The World In A Week - Opportunities in Emerging Markets
Written by Chris Ayton
Despite ongoing political and geopolitical strife in Europe, the US, and elsewhere, last week was generally a positive one for both equity and bond investors as markets focused more on the growing belief that, due to a slowing jobs market and sufficiently benign inflation reading, the Federal Reserve in the US will be able to cut interest rates a bit faster than previously expected. The MSCI All Country World Index of global equities ended the week up +1.5% and is now up over +8.3% this year. In fixed income markets, the Bloomberg Global Aggregate Index was up +0.2% in GBP Hedged terms over the week and is now up +4.0% in 2025 so far.
Emerging Markets have been enjoying a bit of a renaissance and as measured by the MSCI Emerging Markets Index, were up another +3.7% last week. This takes the index to +16.5% for the year-to-date. A weakening US Dollar, which is what we have seen this year, is generally considered good for Emerging Markets but, as ever, the underlying countries are far from homogeneous. The volatility in US tariffs has created great uncertainty, and there has been a huge divergence of returns across the constituents that make up the broad Emerging Markets Index. For example, Korea’s index is up over 40% this year, aided by an unusual bout of political stability, a number of technology related companies benefitting from AI expenditure and also a theme known as “value up” which is a government driven drive to force badly managed or in some cases, corrupt companies, to manage their business for the benefit of their shareholders. Although at a much earlier stage, there are hopes that this can drive a genuine change in corporate governance in Korea, similar to that we have observed in Japan in recent years.
While Korea has been enjoying its time in the sun, a previous market darling, India, has seen its MSCI Index fall by more than 7% in 2025. Economic growth in India has continued to be solid, with GDP forecasts approaching 7% in real terms for 2025. However, unlike other emerging market currencies, the Indian Rupee has weakened sharply, depreciating over 10% against Sterling this year, and many equities have been hit as concerns have mounted over the impact of punitive US tariffs, which were recently increased from 25% to 50% as punishment for India purchasing large amounts of discounted Russian oil. President Modi has been trying to offset the economic impact of US tariffs with a round of domestic stimulus, including a recent cut in the Goods & Services Tax (the Indian equivalent of VAT). However, with equity valuations having started the year at historically elevated levels, international investors have been taking a more cautious stance. Indeed, last week it was reported by Goldman Sachs that foreigners have sold $28bn of Indian equities over the last year.
If we look back one year ago, Indian equities were universally loved, and China was widely detested with investors regularly asking us whether China’s stock market was “investible” anymore. Since this point, MSCI China has outperformed MSCI India by nearly 70% (MSCI China +56.5%, MSCI India -12.5%). This type of volatility within a backdrop of ongoing tariff-related uncertainty is why within our Multi-Asset Blend Funds we choose to primarily utilise active managers within Emerging Markets, some of whom seek out the highest growth companies in Emerging Markets and others who look for hidden value where others aren’t looking. It is interesting to us that our primary “value” oriented manager in Emerging Markets that increased its China allocation when it was unloved, has started dipping their toes into India. However, government policy and standards of corporate governance across Emerging Markets remain volatile, and astute company selection and prudent diversification by country and investment style remain key when seeking to capitalise on the plentiful opportunities in these ever-inefficient markets.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 15th September 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 11th September
Watch the latest ‘Two Minute Missive’ from our Client Investment Director, Shane Balkham.
This video contains the opinions and views of Shane Balkham. Please work with your financial planner before undertaking any investments.
The World In A Week - When politics interferes with markets
Written by Ilaria Massei
Last week, headlines were dominated by political turmoil across key regions, and global bond markets outperformed global equity markets with the Bloomberg Global Aggregate Hedged Index delivering +0.1% and the MSCI All-Country World Index sliding -0.3%.
In the United States, President Donald Trump surprised the world by announcing the decision to fire Federal Reserve Governor Lisa Cook. While it remains highly likely that Cook will contest the removal in court, possibly escalating the matter to the Supreme Court, the move has reinforced perceptions that the White House is attempting to exert greater influence over monetary policy. This political interference has raised questions about the Fed’s independence in its monetary policy decisions, with expectations now pointing to more interest rate cuts, with the first to be delivered as soon as September.
Across the Atlantic, political uncertainty also weighed on European sentiment. In France, Prime Minister François Bayrou called for a vote of confidence to take place on September 4th, reflecting his struggle to pass a budget amid rising fiscal constraints. The uncertainty around the ability of the country to fund its expenses led to an increase in French government bond interest rates, as investors demand higher compensation for the increased risk of not being repaid. While these political developments are closely watched by our team, we do not invest directly in French bonds, but prefer investing with a global, more diversified approach to Fixed Income markets.
