Please see below, Brooks Macdonald’s Daily Investment Bulletin which provides a brief analysis of the key factors currently affecting global investment markets. Received today – 19/09/2025
What has happened?
The S&P 500 (+0.48%) notched another record high, powered by a tech stock rally. Intel soared (+22.77%) after Nvidia’s $5 billion investment, following the US government’s 10% stake acquisition in August. Chipmakers dominated, lifting the Philadelphia Semiconductor Index (+3.60%) and the NASDAQ (+0.94%) to new peaks. The small-cap Russell 2000 (+2.51%) also hit its first record since late 2021, signalling broad market strength. However, US Treasuries faced pressure as yields climbed across the curve, tempering their earlier rally.
Bank of England stays steady
The Bank of England held its policy rate at 4%, as expected, and reaffirmed a ‘gradual and careful’ approach to future rate cuts. The BoE slowed its quantitative tightening (QT) pace, planning to reduce its balance sheet by £70 billion over the next year, down from £100 billion, with £21 billion in active sales and the rest from maturing debt. Notably, only 20% of sales will now involve long-dated gilts. Markets see a less than 30% chance of a 25-bps cut by year-end, aligning with Governor Bailey’s comments that the rate-cutting cycle continues but at a measured pace.
What does Brooks Macdonald think?
The market rally over the past two days has been largely driven by the Federal Reserve’s first interest rate cut of the year. Since the current easing cycle began in September 2024, rates have been reduced by a total of 125 bps. The last time the Fed cut rates this aggressively in a non-recessionary environment was back in the 1980s. Both the dot plot and market pricing now suggest there could be two more rate cuts before the end of the year. Historically, equities have performed well when the Fed eases policy into a soft landing. However, whether a soft landing is achievable remains under scrutiny, with labour market data likely to play a pivotal role.
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Alex Kitteringham
19th September 2025