UBP House View - November 2025

Scepticism and fatigue surrounding artificial intelligence (AI), coupled with the ongoing US government shutdown and mounting concerns about the labour market, weighed on investor sentiment. The global technology sector declined, despite a steady stream of upbeat news related to AI. As the earnings season draws to a close, markets are now looking for supportive macroeconomic signals to restore confidence.

The Fed's 25-bp rate cut, paired with Powell's cautious tone on further rate reductions, led to mixed market reactions. Despite this, strong earnings, particularly in the tech sector, supported equities, while bond yields rose. The USD strengthened amid JPY weakness, and gold consolidated at around USD 4,000. With the eurozone showing modest growth and US consumer confidence declining, investors are focused on another heavy week of earnings and key data releases for further direction.

Resilient macro data, softer inflation and strong corporate earnings have helped global markets recover, with equities reaching new highs and bonds extending gains. Expectations of further Fed rate cuts supported sentiment, while the USD strengthened amid JPY weakness and gold consolidation. However, with valuations near cycle peaks and policy uncertainty still looming, investors remain focused on upcoming central bank meetings for direction.

The US government shutdown carries on, while the earnings season opened on a constructive note, nudging global equities higher amid softer trade rhetoric, resilient bank results and renewed hopes of Fed easing. These tailwinds, however, contrast with credit-quality concerns linked to regional-bank fraud reports and mounting unease over a potential AI-driven bubble, leaving markets more vulnerable to negative headlines. US inflation data due this week are expected to show moderate upward pressure.

Investors have been wary of circular AI investments, stretched equity valuations, the threat of the trade war escalating, and the ripple effects of a prolonged US government shutdown, which itself has further disrupted economic data. This week, Q3 earnings will be in the spotlight, with the US’s largest banks set to lead the reporting season.

The US government shutdown, which began on 1 October, has delayed the release of the closely watched non-farm payrolls report. Other economic data published last week were downbeat, reinforcing our expectation that the Federal Reserve will implement two 25-basis-point rate cuts (on 29 October and 10 December) to counter labour market weakness. Meanwhile, negotiations over government spending between the Democrats and Republicans are set to continue in the run-up to the third-quarter earnings season.

Equities are priced to perfection, yet we remain constructive but cautious, while staying upbeat on gold, where we have raised our conviction rating to 5/5.

Divergent remarks from Federal Reserve members combined with US macroeconomic data that was generally resilient have weighed on optimism for future rate cuts. Attention now turns to this week’s labour market report as a key gauge of job creation, while President Trump is set to meet Democratic and Republican leaders in an effort to avert a government shutdown.

Equities progressed following the US central bank’s 25 basis points rate cut to 4.00–4.25%, which helped fuel investor optimism. Alongside the Fed, several central banks, including the Bank of England (BoE) also met, with the latter leaving its rates unchanged at 4%. This week, attention turns to economic indicators.