Amid these macro-political events, the spotlight also turned to corporate earnings, with Nvidia reporting its highly anticipated results last Wednesday. The chipmaker beat revenue expectations, reflecting continued demand in the AI and GPU sectors. However, its data centre revenues - a key driver of recent performance - came in slightly below consensus estimates, with the division generating $41.1 billion in revenue, up 56% from a year earlier, but just below the $41.3 billion analysts had forecast. As a result, the company’s share price gave back some of its recent gains.
Taken together, last week’s events highlight the increasingly complex interplay between political developments, central bank policy, and corporate performance. As markets respond to these factors, investors will need to stay nimble and avoid focusing on a single market to manage risk and capture opportunities wherever they arise.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 1st September 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 29th August
Watch the latest ‘Two Minute Missive’ from our Client Investment Director, Shane Balkham.
This video contains the opinions and views of Shane Balkham. Please work with your financial planner before undertaking any investments.
The World In A Week - US small caps shine on hopes of lower rates
Written by Ashwin Gurung
The US market rallied on Friday, helping the week close slightly higher after a shaky start, following the US Federal Reserve Chair Jerome Powell’s comments that rate cuts could come as soon as September. At the Jackson Hole symposium, Powell highlighted rising risks in the labour market, suggesting the Fed might ease policy even before inflation falls fully back to target.
The S&P 500 ended the week up +0.6%, while smaller, domestically-focused US companies as measured by the Russell 2000 Index, rallied +3.6% as the sentiment towards riskier assets increased on hopes of lower borrowing costs. Larger, tech-heavy firms on the Nasdaq-100 lagged, returning -0.6%, with ongoing concerns about the long-term sustainability of their massive AI-related infrastructure spending. Global bonds, as measured by the Bloomberg Global Aggregate Index, also reacted positively, returning +0.2%, while the most interest rate sensitive segment of the market led the way, with the Bloomberg U.S. Treasury 20+ Year Index gaining +0.7% in US Dollar terms.
While markets welcomed the Fed’s shift in tone, with inflation still above target and key economic data on the horizon, including the Fed’s preferred Personal Consumption Expenditures (PCE) inflation measure and upcoming jobs figures, the sustainability of this rally remains uncertain and could influence the Fed’s next move.
Elsewhere in the UK, prices continued to rise in July, with inflation unexpectedly hitting 3.8% year-on-year, the highest in 18 months. The Bank of England now expects inflation to climb even further, potentially reaching 4% in September, considerably higher than its 2% target. Higher-than-expected prices, combined with expectations that rates are unlikely to be cut again soon after the 25bps reduction earlier this month, have pushed UK long-term borrowing costs to a 27-year high. This poses a clear challenge for the UK government, as a higher cost of borrowing leaves less room to spend from the budget it had set aside earlier this summer and raises the prospect of needing to raise taxes even further. As a reminder, our portfolios currently do not hold any dedicated UK bond managers. We see them as less appealing than global bonds or local-currency emerging market bonds when it comes to returns, risk, and liquidity.
Despite inflation and fiscal risks, UK equities continued to climb last week, with the FTSE All-Share returning +2.0% and now up +16.2% so far this year. This year’s rally has been supported by a combination of corporate earnings resilience and investor diversification away from the US.
With policymakers caught between tackling persistent inflation and addressing signs of weakness in the labour market, the road ahead remains unclear. In this environment, we believe that maintaining a diversified investment approach and staying invested is the most prudent way to navigate uncertainty.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 26th August 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - Growth surprises and governance shifts
Written by Dominic Williams
Global equity markets posted modest gains last week, with the MSCI All Country World Index rising by +0.4%, despite a backdrop of mixed economic data and ongoing geopolitical uncertainty.
Japan was the standout performer, with the MSCI Japan Index gaining +3.1% over the week, and the price-weighted Nikkei 225 index closing at an all-time high. This was supported by stronger-than-expected GDP growth of 0.3% in Q2, ahead of consensus forecasts of 0.1%. The positive surprise came despite the imposition of a blanket 15% tariff on Japanese exports to the US. As seen in other regions, some of the strength may reflect exporters frontloading shipments ahead of tariff deadlines. Nevertheless, we remain constructive towards the Japanese asset class, supported by ongoing corporate governance reforms aimed at unlocking shareholder value, alongside rising wage growth, which is feeding through into stronger domestic demand and consumer spending.
In the UK, GDP grew by 0.3% in Q2, beating expectations of 0.1%. This marks a slowdown from Q1’s robust 0.7% growth, which was boosted by trade activity being brought forward in anticipation of US tariffs. The Office for National Statistics (ONS) also released its latest labour market overview, which showed signs of softening. Payrolled employees fell by 149,000 year-on-year between June 2024 and June 2025, while vacancies declined by 5.8% over the latest quarter. However, we continue to treat these figures with caution, given the ONS’s ongoing challenges with low response rates and data collection issues. UK equities held up relatively well, with the FTSE All Share Index rising by +0.6% over the week.
