Executive Summary

Global financial markets advanced during September 2025 as the Federal Reserve resumed its interest-rate-cutting cycle, corporate earnings remained resilient and investors continued to favour artificial intelligence, technology and selected emerging markets. The month delivered unusually strong equity returns for a period that has historically been associated with weaker market performance.

The Federal Reserve reduced its target range by 25 basis points to 4.00%-4.25% on 17 September. The decision reflected a shift in the balance of risks as labour-market conditions softened while inflation remained somewhat above target. Policymakers indicated that future adjustments would continue to depend upon incoming data and the evolving outlook.

The S&P 500 rose approximately 3.65% during September, supported by robust corporate earnings, solid economic growth and renewed expectations of additional monetary easing. The index reached further record highs, while technology and communication-services companies continued to contribute strongly.

Asian and emerging-market equities generally outperformed developed markets. China benefited from continued policy support and domestic interest in technology, while Japanese equities rallied on expectations of further fiscal stimulus following Prime Minister Shigeru Ishiba's decision to step down.

The European Central Bank maintained the deposit facility rate at 2.00%, the main refinancing rate at 2.15% and the marginal lending rate at 2.40%. Inflation remained close to target and the ECB judged that the economy was absorbing the earlier easing cycle reasonably well.

The Bank of England kept Bank Rate at 4.00% by a 7-2 vote. Two policymakers preferred an immediate quarter-point reduction. The Committee also slowed the annual pace of quantitative tightening, voting to reduce the stock of government bonds held for monetary-policy purposes by £70 billion over the following twelve months.

Gold continued its exceptional advance as lower US rates, central-bank demand and geopolitical uncertainty supported precious metals. Government bonds also generally benefited from easier monetary-policy expectations, although fiscal deficits and long-term issuance remained important constraints.

Digital assets remained supported by institutional participation and expectations of additional liquidity. Bitcoin traded near historically elevated levels, while tokenisation and stablecoin regulation continued to attract greater institutional attention.

Key Themes During September

• The Federal Reserve reduced rates to 4.00%-4.25%.
• The S&P 500 gained approximately 3.65% and reached new highs.
• Asian and emerging-market equities delivered strong relative performance.
• The ECB held its deposit rate at 2.00%.
• The Bank of England held Bank Rate at 4.00%.
• The Bank of England slowed the pace of quantitative tightening.
• US labour-market weakness increased expectations of further easing.
• Artificial intelligence remained a dominant equity theme.
• Gold continued to benefit from lower-rate expectations and defensive demand.
• Private-market financing conditions continued to improve gradually.

Global Economic Overview

The global economy remained resilient during September, although differences between regions persisted. The United States continued to grow at a moderate pace, Europe showed limited but positive momentum and China remained dependent upon targeted policy support and manufacturing strength.

United States

US economic activity remained solid enough to avoid recession concerns, but the labour market had softened significantly compared with earlier in the cycle. Slower payroll growth and a gradual increase in unemployment shifted Federal Reserve attention increasingly towards the employment side of its dual mandate.

Corporate earnings remained strong, with second-quarter S&P 500 earnings growth substantially exceeding initial expectations. This provided an important foundation for equity valuations even as investors debated the economic implications of tariffs and slower hiring.

Federal Reserve

The Federal Reserve reduced the federal funds target range by 25 basis points to 4.00%-4.25%. The statement explicitly referred to a shift in the balance of risks, indicating that employment concerns had become more important relative to inflation.

The central bank continued reducing its holdings of Treasury securities and agency debt, although balance-sheet policy remained considerably slower than during the earlier phase of quantitative tightening.

Updated projections suggested that policymakers remained open to additional reductions if labour-market weakness continued and inflation did not reaccelerate materially.

US Inflation

Inflation remained above target but did not accelerate sufficiently to prevent the September reduction. Tariffs had increased selected goods prices, although policymakers continued to debate whether the effect would represent a one-time adjustment or become more persistent.

Eurozone

The eurozone economy remained subdued but broadly stable. Earlier ECB easing had reduced financing costs, while infrastructure and defence spending improved the medium-term investment outlook.

The ECB left all three key policy rates unchanged at its September meeting. The deposit facility rate remained at 2.00%, indicating that policymakers considered the current stance consistent with inflation returning sustainably towards target.

Germany

Germany continued implementing its expanded defence and infrastructure plans. Engineering, transport, energy and military suppliers benefited from improving public-investment expectations, although manufacturing remained challenged by global competition and export uncertainty.

