Stay up to date with the latest market trends, economic shifts, and key financial developments across the UK, US, and Asia – helping you guide client conversations with clarity and confidence.
This week's headlines
- US-EU trade deal implemented – President Trump put into effect a major trade deal on Wednesday, which included a notable lowering of tariffs on autos from 25% to 15%, backdated to 1st August. A boost for manufacturers, though wider trade tensions remain.
- US growth boost – the US economy expanded by 3.8% in Q2, beating previous estimates of 3.3%, driven by consumer spending.
- China holds steady on lending rates – The People’s Bank of China kept their 1-year and 5-year Loan Prime Rates – which act as benchmarks for borrowing and mortgage rates respectively – at record lows against a tough political and economic backdrop.
- UK services sector slows – Purchasing Managers' Index (PMI) data for September shows a slowdown in services as rising costs, and heightened geopolitical concerns weigh on sentiment.
- Euro confidence improves – Euro Area consumer confidence rose in September, beating expectations, helped by lower inflation and easing interest rates.
What this means for financial advisers and clients
In the UK, the Bank of England’s (BoE) decision to hold interest rates last week was followed by a cautious tone from members of the decision-making Monetary Policy Committee (MPC), who stressed inflation risk remains. An argument hindered by the latest falling PMI data across both services and manufacturing, suggesting economic activity is slowing down.
Looking at global trade, while the US-EU trade deal is good news for auto companies, Trump has since unleashed further restrictive measures against the global pharmaceutical industry, announcing 100% tariffs on all imports. Stocks in the sector fell on the news.
Chart of the week - US small-cap resurgence
Source: Charlie Bilello, September 2025
Why this matters
While large-cap indices in the US and globally have hit repeated record-highs in recent years, this hasn’t been the case for small-caps. This area of the market has lagged behind its larger peers. A key factor has been the rising interest rate environment, which has tended to weigh more heavily on smaller companies with larger amounts of debt and higher borrowing costs.
But as western economies have now moved into an interest-rate cutting cycle, small-cap fortunes have staged an impressive comeback. This is highlighted in the chart above, with the US Russell 2000 small-cap index hitting its first all-time high since late 2021.
At Parmenion, small-caps are an asset class we remain biased towards in our solutions, and with the valuation gap between them and larger stocks still remaining at historically high levels, significantly more growth potential remains.
The Markets
UK markets hold steady
Despite gains in the retail sector - led by Kingfisher - UK markets remained subdued. Concerns around slowing economic activity and the prospect of Autumn tax hikes kept sentiment muted.
US cautiously positive
The US was again lifted by the tech and AI-related sectors. This included names such as Intel which rose on planned partnerships and increased investment activity. However, investors remained concerned by central bank comments that a cautious approach to cutting interest rates will be maintained.
Japan leads the way
Japan maintained its steady growth over the week with the tech and semiconductor industries leading the way. All eyes are now on Tokyo’s latest inflation data – due today – which could shape expectations for the Bank of Japan’s policy path.
Oil and gold edge higher
Oil rose as geopolitical tensions and stalled supply talks outweighed fears of oversupply. Gold rose on similar geopolitical concerns, alongside increased investor inflows into bullion-backed ETFs.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -0.01% | 16.02% |
| FTSE 250 | 0.05% | 7.61% |
| S&P 500 | 0.11% | 6.07% |
| NASDAQ | 0.08% | 9.40% |
| FTSE Developed Europe Ex-UK | -0.47% | 17.87% |
| FTSE Emerging Markets | 0.94% | 15.74% |
| FTSE Japan | 1.04% | 13.52% |
| Brent Crude | 2.54% | -7.36% |
| Gold Spot | 2.89% | 39.54% |
| UK 10yr Gilt yield | +4bps | +15bps |
| US 10yr Treasury yield | +7bps | -40bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 25th September 2025.
Stay tuned for next week’s market insights
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
