Quarterly Market Review & Outlook Q3 2025

The third quarter once again disproved some of the equity markets’ most enduring seasonal myths. The old saying ‘sell in May and go away’ would have missed a powerful summer rally, while September, historically the weakest month of the year, instead saw the S&P 500 advance 4.5%, marking its best September since 2010. The MSCI World rose 7.4% over the quarter, taking year-to-date gains to fresh highs.

Beneath the surface, performance once again varied by region. As we wrote last quarter, following a sharp reversal of Q1, US equities extended their rally, with the S&P 500 up 7.9% in Q3 and the Nasdaq 100 rising 12.2%, supported by resilient earnings growth and renewed optimism around Fed interest rate cuts. European indices saw more modest returns, with the STOXX Europe 600 up 3.1% in local currency terms.

However, there remains a perception among investors that US equities have underwhelmed year to date. When looking at the headline returns in USD, this is true. As shown in Chart 1, as of 30th September, Eurozone equities have risen 34.4% in USD terms year-to-date compared with 14.8% for the S&P 500. Yet, as Chart 1 illustrates, the drivers have been very different. Europe’s strength has largely been the product of a strong euro and a substantial re-rating in multiples, while earnings growth has contributed relatively little. The US, by contrast, has delivered its gains primarily through earnings growth, a more durable driver of long-term equity returns.

Within our Q3 2025 Market Review & Outlook, our Investment Committee delve deeper into the drivers behind this rally and examine how resilient earnings, shifting central bank policy, and improving credit conditions have supported global markets. The team also outline where opportunities and risks may lie as easing cycles take hold.

Click here to view the Q3 2025 Market Review & Outlook in full

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