Global Market Overview | September 2025

30 September 2025

Written by the FNB Wealth and Investments Research team

Global equities maintained positive momentum in September (MSCI World Index: +2.5%) with emerging markets taking the lead (MSCI Emerging Market Index: +5.5%) as Chinese equities continued to lock in solid gains. The headlines were dominated by central bank activity, dollar weakness, concerns about the health of the United States (US) economy and bullish sentiment in the tech space amid a spike in AI partnership and deal announcements across regions. Geopolitical concerns also remained prevalent amid ongoing tensions between several nations including Russia and Ukraine.

US markets (S&P 500 Index: +2.9%) were driven by a solid performance among the Magnificent 7 (+8.5%), outperforming the broader US market (Rusell 2000 Index: +3%), as news of several AI-related deals pushed tech-stocks to fresh highs, despite growing evidence of a broader economic slowdown, particularly as it relates to the US labour market – Nvidia’s $100 billion investment in OpenAI chips garnered significant attention. Fed Chair, Jerome Powell, also recently noted that equities appear “fairly highly valued”, raising some concerns in the market. In terms of the Fed’s latest policy announcement, the committee cut borrowing costs by 25-basis points (bps), lowering the benchmark target rate to between 4% and 4.25%, in line with expectations. The announcement also coincided with the release of the Fed’s latest economic projections, including the “dot plot” which showed that most Fed members expect at least two further 25bps cuts this year. The cut came despite inflation remaining above the Fed’s 2% target level, as a deteriorating labour market is now viewed as a more pressing concern. However, data released since, including better-than-expected jobless claims and GDP figures, has tempered bets for further rate cuts.

European markets (Euro Stoxx 600 Index: +0.9%) struggled for momentum as fiscal concerns continued to weigh on sentiment, with ongoing tariff negotiations (most recently related to metals) creating further hesitation in the market. The European Union’s Trade Chief, Maros Sefcovic, plans to meet with US Trade Representative, Jamieson Greer, to try and restart stalled talks to lower tariffs on steel and aluminium exports. The European Central Bank (ECB) kept interest rates unchanged, as expected, with the Governing Council reaffirming its determination to anchor inflation at 2% in the medium term, emphasising a cautious, meeting-by-meeting, data-driven approach. ECB President, Christine Lagarde, also said that growth risks in the region are more balanced and the disinflationary process is over.

Moving over to the Asia-pacific region, China (MSCI China Index: +6.3%) delivered a robust performance despite generally soft economic releases, as investors remained focused on possible further stimulus measures and (hopefully) easing trade tensions. The tech sector was also in the spotlight (MSCI China Tech Top 100 Index: +10.1%) after Alibaba announced that it would boost AI spending beyond its original $50 billion plan, joining global tech rivals in the race for breakthroughs. Alibaba’s plan to increase AI spending also coincided with similar promises to up capex by the likes of regional peers Tencent and Baidu. Huawei also laid out its AI roadmap which showed that the group has secured reliable manufacturing capabilities to support its ambitious AI plans – management has emphasised the importance of building a local semiconductor ecosystem capable of withstanding global supply chain disruptions. At its September policy announcement, the People’s Bank of China (PBoC) kept lending rates unchanged at record lows for a fourth consecutive month amid signs of subsiding Sino-US trade tensions, but against a backdrop of weakening domestic momentum and fresh US policy easing. News out of Japan (MSCI Japan Index: +3.7%) included plans by the Bank of Japan (BoJ) to offload its huge portfolio of exchange-traded funds, a sign of growing confidence in the economy despite challenges including President Trump’s tariffs.

While most sectors in the local market delivered a lacklustre performance, mining counters continued to benefit from higher commodity prices amid a softer dollar which led to record breaking gains in the resources sector (JSE Africa Resources 10 Index: +25.6%). This rally pushed the bourse up 5.4% for the month (JSE All Share Index: +7% in USD terms). The South African Reserve Bank (SARB) opted to keep the repo rate unchanged at 7% during the September meeting (in line with market expectations), citing possible inflationary pressures from new trade tariffs and global uncertainty as influencing factors while reiterating a subdued outlook for the domestic economy.