United Kingdom

The Bank of England maintained Bank Rate at 4.00%, with seven policymakers supporting no change and two voting for a reduction to 3.75%.

Inflation remained elevated relative to target, limiting the case for rapid easing. At the same time, weaker employment and subdued underlying growth continued to support the expectation of gradual future cuts.

Japan

Japanese markets responded positively to expectations of renewed fiscal support after Prime Minister Ishiba announced his intention to step down. Investors anticipated that the political transition could result in additional measures supporting households, infrastructure and domestic investment.

The Bank of Japan continued its gradual normalisation process while avoiding abrupt tightening that could destabilise the yen or domestic financial conditions.

China

China remained supported by accommodative monetary policy, technology investment and targeted fiscal measures. Property continued to represent a structural weakness, while domestic equity markets benefited from stronger retail participation and enthusiasm surrounding artificial intelligence.

Global Outlook

The September Federal Reserve cut improved confidence that global monetary conditions would become gradually more supportive. The principal risk was that rate cuts could be occurring because labour-market weakness was becoming more pronounced rather than because inflation had been fully defeated.

Equity Markets

Global equities advanced during September, with emerging markets and Asia generally delivering stronger returns than Europe and the United Kingdom. US equities also performed strongly, overcoming the historically difficult seasonal pattern associated with September.

United States

The S&P 500 gained approximately 3.65% and reached fresh record highs. Strong corporate earnings, expectations of further rate cuts and continued enthusiasm surrounding artificial intelligence supported the advance.

Technology, communication services, utilities and selected financial companies remained strong contributors. Eight of the eleven major S&P 500 sectors were expected to produce year-on-year earnings growth during the third quarter, providing greater breadth than earlier phases of the rally.

Technology and Artificial Intelligence

Artificial intelligence remained a central source of earnings growth and capital expenditure. Semiconductor, networking, cloud-computing and data-centre businesses continued to benefit from demand for advanced computing infrastructure.

Investors nevertheless became increasingly selective. Companies were expected to demonstrate that AI expenditure translated into revenue, customer retention or measurable productivity gains rather than relying solely upon long-term expectations.

Small and Mid-Capitalisation Companies

Lower policy rates improved the relative outlook for smaller businesses, particularly those exposed to domestic demand and refinancing costs. However, weaker labour-market conditions remained a potential headwind for economically sensitive companies.

Europe

European equities produced positive but more subdued returns. Lower financing costs and infrastructure spending provided support, while exporters remained sensitive to trade restrictions and global manufacturing conditions.

United Kingdom

UK equities also advanced modestly. Financials, defence companies and internationally diversified businesses remained comparatively resilient, while domestically focused sectors remained sensitive to inflation and employment.

Japan

Japanese equities rallied strongly as investors anticipated further fiscal support following political change. A weaker yen also supported the translated earnings of major exporters.

China and Hong Kong

Chinese and Hong Kong equities continued to benefit from policy support and enthusiasm surrounding domestic technology development. Internet platforms, semiconductor businesses and selected consumer companies attracted investor interest.

Emerging Markets

Emerging-market equities generally outperformed developed markets during September. Lower US rates reduced pressure from the dollar and improved expectations for international capital flows.

Indicative September Performance

Fixed Income Markets

Fixed-income markets generally benefited from the Federal Reserve's September reduction, although long-term yields remained sensitive to fiscal deficits, inflation and government issuance.

US Treasuries

Shorter-dated Treasury yields declined as the Federal Reserve reduced its target range to 4.00%-4.25%.

Longer maturities were more constrained by the continuing fiscal deficit, Treasury supply and uncertainty surrounding the eventual inflationary impact of tariffs.

European Government Bonds

Eurozone government bonds remained comparatively stable as the ECB held rates unchanged. The 2.00% deposit rate increasingly appeared close to a neutral policy setting.

UK Gilts

UK gilts were supported by the two votes for a September rate cut and by the Bank of England's decision to slow the pace of quantitative tightening.

The Bank planned to reduce its government-bond holdings by £70 billion during the following twelve months, compared with a faster pace previously.

Corporate Credit

Investment-grade and high-yield markets remained supported by strong corporate earnings and generally positive risk appetite. Credit spreads remained relatively tight.

Private Credit

Private-credit markets continued to attract institutional capital. The Federal Reserve reduction offered gradual relief to floating-rate borrowers, while strong competition among lenders continued to reduce spreads for high-quality assets.

Foreign Exchange

Currency markets reflected the resumption of Federal Reserve easing and changing expectations for international monetary policy.

