Week ending 26th September 2025.

Global markets were mixed last week, with U.S. stocks pulling back as hawkish central bank commentary tempered investor optimism following recent gains. Major U.S. indices ended the week slightly lower, reflecting cautious sentiment after Federal Reserve officials dampened expectations for further rate cuts.

UK and European markets remained resilient despite fresh U.S. tariffs announced on Thursday. President Donald Trump unveiled a new round of import duties, including 100% tariffs on branded or patented drugs unless the manufacturer has already begun building a U.S. production facility. Additional tariffs targeted furniture, kitchen cabinets, and heavy-duty trucks.

Pharmaceutical stocks broadly shrugged off the news. Many major drugmakers are well-positioned, with existing U.S. operations or substantial investment commitments already in place. While smaller firms may face greater pressure, the announcement was largely priced in following months of signalling from the White House.

Although Trump has warned that tariffs could eventually rise as high as 250%, UK firms such as AstraZeneca appear better placed, given their existing U.S. investments and indications that the UK may receive preferential treatment in future trade negotiations.

Beyond tariffs, market attention shifted back to the health of the U.S. economy. Durable goods orders rose by 2.9% in August, sharply reversing July’s decline and beating expectations for a fall. While encouraging, part of the increase likely reflects higher prices due to tariff-related input cost pressures, rather than stronger volumes.

Major global indices posted decent gains on Friday, rebounding after the recent sell-off, as the Federal Reserve’s preferred inflation measure came in as expected. The core personal consumption expenditures (PCE) index rose 2.9% year-on-year in August, unchanged from July and in line with forecasts. On a monthly basis, core PCE rose 0.2%, while headline PCE climbed 0.3% from July and 2.7% from a year earlier. These steady but elevated readings reassured markets, but underscore the challenge facing the Federal Reserve, with inflation remaining above target for nearly five years. Markets remain divided over the Fed’s next steps.

Chinese onshore equities ended the week higher, supported by progress among domestic AI startups and Beijing’s “anti-involution” campaign aimed at curbing excessive price competition. These tailwinds have buoyed sentiment despite ongoing concerns around slowing growth and deflationary pressures.

Looking ahead, several events next week could test investor sentiment, though history suggests markets tend to take them in stride. The U.S. government faces the prospect of a shutdown from early Wednesday should Congress fail to pass a funding bill before the fiscal year ends on Tuesday. While such standoffs can briefly delay the release of key data including Friday’s jobs report investors have seen similar episodes play out with limited long-term impact. Attention will turn to the U.S. labour market, with September’s non-farm payrolls and unemployment rate due, alongside ISM services PMI. In Europe, the latest inflation figures will be closely watched, while Chinese markets will be closed for the Golden Dragon holiday.

Kate Mimnagh, Portfolio Economist 

The latest market updates are brought to you by Investment Managers & Analysts at Wealth at Work Limited which is a member of the Wealth at Work group of companies.

Links to websites external to those of Wealth at Work Limited (also referred to here as 'we', 'us', 'our' 'ours') will usually contain some content that is not written by us and over which we have no authority and which we do not endorse. Any hyperlinks or references to third party websites are provided for your convenience only. Therefore please be aware that we do not accept responsibility for the content of any third party site(s) except content that is specifically attributed to us or our employees and where we are the authors of such content. Further, we accept no responsibility for any malicious codes (or their consequences) of external sites. Nor do we endorse any organisation or publication to which we link and make no representations about them.