Financial Markets Update: September 2025
Adviser Team
GDA Financial Partners
As summer comes to an end, global financial markets are entering September with a mix of cautious optimism and heightened risk. Historically a volatile month, September 2025 is already shaping up to be eventful, with political tensions, central bank decisions, and trade dynamics all influencing investor sentiment.
Key Themes Driving the Markets
1. Federal Reserve Drama and Rate Cut Speculation
The U.S. Federal Reserve is under intense scrutiny following President Trump’s controversial firing of Fed Governor Lisa Cook and the head of the Bureau of Labor Statistics. These moves have raised concerns about the Fed’s independence. However, Fed Chair Jerome Powell’s recent speech hinted at a potential rate cut during the upcoming September 16–17 meeting, with markets pricing in an 85% chance of a cut. This has fueled a rally in U.S. equities. The Dow Jones rose 1.34%, the S&P 500 gained 1.47%, and the Nasdaq jumped 1.95%, led by strong earnings from tech giants like Nvidia and Amazon.
2. European Markets: Political Uncertainty and Modest Gains
European stocks opened slightly higher this week, with Germany’s DAX and France’s CAC 40 edging up around 0.1–0.12%. However, political instability looms large. French Prime Minister Francois Bayrou faces a confidence vote on September 8, and a potential government collapse could trigger new elections and budgetary delays. Meanwhile, a favorable UK Supreme Court ruling on motor finance mis-selling has boosted British bank stocks, with Lloyds surging over 8%.
3. Asia-Pacific: Mixed Signals from China
China’s economic outlook remains undefined. Private manufacturing data showed expansion (PMI 50.5), while official figures indicated contraction (PMI 49.4). This divergence has left investors uncertain about the true state of the world’s second-largest economy. On a brighter note, diplomatic relations between India and China have improved, with both nations declaring themselves “development partners” after a summit meeting—potentially easing regional tensions.
4. Tariffs and Geopolitical Tensions
Trade tensions continue to simmer. The U.S. has imposed a new 25% tariff on Indian imports due to its Russian oil purchases, adding to existing duties. Switzerland also faces steep U.S. tariffs (up to 39%), which are pressuring its currency and inflation outlook. Geopolitical risks remain elevated, especially with fading hopes for peace in Ukraine and ongoing energy infrastructure attacks.
5. Bond Market Watch
Bond markets are under pressure as governments ramp up borrowing. Japan’s 30-year yields are at record highs, and European yields are near multi-year peaks. Investors are closely watching upcoming long-dated bond auctions in the U.S., Japan, and Germany.
Final Thoughts
September is historically the weakest month for global equities, and 2025 may be no exception. With political drama, central bank uncertainty, and trade tensions all in play, investors should brace for volatility and consider defensive strategies.
This article is for general information and does not constitute personal financial advice. If you’re unsure what’s best for you, seek independent financial advice.
Past performance is not a guide to future performance, nor a reliable indicator of future results or performance. The value of investments, and the income or capital entitlement which may derive from them, if any, may go down as well as up and is not guaranteed; therefore investors may not get back the amount originally invested.