Political developments continued to influence market sentiment in the US. Following the controversial dismissal of the previous Head of the Bureau of Labor Statistics, President Trump appointed EJ Antoni as the new head. The Bureau is responsible for key economic indicators such as the Consumer Price Index (CPI) and non-farm payrolls, which are closely watched by markets and policymakers. The latest inflation data showed headline CPI holding steady at 2.7% year-on-year in July, slightly below expectations of 2.8%. However, core inflation, which excludes food and energy, accelerated to 3.1%, its highest level in five months.
Despite this, investor sentiment remained broadly positive, buoyed by growing expectations of a Federal Reserve (the Fed) rate cut at the September meeting. A Reuters poll showed 61% of economists now anticipate a 25 basis point cut, with further easing likely before year-end. However, concerns persist over the Fed’s independence, particularly following President Trump’s public criticism of Chair Jerome Powell and the politicisation of key economic institutions. The S&P 500 Index was largely flat, rising by just +0.1% over the week.
Despite the week’s gains, risks remain. Inflationary pressures from tariffs, political interference in economic data, and uneven global growth continue to cloud the outlook. As ever, maintaining a diversified investment approach and staying invested remains the most prudent strategy in navigating an uncertain environment.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 18th August 2025.
© 2025 YOU Asset Management. All rights reserved.
Two Minute Missive - 12th August
Watch the latest ‘Two Minute Missive’ from our Client Investment Director, Shane Balkham.
This video contains the opinions and views of Shane Balkham. Please work with your adviser before undertaking any investments.
The World In A Week - Chipping away at technology companies’ profits
Written by Shane Balkham
We had a third rate cut of the year from the Bank of England last week, bringing bank base rates down to 4%, the lowest since February 2023. It did take two rounds of votes to come to a majority though, with the initial voting result being 4-4-1, with four in favour of no change, four in favour of a ¼ percent reduction, and one in favour of a ½ percent reduction. The second vote saw a majority decision of 5-4 in favour of a ¼ percent cut.
There was devil in the detail, as the accompanying summary notes showed that the Monetary Policy Committee (MPC) members saw upside risks around medium-term inflationary pressures and reiterated that a cautious and gradual approach was still required in reducing bank base rates further. Whether this will lead to a dampening of the expectations for future rates cuts remains to be seen, although the Governor of the MPC, Andrew Bailey, confirmed the path may be longer and more drawn out than previously thought. Key to the pace of cuts will be future economic data, with growth, employment, and inflation being the most critical.
The dependence on economic data is starting to become less reliable. A lot of economic data is survey-based, and response rates have been dropping dramatically over time and worsened during the pandemic. If response rates are low, they may not be representative or wholly accurate. The rapidly changing world means that economic activity may no longer be accurately captured by traditional measures, and underfunding of statistical agencies weakens the quality of data. In the US, as part of Trump’s commitment in reducing costs within government, the measurement scope of consumer price inflation has been reduced, meaning areas of the US will no longer contribute to the data (such as Buffalo, NY). This is important, as CPI is a number that directly determines government spending and interest rate payments on some government debt. As highlighted in last week’s article, the markets reacted negatively to the very weak US employment report, which was sufficient cause for the US President to fire the head of the Bureau of Labor Statistics. The successor is expected to be announced this week, but that will not change the numbers in the data.
Also reported in last week’s update was Microsoft, which reached a $4 trillion valuation. It joined Nvidia in that top bracket, which is the largest US-listed company. Nvidia has increased its dominance at the top, becoming the largest single component in the S&P 500 index (the core equity index in the US consisting of the largest 500 companies), since the data started in 1981, at just under 8%. This level of concentration is distorting market performances, and the need for additional diversifying investments has arguably never been greater.
This has been driven by the profits from the semiconductor sector, which have increased significantly, and has not gone unnoticed by President Trump, who has struck an agreement with Nvidia and AMD to give the US government 15% of revenues from chip sales in China, in return for granting export licences for the Chinese market.
US investors who were trying to hedge the inflation impact from President Trump’s trade tariffs by buying gold must now pay tariffs as well. The US has imposed tariffs on imports of one kilogram and 100-ounce gold bars. Switzerland is the main supplier of gold bars to the US, meaning gold exports from Australia and the UK may be favoured due to having lower export tariffs.
Two extremes of investing - US technology equities and gold - both very different, but both being influenced by politics and policies, highlight the importance of having a spread of different investments over different geographies.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 11th August 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - What can you buy for $4 trillion these days?
Written by Chris Ayton
A challenging end to the week led equities into the red as investors reacted to a very weak US employment report, a decline in business sentiment in the US and a new set of tariffs announced by President Trump. The MSCI All Country World Index of global equities ended the week down -1.3%. Bonds, conversely, rallied on the economic uncertainty, with the Bloomberg Global Aggregate Index up +0.6% in GBP Hedged terms.