US Dollar

The dollar faced pressure as US rates declined and investors anticipated additional easing. Strong US economic growth limited the scale of the weakness.

Euro

The euro remained comparatively stable as the ECB held rates and European fiscal investment improved the regional growth outlook.

Sterling

Sterling remained supported by the Bank of England's cautious easing approach. With Bank Rate still at 4.00%, UK yields remained relatively attractive compared with the eurozone.

Japanese Yen

The yen remained volatile as investors balanced political uncertainty, possible fiscal stimulus and eventual Bank of Japan normalisation.

Chinese Renminbi

The renminbi remained closely managed, while lower US rates reduced some of the depreciation pressure created by China's comparatively accommodative monetary policy.

Commodities

Commodity markets were supported by lower US interest rates and continued geopolitical uncertainty, with precious metals again among the strongest performers.

Gold

Gold continued its advance as the Federal Reserve resumed easing. Lower real yields, central-bank buying and geopolitical uncertainty remained important sources of demand.

Oil and Energy

Oil remained influenced by global supply, Russian exports and Middle East developments. Demand expectations remained closely connected to the strength of the US and Chinese economies.

Copper and Industrial Metals

Copper remained supported by structural demand from electricity networks, renewable energy, industrial automation and data centres.

Iron Ore

Iron ore remained sensitive to China's property market and infrastructure programmes. Manufacturing support partially offset continued weakness within residential construction.

Agricultural Commodities

Agricultural markets remained exposed to weather, trade restrictions and geopolitical developments affecting shipping and export supply.

Digital Assets

Digital assets remained supported by improving global liquidity and institutional participation, although volatility continued to distinguish the asset class from conventional securities.

Bitcoin

Bitcoin remained close to historically high levels. Lower US rates improved liquidity conditions and reduced the relative return available from cash instruments.

Spot ETFs and corporate treasury strategies continued to provide institutional demand, although concentration among large holders remained a risk.

Ethereum

Ether remained supported by institutional interest in tokenisation, stablecoins and decentralised financial infrastructure.

Tokenisation

Banks and asset managers continued developing tokenised money-market funds, securities and settlement systems. These regulated applications increasingly represented a distinct investment theme from speculative cryptocurrency trading.

Risk Considerations

• Digital assets remained highly sensitive to liquidity conditions.
• Institutional ownership increased concentration risk.
• Leverage remained capable of amplifying corrections.
• Regulatory implementation continued to evolve.

Private Equity

Private-equity conditions improved during September as lower US interest rates and strong public markets supported financing, transaction confidence and exit preparation.

Deal Activity

Technology, healthcare, business services, financial services and infrastructure remained active. Buyers continued to favour recurring revenue, strong cash conversion and limited tariff exposure.

Financing

The Federal Reserve reduction improved the outlook for floating-rate acquisition debt. Banks, syndicated markets and private lenders continued competing aggressively for strong borrowers.

Exits

Record public equity valuations supported IPO preparation and strategic sales. Sponsors increasingly sought to convert unrealised gains into distributions after several years of limited exit activity.

Secondaries

Secondary markets remained active as investors sought liquidity and diversified exposure to mature private-market portfolios.

Fundraising

Fundraising remained concentrated among established managers capable of demonstrating realised returns and consistent distributions.

CE Global Private Equity Observations

• Lower US rates improved financing sentiment.
• Strong public markets supported exit visibility.
• Competition remained intense for high-quality private assets.
• Recurring revenue and moderate leverage remained highly valued.
• Secondaries continued to provide important portfolio liquidity.

Artificial Intelligence & Technology

Artificial intelligence remained one of the strongest structural investment themes during September, with corporate earnings continuing to support infrastructure and software demand.

Semiconductors

Demand for advanced processors, memory and networking remained strong. Technology companies continued expanding infrastructure for both model training and inference.

Cloud Computing

Major cloud providers continued to report strong AI-related usage. Enterprise customers increasingly deployed models within coding, customer service, financial analysis and administrative workflows.

AI Monetisation

Investor focus continued shifting from capital expenditure towards revenue generation. Companies demonstrating measurable customer adoption and productivity benefits received stronger valuations.

Data Centres and Power

Electricity availability, network infrastructure and cooling remained major constraints on data-centre development. Utilities and infrastructure investors continued planning substantial capacity additions.

Technology Risks

• AI valuations remained dependent upon sustained earnings growth.
• Infrastructure expenditure remained exceptionally high.
• Model efficiency could reduce computing demand per task.
• Export controls continued to restrict selected international markets.
• Power availability remained a major development constraint.

