Developed market (DM) equities ended the quarter strongly (MSCI World Index +3.3% MoM and 4.7% QoQ), leaving them up 17.9% YTD. The mega-cap tech and AI cohorts were leading from the front again (Tesla +33% MoM, Alphabet +14% MoM, Apple +10% MoM). Oracle, another beneficiary of the AI revolution, saw its share price soar (+24% MoM) as its latest earnings release showed the backlog of future business had spiked to US$455bn (up from US$138bn three months prior). In an indication of how concentrated the 2025 YTD returns have been, 6 of the 11 S&P 500 sectors have delivered single-digit YTD returns despite the index’s 15% YTD return. Some of the underperforming sectors include Healthcare (+2.6% YTD), Consumer Staples (+3.9% YTD) and Consumer Discretionary (+5.3% YTD).
Emerging market (EM) stocks also had a very strong September (MSCI EM Index +7.2% MoM), leaving them comfortably ahead of their DM peers in 2025 (+28% YTD vs +18% YTD). Chinese stocks, particularly those listed outside Mainland China, were a key driver of EM performance as they maintained their recent strong momentum (Hang Seng China Enterprises +7.3% MoM and +35% YTD). Although precious metal miners are a small component of the MSCI EM Index (c. 2.5%), they also contributed strongly to September’s MSCI EM Index performance, with that cohort up 15% MoM and 76% YTD in aggregate. A 12% MoM rally in the gold price (+47% YTD) and a 15% MoM rally in the platinum price (+74% YTD) were the key drivers of the miners’ performance.
The latest US payroll data continued a recent disappointing run for the US labour market, with only 22,000 jobs added in August, well below consensus expectations (75,000) and the typical rate of >200,000 jobs added per month in a healthy US economy. The payroll data was cited by US Federal Reserve (Fed) chair, Jerome Powell, as the rationale behind the committee’s latest, much-anticipated, 0.25% rate cut. Investors are anticipating another 0.5% of Fed rate cuts in 2025 and 0.75% of US rate cuts in 2026. The US government’s 10Y borrowing rate dropped slightly during the month, though it remains above 4% p.a. (4.15% p.a.). The US dollar stabilised in 3Q25 (Dollar Index +0.9% QoQ) after experiencing significant weakness in 1H25 (-11%).