In the US, last week saw some of the largest technology companies release a raft of better-than-expected profit statements. In the process, Microsoft became the second US listed company after Nvidia to reach a market value of $4 trillion. To put this magnitude of a single company into perspective, FTSE-Russell state the combined market value of all 548 companies contained within the UK’s FTSE All Share Index as at end of June at just under $3.3 trillion (£2.5 trillion). With $4 trillion, you could buy all of the 548 largest listed UK businesses at their current market prices and still have $700 billion to spare!
That said, although many UK investors continue to eschew their domestic equity market, the lower valuations on offer in the UK continue to gather the attention of those seeking some diversification away from the elevated valuations in the US and the combination of a 3.5% dividend yield from the overall UK equity market, ongoing share buybacks and solid corporate profit growth, particularly in mid-sized companies, are helping propel the index higher this year. The UK equity market is up +12.5% in 2025. Takeover activity in the UK also remains robust and, in the latest example, last week we saw London-listed retirement specialist, Just Group, bid for by a Canadian group, Brookfield, for £2.4bn, a 75% premium to its pre-bid price. This means Brookfield views the company as good value even at a price 75% above where it was being priced on the UK market. This bid comes hot on the heels of Spectris, the UK precision instruments supplier, being bid for by American private equity group, KKR, at a 96% premium. Research from broker Peel Hunt last month showed the UK is on course for the biggest year of takeovers since 2021 after £74 billion of offers in the first half of 2025. While the long-term implications for the UK equity market of these UK businesses being snapped up by private and industrial admirers remains uncertain, it does validate the value on offer in certain segments of the UK market. We retain a modest overweight to UK equities within our portfolios.
Having enjoyed a bit of a renaissance this year, European equities were the laggards last week with the MSCI Europe ex-UK Index down -3.6% over the week. As the French Prime Minister called the EU’s tariff agreement with the US as a “dark day” for Europe, the German Chancellor said his country would suffer “substantial damage” from the tariffs and Italian trade associations called for compensation from the EU to make up for predicted losses, others breathed a modest sigh of relief that this was lower than the 30% previously threatened. The European index’s weekly decline was also exacerbated by one of its largest companies, weight loss drug maker Novo Nordisk, seeing its shares fall by more than 20%, after cutting its profit forecasts amid rising competition from the US. The share price of this previous market darling is now down nearly 70% from its peak last year. This should provide a stark reminder to investors that just because something is large and loved by the market doesn’t make it a safe long-term investment.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 4th August 2025.
© 2025 YOU Asset Management. All rights reserved.
The World In A Week - Minority rules
Written by Shane Balkham
Last week was littered with speeches from central bankers, which would not normally generate too much attention, however one of those central bankers was newly appointed Federal Reserve governor Stephen Miran. It is suspected that Stephen Miran, who was appointed by President Trump to the board of the Federal Reserve just two weeks ago, was the outlier in the ‘dot plot’ forecasts.
Every quarter, each member of the Federal Reserve individually forecasts where they consider rates to be at the end of the year. Normally the spread between the highest and lowest dot is around 1%, however, in the dot plot forecast issued at the last Federal Reserve meeting, there was a significant outlier which was 1% below the other lowest forecast.
It means that cuts of 1% for the remainder of this year are expected by this member, in addition to the 0.5% expected by the majority of the committee. All doubts were erased when Stephen Miran’s speech to the Economic Club of New York was centred around reducing rates by 2%, arguing that the current level is too high, advising that he has concerns about the direction of the US jobs market and the risks of unnecessary layoffs.
The US continued to dominate the headlines, with President Trump’s comments on Ukraine and Russia, which presented a change of tone. This was followed by a proposed series of new trade tariffs. US buyers of foreign vanity units, soft furnishings, and pharmaceuticals will be subject to new tariffs. The furniture tariffs, applied on national security grounds, are likely to have a muted impact, as they are not high-frequency purchases, however, the 100% pharmaceutical tariff applies only to branded drugs, and constructing a factory in the US may lead to an exemption. Many pharmaceutical companies already have facilities in the US, so it may be relatively easy to superficially expand those facilities to avoid tariffs being applied.
Where the US is not dominating is in market returns. The range of geographical contribution to global equity returns has been high in 2025, particularly for UK investors investing in Sterling. Q1 saw European equities outperform (including UK equities), Q2 saw broad-based returns across global equities, and so far in Q3, with just two days to go, Emerging Market and Japanese equities have outperformed.
This year is demonstrating the importance of being appropriately diversified, both in terms of having a spread of different investments over different geographies, but also in having a spread of different asset classes.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
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 29th September 2025.
© 2025 YOU Asset Management. All rights reserved.