Investment update – November 2025

What happened in markets?

It was a flat month for global stock markets after what feels like a long period of uninterrupted gains following the market sell-off in the aftermath of the US tariff shock in April. Most regional stock markets eked out small gains, or posted modest losses, although emerging markets were the outlier, after falling by just over 3%. It was a similar story with global government bonds, although Japanese government bonds underperformed in anticipation of further interest rate hikes (rising interest rates usually being a negative for bond prices), going against the grain of most other major developed market central banks being in “rate-cutting” mode.

After a period of consolidation, gold enjoyed a strong month, rising by nearly 4.5%, with global listed property and infrastructure stocks also posting gains, albeit more modest. Oil prices fell on a potential breakthrough in negotiations between Ukraine and Russia, although the US would appear to be acting on behalf of the Ukrainian government.

The UK Budget landed fairly well with the bond markets, particularly since “fiscal headroom” (essentially the extra “cushion” between the Government’s spending plans and its own long-term commitments) is forecast to increase to over £20bn, and Gilt issuance for the remainder of this year and for 2026/7 was lower (meaning the Government will borrow less) than market participants feared. Bond yields, which move inversely to bond prices, were also driven lower by the Government’s action on energy bills and rail fares, and the likelihood that this should see inflation fall further next year. UK equities also enjoyed a relief rally with a major “risk event” (namely the Budget) out of the way and some scope for interest rates to fall further.

The US government shutdown has reduced the availability of timely economic data, but the data that have been released continue to point to a gradual slowdown in the economy, with the central bank, the US Federal Reserve, expected to reduce US interest rates once again in December. The US economy has been described as “K” shaped, reflecting the divergence in fortunes between high- and low-income households, an issue which may be exacerbated by looser monetary policy.

Source: Morningstar Direct, total return in GBP or hedged to GBP for bonds, for the calendar month.

What did we do with the funds?

It was a quiet month for portfolio activity as markets paused for breath, and the US government shutdown meant investors had fewer economic releases to digest.

Bonds continue to look very attractive from a portfolio construction perspective – a growth shock would likely hurt corporate earnings and therefore equity valuations. Meanwhile, we are receiving attractive levels of income from our bond exposure, and the potential for some capital growth, should inflation and interest rates move lower (which would be positive developments for bond markets).

Stock markets outside of the US have enjoyed a valuation re-rating, delivering strong absolute returns, but somewhat masking the fact that US companies have delivered superior earnings growth this year, alongside Japanese equities.

What is the outlook?

Global growth has surprised to the upside in recent years, and with the tailwind of lower interest rates and looser fiscal policy, where government
spending is set to increase in countries including Japan and Germany in 2026, the consensus may be too pessimistic once again. We expect December interest rate cuts from the US Federal Reserve and the Bank of England, with the Bank of England likely to follow up with one or two more cuts early next year.

The UK Budget was better than feared, at least in the short term, with the economy receiving a boost from higher government spending and most of the announced tax rises deferred for another couple of years. Lower energy bills and falling interest rates should benefit consumer confidence and household balance sheets, although the Office for Budget Responsibility has lowered UK growth forecasts beyond this year. There is also a sense of frustration that the Labour government has failed to deliver any meaningful pro-growth policies or much-needed tax reform, despite such a stronghold on parliament.

As we highlighted last month, some consolidation of stock markets in the near-term should not be unexpected, given the double-digit returns from several major stock markets this year, although we note that despite lagging other regions, US companies have delivered superior earnings growth. The prospect of significant gains from investments by companies in artificial intelligence remains key to ongoing US corporate earnings growth, but it is also increasingly important to tech-heavy regions such as Asia-ex Japan.

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Important information:

This document is issued by Shackleton, which is a trading style of Shackleton Advisers Limited. Shackleton makes no warranties or representations regarding the accuracy or completeness of the information contained herein.  We have prepared the following document based on our view of the current market. Nothing in this document shall be deemed to constitute financial or investment advice in any way. We recommend you speak to your adviser before making any decisions.  This document shall not constitute an invitation or inducement to any person to engage in investment activity. Past performance is not a guide to future returns and the value of capital invested and any income generated from may fluctuate in value.