took this as another example of the familiar “TACO” (Trump Always Chickens Out) trade and flows into equity markets, especially from US retail investors continued apace. Equity markets delivered strong returns in Q3 with the standout performers being Asia and Emerging Markets as a weakening Dollar led investors to rotate towards these regions. It is also fair to say that we have seen good profit growth from many companies, and this has helped investors override concerns about high valuations.

Gold also performed strongly and other metals such as silver, platinum and palladium followed gold higher. These also benefited from Dollar weakness as well as persistent inflation concerns, ongoing geopolitical uncertainty and retail buying which together reignited demand for tangible stores of value.

Despite the inflation backdrop Bonds have also performed well. The US Treasury market also delivered positive returns as the US Federal Reserve (Fed) cut interest rates and from relief that Trump’s attack on the Fed’s independence seems to have stalled.

Despite the "everything and everywhere" bull market there are some clouds on the horizon. Notably the softer employment data in many countries, persistent inflation and questions about whether the massive amount of investment in AI is leading to a bubble.

Our portfolios remain defensively positioned as we continue to be underweight equities and overweight short-dated investment grade bonds. We maintain a preference for non-US markets such as UK, Asia and Emerging Markets, where valuations remain more attractive and policy responses have been measured. With volatility likely to persist, we continue to prioritise diversification, liquidity and quality across all asset classes.

‍