Issue link: https://info.seic.com/i/1541269
Executive Summary • October was another strong month for markets, with global equities extending gains despite political and policy uncertainty. U.S. markets were supported by easing trade tensions with China and a widely expected Federal Reserve rate cut. U.K. markets were more muted, reflecting cautious sentiment ahead of the Autumn budget. • Earnings season continued to deliver strong results overall. Of the S&P 500 firms that have reported Q3 earnings, over 80% have beat expectations. The U.S. large cap 'Magnificent Seven' stocks released mixed forward-looking guidance, flagging caution around tariffs, energy prices, and China exposure. • U.K. inflation held steady at 3.8% in September, still above the Bank of England's 2% target, while GDP growth remained subdued amid weaker consumer spending. Economic Factors Interest Rates • The ECB kept rates unchanged in October, though signalled potential rate cuts in early 2026 if inflation progress remains. The Federal Reserve cut interest rates by 0.25%, continuing its easing cycle following September's move. Inflation • Inflation in the U.K. and U.S. remained above the central banks' 2% target, while Eurozone inflation eased to 2.1%, continuing its downward trend toward the ECB's goal. Economic Growth • U.S. GDP growth remained solid supported by strong consumer spending and business investment. In contrast, Eurozone GDP grew just 0.2% from Q2, while U.K. growth slowed further, amid weaker demand and fiscal uncertainty. Tactical Views Fixed Income • We maintain a defensive stance in credit markets and a neutral view on duration, while positioning portfolios to capture potential benefits from a continued steepening of U.S. and European yield curves. Global Equities • We continue to prioritise globally diversified equity exposure, with a tactical tilt towards attractively priced 'value' companies. We have also reduced exposure to recent high performers, or 'momentum' stocks, to manage valuation risk. Pessimistic Optimistic Pessimistic Optimistic SEI Monthly Update October 2025 This is a marketing communication Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Legend SEI's Current View: Direction of movement from previous: For use by advisers of regulated intermediaries in the UK in acceptance with all applicable laws and regulations