Take Two: Markets on track for robust 2025 returns; German economy stagnates in Q3

What do you need to know?                 

Following a volatile few weeks, markets have enjoyed a more benign period over recent days, boosted by hopes of a US interest rate cut. But while the recent wobble has taken some of the shine off this year’s rally - especially in the technology sector which was weighed down by valuation concerns - markets enter December with year-to-date total returns across major indices firmly in positive territory. Over the period to Thursday’s close, the S&P 500 and technology-heavy Nasdaq were up 17% and 21% respectively while the MSCI Emerging Markets and MSCI Europe indices were each ahead by 30%. Additionally, the JP Morgan Global Government Bond Index was up 7% and the ML Global High Yield Index was ahead by 10%.*

* Source: FactSet, data as at 27 November 2025. US dollar terms

Around the world

While trade policy uncertainty “could surge again” the acute risk of a widespread trade war appears to have abated, according to the European Central Bank’s Financial Stability Review. It said concerns over stretched public finances could potentially strain global bond markets, while equity market sentiment could shift suddenly if growth prospects deteriorate, or companies fail to deliver on earnings expectations. However, it added that the Eurozone banking system “has shown resilience to recent shocks, underpinned by strong capital, liquidity and profitability”.  Elsewhere, markets had a muted reaction to the UK’s much anticipated Budget on Wednesday with 10-year gilt yields easing slightly on the day. 

Figure in focus: 0%

The German economy stagnated in the third quarter (Q3), recording 0% growth on a seasonally adjusted basis compared to a contraction of 0.2% in Q2. Weak exports dampened activity, while household consumer spending declined for the first time since Q4 2023, though government spending increased. Separately, Germany’s closely watched Ifo Business Climate Index fell in November as companies remained unconvinced that Europe’s largest economy can boost growth. The Ifo index, which is based on approximately 9,000 responses from businesses in services, manufacturing, trade and construction, slipped to 88.1 over the month, down from 88.4 in October. 

Words of wisdom

Global Mutirão: Meaning ‘collective effort’, November’s COP30 summit called for a ‘Global Mutirão’ – a plea for the world to take unified action against climate change. However, hopes for a roadmap to phase out fossil fuels failed. The United Nations conference saw representatives agree to a tripling of adaptation finance to support “those least responsible for climate change but most affected by its impacts” while a just transition mechanism was also adopted, aiming to ensure a fair and equitable move to a low-carbon economy, supporting those impacted by the change. Nearly 200 countries attended the summit, though the US did not send a delegation.

What’s coming up?

On Tuesday, updated Eurozone inflation numbers are issued - the bloc’s annual rate was 2.1% in October, down from 2.2% in September. Wednesday sees Australia report Q3 economic growth data while composite Purchasing Managers’ Indices (PMIs) for the Eurozone, Japan, the UK and US are also published. On Friday, the Eurozone releases unemployment numbers and a third estimate for Q3 GDP growth. The previous estimate put growth at 1.4% year-on-year, slightly below Q2’s 1.5%.