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Investment market update: September 2025

Published: October 7, 2025 by Jennifer Armstrong

There were ups and downs for investors during September 2025, with disappointing economic data dampening the market at times. However, some positive outcomes also emerged. Read on to find out what might have influenced your investment portfolio’s recent performance.

Investors turn to gold as market uncertainty continues in September 2025

The price of gold reached a record high of $3,508.50 (£2,600) an ounce on 2 September. Gold is often viewed as a “safe” asset, so the rising value could signal that investors are feeling nervous about the outlook for the equity market.

As gold prices rose, markets in the UK, Europe, and the US declined.

On 2 September, the FTSE 100 fell 0.43%. Among the biggest losers were retailers Marks & Spencer (-3.6%) and Sainsbury’s (-2.5%), and housebuilders Taylor Wimpey (-3.4%) and Barratt Redrow (-2.5%).

Similarly, key indices fell in Europe and the US, including Germany’s DAX (-1%), Spain’s IBEX (-0.9%), Italy’s FTSE MIB (-0.9%), and the US’s S&P 500 (-1.2%).

Shares in airlines tumbled on 4 September after Jet2 told investors it expected earnings this year to be on the lower end of forecasts. The announcement sent the company’s shares down 14% and had a knock-on effect on other airlines, including easyJet (-4.2%) and IAG (-2.3%).

Rising tensions between Russia and Europe led to defence company BAE Systems’ share price rising 2.9% on 11 September. The jump made the company the biggest riser on the FTSE 100, which gained 0.37%.

On 11 September, hopes that the US Federal Reserve would cut interest rates lifted the major Wall Street indices, including the Dow Jones (0.5%) and S&P 500 (0.25%).

Then, on 24 September, after President Donald Trump said that Nato aircraft should shoot down Russian aircraft entering its airspace, European defence stocks jumped. The two biggest risers on the FTSE 100 were Babcock International (1.9%) and BAE Systems (1.5%). Other companies whose share prices increased included France’s Thales (1.7%), Germany’s Rheinmetall (1.4%), and Italy’s Leonardo (2.8%).

After signs that the US trade war had eased in August, Trump unveiled new tariffs on 26 September.

From 1 October, medicines and pharmaceutical goods will face a 100% tariff when entering the US. Unsurprisingly, this caused shares in firms within this sector to fall, including AstraZeneca (-1.4%). The US will also impose tariffs of between 25% and 50% on other goods, including heavy-duty trucks and kitchen cabinets.

UK

Official data for July showed GDP was unchanged from the previous month.

The inflation rate for the 12 months to August was 3.8%, prompting the Bank of England to keep interest rates static.

UK borrowing costs reached a 27-year high in September due to higher interest rates on national debt. The additional cost ate into the headroom available in the November Budget, placing pressure on the chancellor, who reportedly needs to plug a £50 billion gap in the public finances.

The effect of Trump’s trade war was also visible in the figures released in September. According to the Office for National Statistics, the trade deficit widened by £400 million to £10.3 billion in the three months to July 2025.

Data from S&P Global’s Purchasing Managers’ Index (PMI), an economic indicator, painted a weak picture for the manufacturing sector. The PMI reading was 47 in August (readings above 50 indicate growth). This was the 11th consecutive month the PMI remained below 50.

However, the PMI data wasn’t all negative. The service sector hit a 16-month high in August 2025 with a reading of 54.2. Encouragingly, sales to the EU and US rose, which could suggest long-term growth.

Technology investors welcomed the news that US tech giant Nvidia pledged to invest £2 billion in UK firms, which could boost the sector.

Europe

Inflation across the eurozone was 2.1% in the 12 months to August 2025, only slightly above the European Central Bank’s (ECB) target of 2%. Cyprus recorded the lowest inflation rate at 0%, while Romania had the highest rate at 8.5%.

The ECB raised its eurozone growth forecast for this year to 1.25%, up from 0.9% in June. However, it tempered this rise with a slightly lower forecast of 1% for 2026.

The bloc also received other positive news. HCOB’s eurozone manufacturing PMI was 50.7 in August, a 14-month high. Meanwhile, unemployment dipped to a record low of 6.2% in July, according to data from Eurostat.

The European Commission’s economic sentiment tracker improved in September, suggesting greater confidence in the outlook after the EU struck a trade deal with the US.

This month also saw an interesting initial public offering for investors. Swedish fintech company Klarna is set to debut on the New York Stock Exchange with a value of more than $14 billion (£10.9 billion).

US

US inflation continued to be above the Federal Reserve’s 2% target at 2.9% in the 12 months to August 2025. This was partly due to businesses passing on the cost of tariffs to consumers.

The data led to the Federal Reserve cutting the interest rate by 25 basis points, and economists expect further cuts before year-end.

Job data from the Bureau of Labor Statistics may suggest that businesses aren’t feeling confident enough to hire new employees. The US economy added only 22,000 new jobs in August, well below the expected 75,000.

Alphabet, Google’s parent company, reached a new high on 15 September after shares increased by almost 4%, pushing its value to $3 trillion (£2.2 trillion) for the first time.

News was less positive for Tesla. The company’s share of the US electric vehicle market fell to 38%, down from more than 80% at its peak, amid rising competition.

Asia

The effects of Trump’s trade war were evident in official figures from China.

Chinese export growth slowed to a six-month low in August. Exports increased by 4.4% year-on-year, down from 7.2% in the previous month. Shipments to the US fell 33%, and a 22.2% rise in exports to Southeast Asian nations wasn’t enough to offset the decline.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.


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