Outlook

Local

• Growth indications turned positive in 2Q25, with real GDP posting growth of 0.8% q/q seasonally adjusted and 0.6% y/y. While the latest data has allowed us to uphold our expectation that growth will average 1.0% this year, there could be enough momentum that builds up in 2H25 to support expectations of above 1% growth by other forecasters.
• High-frequency data showed a resilient start to 3Q25 in mining, supported by higher commodity prices, as well as the retail sector. Manufacturing activity remains volatile and constrained by tepid demand. While we still expect slow inflation and monetary easing to support demand, we worry that poor business and consumer sentiment will contain investment and discretionary spending growth. Furthermore, the risk of rising imports of highly competitive consumer goods on local manufacturing is material. That said, credit growth is lifting in the corporate space, signalling that businesses are at least looking to sustain current operations. A stronger turn in demand and easier business conditions will support capacity investment.
• Inflation should remain below 4% in 2H25 and average 3.3% this year. Over the medium term, inflation is expected at around 3.5% in 2026 and 2027 before falling towards 3% in 2028. This will be supportive to real income growth and easier monetary policy. We predict that as inflation expectations slow towards the 3% objective, monetary policy easing will continue. We believe this should happen within the next year without any negative inflation shocks, and the policy rate should drift towards 6% in the next few years – further supporting demand.
• Lower borrowing costs will also assist fiscal consolidation. National Treasury and SARS have performed well in containing spending growth and mobilising revenue, however, to manage operational and contingent risks, more will need to be done. This will include supporting the traction in growth-enhancing cost-reducing reforms and narrowing SA’s risk premium.

Global

• Proposed policy changes by President Trump (tariffs, taxes, deportations, and deregulation) are increasing uncertainty in global markets and economies. Implementation (or lack thereof) of these policies will dictate the direction of markets over the next few months. Although some trade agreements have been reached with certain countries, which could remove some uncertainty, the tariff levels are still higher than what was expected at the beginning of the year. Tariffs on sectors (like Pharma) have also kicked in. Geopolitical events (Israel/US/Iran and Russia/Ukraine) are also contributing to the uncertainty.
• Other actions from the Trump administration, like firing Fed governors, firing the labour statistics boss, and taking stakes in private companies, are adding uncertainty and is testing the credibility of the independence of the central bank.
• US growth expectations for 2025 have fallen from 2.3% at the start of the year to about 1.3% after ‘Liberation Day’ in April, but expectations have started to improve again to 1.7%. Second-quarter growth in the US surprised to the upside, returning 3.8% versus an expectation of 3.3%.
• This month, US CPI and core CPI came out at 2.9% and 3.1%, respectively, slightly higher than expectations. Goods inflation is showing some evidence of tariff passthrough. Inflation expectations are still elevated; University of Michigan one-year inflation expectations printed 4.7% from 4.8% in the previous month. This is still some way off the 2% target of the Fed. Shelter inflation and core services should continue to trend lower, causing overall inflation to move down towards target, but risks remain that inflation proves “stickier” than expected (depending on the rates where tariffs eventually settle).
• The Fed’s interest rate cutting cycle that started in September 2024 resumed in the month. The Fed cut rates by 0.25% to 4.00% to 4.25%, as expected. Downside risks to employment were the main driver for the cut, as inflation is still above target. The cut was described as a “risk-management cut”. Markets are forecasting another two cuts (of 0.25% each) for 2025, as well as another two cuts in 2026.
• After a strong Chinese 2Q25 GDP print of 5.2% y/y, data broadly disappointed in August and September. Retail sales, industrial production, fixed asset investment, and property investment all slowed. Authorities are expected to step in and stimulate the economy with fiscal support. Exports to the US have fallen sharply but exports to the rest of the world have increased by a similar amount as China seeks new trading partners to overcome steep US tariffs.
• The US dollar weakening trend paused in September with the USD index flat for the month. The dollar index is down by almost 10% year-to-date. Capital flows for the year have been out of the US into other less expensive markets as uncertainty remains (with Europe and emerging markets the biggest beneficiaries).
• Gold and platinum also performed well in September, rising by 9% to $3 760 per fine ounce and 15% to $1 580, respectively. Reasons include central bank buying, geopolitical tensions, uncertainty around policies, and growing investor appetite.
• Given all the above uncertainties, we are closely aligned to our strategic asset allocation benchmarks, with a slight defensive twist.