CIO's Market Watch - November

Politics and economics cannot be separated when it comes to budgets.

When writing economic and financial market commentaries such as this, we are always guided to avoid observations that could be perceived to be political in nature or opinion. However, that is difficult to avoid when it comes to discussing economic policy and budgets, as political views are being expressed by the government in their policy decisions as well as economic ones. However, here goes.

This was the most hotly anticipated budget since the last one! The point being that the last budget itself was one of the most hotly anticipated post war. It was a bit of a re-run; in the preceding months there were non-stop leaks, speeches and speculation that led to huge uncertainty and a resulting drop in economic activity driven by falling consumer and business confidence.

The budget itself turned into a shambles with the Office of Budget Responsibility’s (OBR) early release of the details and its forecasts.

As to the content of the budget; you will have read and heard the detail many times already, so I will not repeat it here, but I will provide my own view. I fail to see how the policies announced lead to sustainable economic growth, one of the government’s stated goals. In fact, I think it will do the opposite and stifle growth. This is backed up by the OBR’s forecasts for economic growth being reduced for 2026, 2027, 2028 and 2029. I struggle to see why companies at home and from other countries will increase their spending and commitment to the UK, given the costs and difficulties from employment law changes and taxes. I also struggle to see why investors will have an improved view of UK financial markets as a rewarding home for their money.

Much has been made of the need for the Chancellor to “keep the bond markets happy”, which meant ensuring the cost of government borrowing didn’t rise. That has largely been achieved, with the fiscal rules being met, in fact, better than anticipated by some. However, as I write this, there is massive uncertainty prevailing around whether the Chancellor misled us on the actual size of the “black hole” in public finances. Furthermore, did the Prime Minister know? Rather perversely, the bond markets might see that as good news; public finances weren’t as bad as we thought. But ulterior motives were at play. The Chancellor’s tenure is a live debate and the Prime Minister’s own position may be as well. Political risk has not gone away. The Starmer / Reeves leadership combination is probably the best one as far as bond markets are concerned, any other is likely to be more left wing and more driven by a spending mantra.

I was hoping once the budget was behind us we could just move on, with greater certainty, I don’t think that is the case.

November brought calmer equity markets, or did it?

Overall, as measured by market indices such as the UK’s FTSE All-Share Index or the US’s S&P 500 Index, equity markets were quiet, hardly moving at all over the month. However, there was a lot going on day to day and within markets.

There were big swings in share prices between those companies that have been pushing markets higher, notably the giant US technology companies and those that have been discarded as a result, with investors rotating between the two being quite noticeable. For some time there has been little differentiation between the share prices of individual companies, with groups of companies or sectors considered to be homogenous and moving up or down together.

It was interesting to see that trend come into question in November, with some of the big technology companies share prices diverging.

The share prices of Nvidia, Alphabet (Google), Meta & Broadcom in November

Source: Bloomberg 31.10.2025 – 28.11.2025. The performance information presented on this page relates to the past. Past performance is not a reliable indicator of future returns.

The news from the triumvirate of Meta, Alphabet (Google) and Nvidia, is that Meta is in talks to move more towards partnering with Google rather than Nvidia, which saw Nvidia’s share price react negatively, it was down over 12% during the month, Google’s jumped, up nearly 14% in November and Meta’s was flat. Meanwhile Broadcom, a manufacturer of AI semiconductors and a competitor to Nvidia stepped into the breach and rose 9%.

It is encouraging to see some diversification and more rational moves in share prices than we have been used to. It makes for healthier markets as individual company attributes are being reflected in share prices rather than more general factors.

The US economy keeps trucking along

The US government shut down has meant there has been paucity of data relating to the economy but what we have seen shows that it is in decent shape. Given it is the world’s largest and most important economy and that tariffs are now in place globally, it would be very helpful to actually know what the situation is.

December will be an important month as we learn how inflation is travelling, what the Federal Reserve decides on interest rates in their last meeting of this year and hopefully provides guidance for 2026.

As we approach the end of 2025, there are many important questions to answer as there were at the start of the year, just different ones.

Neil Birrell

Chief Investment Officer