Written by Shane Balkham
The past few weeks have seen the media vultures circling over the AI-driven technology stocks, as investors took profits and global equities remained under pressure, waiting for the bellwether results from Nvidia. Nvidia’s results were strong, with the near-term outlook for its chips remaining robust, however, that is where the weakness lies. In order to sustain the current valuation, Nvidia needs the requirement for its products to remain high, as any sign of cooling demand could have investors questioning its dominance.
Nvidia’s shares initially rallied on the results, as did global equities, but slid backwards over the rest of the week. Global equities are down for the month of November, as the uncertainty of the impact of the US government’s closure and the sustainability of the AI-driven market weighed heavily on investors.
We wrote about the reopening of the US government in last week’s publication, and that means we are now seeing economic data being published. The problem is as the US government was shut for over six weeks, the data being published is stale. The September jobs report showed that although 119,000 jobs were added, much greater than the consensus expectation of 53,000 jobs, unemployment reached its highest level for four years. To add to the gloom, the prior two months’ results were revised downwards by 33,000. This will complicate the Federal Reserve’s decision on whether to cut interest rates next month. Making matters worse for the members of the Federal Open Market Committee (FOMC), the US Bureau of Labor Statistics (BLS) confirmed that it will be cancelling both its October consumer price index (CPI) report and October employment report. This was mainly due to being unable to retrospectively gather and obtain some data that was not collected during the government shutdown. The next inflation and jobs report, for November, will be issued on 18th December, after the FOMC meeting.
The odds of a rate cut by the Federal Reserve have dropped significantly, despite President Trump’s very public rebuking of both Jerome Powell (Chairman of the Federal Reserve) and Scott Bessent (Secretary of the Treasury) for not delivering on lower interest rates. If the decisions by the Federal Reserve are heavily based on data, and that data is either stale or not available until after their next meeting, it seems unlikely the committee with have enough confidence in the state of the US economy to deliver the presidentially desired rate cut.
Last week was not all about the US. In the UK, we had our latest and freshest data release for inflation in the UK. The Consumer Prices Index (CPI) rose by 3.6% in the 12 months to October 2025, down from 3.8% in September. Inflation had been static over the third quarter at 3.8%, which matched the forecasts from the Bank of England, which, in its latest report, had judged inflation to have peaked. The largest contributor to driving inflation down was gas and electricity prices, which rose by less than this time last year. Food prices are still the primary component of pushing inflation up.
So, this slight drop tallies with the expectations of the Bank of England, which is also seeing an easing of growth in the UK and some weakening in the labour market. Although the direction of travel is improving, the wider economic backdrop does remain fragile. Evidence of reducing inflation is welcome, however, subdued economic growth and a fading labour market does leave the UK at risk.
However, the UK stock market has been resilient, with the FTSE All Share delivering strong double-digit returns year to date. The spread of returns across regional equities has been a significant factor this year, the opposite of last year, which saw US equities as the dominant asset class.
Being appropriately diversified over the long term continues to deliver strong outcomes for our clients, particularly during periods of market stress, where keeping your head and staying invested is the right course of action.
All performance figures are stated in Sterling terms, unless otherwise specified.
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All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 24th November 2025.
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