Steady markets, mixed signals – and what UK investors should take from it 

After a bright summer, markets also brightened in Q3. Major equity indices pushed higher, even as UK growth data and headlines on public finances painted a more subdued picture. Here’s our jargon-free look at what moved investment markets this quarter and the practical, calm takeaways for long-term investors. 

Global economic overview 

The US set much of the tone. The Federal Reserve cut rates by 0.25% in September, its first move in nine months, helping risk appetite and supporting a late-quarter rally. Inflation there ticked up to 2.9% in August, but equity markets took it in their stride as investors focused on the prospect of a gradual easing cycle. 

Politics also featured. Early policy shifts in Washington – from broad new tariffs to tighter rules and new fees for skilled-worker visas – added to the noise, with some economists marking down growth expectations for 2026. Even so, US shares advanced and breadth improved beyond the mega-cap tech names that dominated earlier in the year. 

UK economic outlook 

At home, the signal was mixed. The FTSE 100 ended the quarter near record highs, yet monthly GDP data showed no growth in July, and the three-month trend slowed again – a reminder that stock indices and the domestic economy don’t always move together. Large UK-listed companies earn a big share of their revenues overseas, so share prices often reflect global forces as much as UK activity. 

Public finances were back in the spotlight. Government borrowing over the first five months of the fiscal year overshot March forecasts, while the 30-year gilt yield briefly rose to its highest since 1998 before easing as markets digested the Bank of England’s slower pace of quantitative tightening (the BoE selling fewer of the bonds it bought post-2008 – £70bn over the next 12 months, down from £100bn). These moves matter because higher long-dated yields lift the cost of servicing debt and ripple through mortgage and corporate financing costs. 

Speculation about the 26 November Budget is inevitable – from income tax and NI tweaks to inheritance tax rules, ISAs and property taxes – but it remains just that: speculation. Sound financial planning is built to cope with policy change, not guess it. 

Equity markets at a glance 

• Broad-based gains: Global equities climbed, with leadership widening across sectors (healthcare, financials, industrials) and regions, not just US big tech. Small-cap shares also re-engaged. 

Regional highlights: 

• US: Upward momentum resumed; investors rewarded companies that hit guidance and generated cash.  
• Europe & UK: Europe posted modest gains amid rotation between tech and cyclicals; UK large caps benefited at times from energy and mining strength.  
• Emerging markets: Taiwan and Korea led on AI-related demand; Brazil and Mexico were steadier; China was mixed; India advanced unevenly.  
• Japan: Near record highs, helped by exporter strength when the yen weakened and by ongoing governance reforms. 

The big picture: Q3 saw a healthier, more diversified equity backdrop, with performance no longer so narrowly concentrated. That typically supports balanced, globally diversified allocations. 

Bonds and interest rates 

Fixed income had a more nuanced quarter: 

• US bonds: The Fed’s cut steepened the curve – shorter-dated yields fell while 10- and 30-year yields stayed elevated. Credit spreads in investment-grade corporates tightened toward long-term lows, meaning investors were paid relatively little extra to hold credit over Treasuries. 

• UK gilts: The BoE cut the Bank Rate to 4% in August and held in September. Even so, long gilts were volatile as the market digested heavy sovereign issuance and the BoE’s slower bond sales. By quarter-end, the 10-year gilt hovered around the high-4%s and the 30-year eased off its mid-September peak. 

For investors, higher long-term yields are a double-edged sword: they pressure existing long-duration bond prices, but they also lift future expected returns from new bonds and reinvested coupons. A sensible bond mix continues to play a role in balancing risk. 

Spotlight theme: uranium and the energy transition 

Outside the core asset classes, uranium drew attention. Spot prices pushed into the low-$80s/lb amid tight supply and a pipeline of new and planned nuclear reactors, while governments – notably the US – discussed bolstering strategic fuel reserves to enhance energy security. The spot market is small and can be jumpy, but longer-term utility contracts make the underlying demand story more stable. For most investors, this remains a niche, higher-volatility area rather than a core holding. 

Financial planning insights 

• Diversification did its job: With returns broadening across sectors and regions, staying globally diversified – rather than trying to time the “hot” market – was rewarded again this quarter. 

• Bonds still matter: Despite yield volatility, high-quality bonds continue to provide ballast and now offer more attractive income than in the ultra-low-rate years. Consider avoiding over-concentration in the longest maturities if sharp moves in long yields would make you uncomfortable. 

• Policy noise vs. personal plan: Budget rumours and geopolitical headlines can be unsettling, but they’re hard to trade and easy to misread. A robust plan factors in tax wrappers, allowances and rebalancing so you’re not reliant on any single outcome. 

• Costs compound too: The latest SPIVA scorecard again showed how hard it is for active funds to beat benchmarks over time once fees are included – a reminder that keeping costs under control is one of the few levers investors can reliably pull. 

Bottom line for Q3 2025 

Equities ended Q3 on a strong note with healthier breadth, while bonds navigated diverging central-bank paths and higher long-end yields. The UK picture mixed record-high shares with slower growth and fiscal questions. Through it all, long-term, diversified allocations – aligned to personal goals and risk tolerance – remain the most dependable way to capture market returns without getting wrong-footed by the news cycle. 

If you’d like to discuss how these developments fit with your goals – from ISA and pension planning to the right equity/bond mix – speak to Pentins Financial Planners. We’ll help you stay focused on what you can control and keep your plan on track.