Sector Spotlight

Power Grid Modernisation

September's sector spotlight examines electricity-grid modernisation as artificial intelligence, electrification and renewable generation create substantial investment requirements.

Transmission

New generation increasingly required long-distance transmission infrastructure connecting renewable-energy regions, industrial users and growing data-centre markets.

Distribution

Local networks required upgrades to support electric vehicles, heat pumps, distributed generation and higher commercial electricity demand.

Transformers and Switchgear

Demand remained strong for transformers, switchgear, cables and substations. Production lead times remained elevated for specialised equipment.

Grid Software

Digital systems allowed utilities to monitor demand, identify faults and integrate renewable generation more efficiently.

Private-Market Opportunities

• Electrical equipment manufacturing
• Transmission engineering
• Grid-management software
• Substation construction
• Energy storage
• Maintenance and inspection services

Investment Perspective

Grid modernisation represented a multi-decade investment requirement rather than a short-term AI trend. Businesses with scarce engineering capabilities, recurring maintenance revenue and exposure to regulated utility expenditure appeared particularly well positioned.

Regulatory Update

Regulatory developments during September focused on monetary policy, artificial intelligence, digital assets and trade implementation.

Federal Reserve Policy

The Federal Reserve's September cut reflected a formal shift in the balance of risks towards greater concern about employment. Investors and businesses prepared for the possibility of additional reductions later in 2025.

Bank of England Quantitative Tightening

The Bank of England reduced the planned annual decline in its gilt holdings to £70 billion, reflecting concern about market conditions and the growing maturity of the balance-sheet-normalisation process.

Artificial Intelligence

Companies continued implementing staged requirements under the EU Artificial Intelligence Act, including governance, documentation and staff responsibilities.

Digital Assets

Financial institutions continued adapting to emerging stablecoin, custody and tokenisation rules in the United States, Europe and other major jurisdictions.

Trade Policy

Businesses continued incorporating higher tariffs into pricing and supply-chain planning even after the major trade agreements reached earlier in the summer.

Compliance Priorities

• Monitor additional Federal Reserve policy adjustments.
• Review funding assumptions following lower US rates.
• Continue EU AI Act implementation.
• Maintain tariff and country-of-origin controls.
• Review digital-asset custody and stablecoin exposure.
• Maintain consistent private-market valuation procedures.

Looking Ahead

Markets entered October with equities near record levels, the Federal Reserve easing again and investors increasingly focused on whether lower interest rates would support growth without reigniting inflation.

Federal Reserve

Employment and inflation data would determine whether September's reduction was followed by another cut. The Federal Reserve continued to emphasise that future decisions would depend upon incoming information and the balance of risks.

European Central Bank

The ECB appeared increasingly comfortable with a 2.00% deposit rate. Further reductions would require evidence of weaker growth or renewed downside inflation risk.

Bank of England

The Bank of England was likely to remain cautious after holding rates in September. Inflation remained above target, while two policymakers continued to support further easing.

Corporate Earnings

Third-quarter earnings would test whether elevated US equity valuations remained supported by profit growth. Artificial-intelligence revenue and capital expenditure would remain central themes.

Japan

Political developments following Prime Minister Ishiba's resignation could affect expectations for fiscal policy, the yen and Bank of Japan normalisation.

China

Investors would assess whether stronger equity performance translated into improved household confidence and domestic demand.

Gold and Commodities

Lower US interest rates could continue supporting gold, while industrial commodities would remain dependent upon Chinese activity and global infrastructure investment.

Private Markets

Lower financing costs and strong public valuations could support transactions and exits. Investors would nevertheless need to avoid assuming that lower policy rates automatically justified higher leverage or entry multiples.

CE Global Private Equity Perspective

September demonstrated that monetary easing can support risk assets when accompanied by resilient corporate earnings and moderate economic growth. The Federal Reserve's decision improved financing conditions without signalling that a recession was already under way.

CE Global Private Equity believes that infrastructure, AI-enabled services, healthcare, cybersecurity and specialised financial businesses remain attractive long-term areas. Grid modernisation and electricity infrastructure are particularly compelling because demand is being driven by several independent structural forces.

Strong public markets also create improved private-market exit opportunities, but competition for high-quality assets remains intense. Entry-price discipline, moderate leverage and operational value creation remain essential.

This market review is provided for general information and discussion purposes only. It does not constitute investment, legal, tax or other professional advice, nor an offer or solicitation to purchase or sell any security, financial instrument or investment product. Market values can rise or fall, and past performance is not a reliable indicator of future results.