The third quarter of 2025 saw global markets strengthen amid easing inflation, supportive rate cuts, and renewed investor confidence. Emerging and Asian markets led gains, driven by tech and AI enthusiasm, while South Africa’s economy continued to improve with record equity highs, a stronger rand, and inflation returning to target levels.
South Africa
South Africa’s economy continued to show gradual improvement with equities maintaining strong momentum. The FTSE/JSE All Share Index climbing to a record high, delivering a 13% return. The Resources sector is the main contributor to this surge, led by stronger gold prices and weakened US dollar. According to Schroder’s, South Africa is one of the top-performing index markets over the quarter, fuelled by stronger precious metals prices. A firmer rand, ending the quarter near R17.27/USD, reflected improved investor confidence.
Fewer electricity disruptions and a drop in inflation contributed to economic growth, with tamer inflation being mainly due to lower costs for housing, utilities, and food.
The SARB’s Monetary Policy Committee voted to keep the repo rate unchanged at 7%, following a 25-basis-point cut earlier in July, keeping inflation anchored. Overall, local policy stability points to a cautiously optimistic outlook heading into the final quarter of 2025.
Emerging markets
Emerging markets (EMs) saw impressive, double-digit gains in the third quarter, outperforming developed markets. This rally was fuelled by investor optimism in AI, progress in US-China trade talks, and the US Federal Reserve's rate cut. China, Taiwan, Korea, Egypt, Peru, and South Africa were top performers, with Taiwan and Korea driven by strong tech/AI demand and South Africa by higher precious metal prices. China's market improved despite economic challenges. Conversely, Brazil underperformed due to political uncertainty, and India, Indonesia, and the Philippines faced pressure from trade and tariff issues.
US
U.S. inflation accelerated to 2.9% year-on-year in August from 2.7% in July — the highest since January — prompting the Federal Reserve to cut rates by 25 basis points, with further easing likely before year-end. Despite ongoing inflationary pressures, the economy showed resilience, with Q2 GDP rebounding 3.8% and consumer spending rising 0.9% in August. However, new tariffs announced by President Trump added to market uncertainty. Even so, the AI boom showed no signs of slowing down. Stocks powered higher on the back on the artificial intelligence boom. Equities posted solid quarterly gains, with the NASDAQ up 11.4%, the S&P 500 up 8.1%, and the Dow Jones up 5.7%.
UK
UK equities delivered a strong quarter, with the FTSE 100 posting its best performance since 2022, supported by a resilient global economy, a weaker pound, and gains in technology, communications, and gold-linked stocks.
Despite high inflation (3.8%), the Bank of England delivered its first rate cut since 2020 and slowed quantitative tightening. However, gilt yields rose amid concerns over the £2.8 trillion public debt.
IPO activity on the London Stock Exchange remained subdued (only three listings), though a rebound is anticipated in 2026.