Global Market Overview
Global equity markets entered the final quarter of 2025 with measured optimism, buoyed by the Federal Reserve’s long-anticipated rate cut in September — its first since 2024. The decision to trim rates by 25 basis points to 4.25% signaled a clear shift toward policy accommodation amid easing inflationary pressures and softening growth indicators. In USD terms, the MSCI World Index advanced 0.64 % in September, bringing year-to-date gains to 17.43%, while the broader MSCI ACWI rose 1.04 % for the month and 18.44% YTD. The S&P 500 added 1.03%, led by continued strength in the technology and communication sectors, whereas global real estate lagged, with the S&P Global REIT Index declining 1.63%.
Emerging markets continued their outperformance streak, with the MSCI EM Index climbing 4.48% in September and 27.53% year-to-date, fueled by a weaker US Dollar and resilient commodity prices. China and Hong Kong were the primary drivers, with the Hang Seng Index rising 5.14% as stimulus measures and stronger industrial production data underpinned investor sentiment. Meanwhile, Japan’s Nikkei 400 edged up 2.43%, supported by stable domestic demand and a firmer Yen, while the FTSE 100 gained 1.47%, as UK assets benefitted from expectations of further monetary easing by the Bank of England.
Across the Atlantic, US bond yields eased in response to the Fed’s dovish pivot, boosting risk appetite and supporting global credit spreads. However, market breadth remained narrow, with the bulk of returns still concentrated in top technology names. The NASDAQ 100 gained 2.82% in September and 17.91% YTD, underscoring the enduring dominance of the AI and semiconductor sectors. Despite these gains, valuations remain elevated, particularly in the US, where consensus earnings revisions have begun to plateau. Investors appear increasingly reliant on liquidity and fiscal support rather than fundamental growth acceleration.
Europe and the UK remained more restrained, weighed by stubborn core inflation and fragile industrial output. The Eurozone’s CPI crept back above 2%, keeping the ECB cautious about additional cuts. By contrast, emerging markets enjoyed renewed capital inflows, driven by Dollar weakness, improving trade balances, and stronger commodity exports — themes particularly beneficial for resource-linked economies such as South Africa and Brazil.
Overall, global markets closed the third quarter with a tone of cautious optimism. The Fed’s pivot, softer inflation data, and ongoing resilience in corporate earnings helped extend equity gains, but the balance between policy easing and slowing growth continues to define the global investment landscape.
South African Market Overview
On the local front, September proved another strong month for South African assets. The FTSE/JSE All Share Index advanced 6.61% in ZAR terms (+9.33% in USD), extending its year-to-date gain to 31.73% (+44.08 % in USD). Domestic bonds also delivered solid performance as yields declined alongside global rates — the FTSE/JSE All Bond Index rose 3.32% in the month and 14.02% YTD. However, property lagged; the FTSE/JSE SA Listed Property Index slipped 0.96%, reflecting lingering caution around liquidity, refinancing costs, and muted rental growth. The STeFI Composite added 0.58%, underscoring the opportunity cost of remaining overly defensive in a momentum-driven environment.
The Rand strengthened modestly during the month, aided by renewed risk appetite and firmer commodity export earnings. Investor sentiment was further buoyed by the South African Reserve Bank’s previous decision to adopt a lower inflation target earlier in the quarter, which markets interpreted as a structural step toward longer-term price stability. Headline CPI remained within target at 3.4%, while core inflation eased slightly, opening the door for potential further rate cuts into 2026.
Macroeconomic conditions, though improving, remain mixed. Mining and manufacturing output showed modest recovery, supported by gold and platinum-group metals, but load-shedding disruptions and logistical bottlenecks continued to cap industrial momentum. Fiscal challenges persist as government revenue growth remains subdued; however, investor confidence has improved as public-private partnerships in logistics and energy gain traction. In this context, South African risk assets benefited both from global tailwinds and a recalibration of domestic expectations, with resource counters, gold miners, and globally exposed large caps leading market gains.
The performance divergence between equities and property underscores investors’ preference for liquidity and earnings visibility amid ongoing structural reform uncertainty. Nonetheless, the domestic market’s resilience — both in equities and bonds — reaffirms South Africa’s relative attractiveness in an environment where real yields remain positive and valuations compelling.
Key Insights from Weekly Investment Team Meetings
- Gold and gold miners showed strong bullish momentum, with bullion breaking out of a six-month consolidation and targeting levels near USD 3 700. Gold Fields and AngloGold Ashanti were viewed as undervalued relative to metal prices.
- PGMs, particularly platinum and palladium, continued to benefit from supply constraints and renewed auto-sector demand.
- Rising long-term bond yields in developed markets, notably Japan and parts of Europe, were flagged as potential headwinds for global duration, though South African bonds remained supported by attractive real yields.
- US equity markets continued to enjoy support from solid corporate margins and the prospect of additional monetary easing, but narrow market breadth raised caution.
- The team reaffirmed the importance of maintaining a barbell strategy — balancing growth exposures in global and emerging markets with defensive positioning in bonds, gold, and cash.
- Diversification, liquidity management, and tactical flexibility remain central to navigating elevated global uncertainty.
Portfolio Performance and Strategy
Portfolio positioning remains consistent with our established barbell approach — balancing growth exposure with defensive stability. We retain an overweight to emerging market and South African equities, both of which continue to deliver superior relative performance. Exposure to global developed market equities remains concentrated in high-quality growth and technology themes, though valuations have prompted selective trimming. Within fixed income, we maintain core allocations to South African government bonds, which continue to offer compelling real yields and act as an effective stabiliser amid global volatility. Cash levels are kept slightly above neutral to allow tactical flexibility in the event of short-term market dislocations.
Looking ahead, our strategy remains anchored on three principles: maintaining diversification across regions and asset classes; capitalising on structural trends such as Artificial Intelligence, energy transition, and commodity reflation; and preserving downside protection through prudent risk management. With global monetary conditions easing and inflation stabilising, the investment environment appears supportive — but the high wire of geopolitical and fiscal uncertainty demands continued vigilance and adaptability.
Source of all data: Morningstar, unless otherwise stated.
Jacques de Kock
Quantitative Analyst & Portfolio Manager
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