Speculation over the possibility that the US stock market is in an AI-fuelled bubble has continued during the final quarter of 2025. The International Monetary Fund (IMF) warned of market “complacency”, noting that concentration risk is now “substantially higher than during the dotcom bubble”.
The 43-day US government shutdown eventually ended on 12th November, but had little impact on US stock markets, with the Dow Jones Industrial Average, S&P500 and Nikkei Composite all posting strong gains during October. Meanwhile, US AI technology company Nvidia became the first-ever company to achieve a market capitalisation of US$5 trillion.
The Federal Reserve (Fed) cut the key federal funds rate by a further 25 basis points to a range of 3.75% to 4% in October, following a previous cut in September. However, Fed Chairman Jerome Powell remained cautious, stating that “A further reduction in the policy rate at the December meeting is not a foregone conclusion”. US inflation currently stands at 3.0%, the September CPI (Consumer Price Index) figure, with the October figure unavailable due to the government shutdown.
Inflation (CPI) in the UK fell to 3.6% in October, a slight reduction from the September figure of 3.8%. The Bank of England (BoE) held the base rate at 4.0% in November, with the next rate decision due on 18th December.
The rate of inflation for the Eurozone has remained near the European Central Bank (ECB) target of 2%, with ECB interest rates unchanged since June 2025. The key ECB interest rate (deposit facility rate) currently stands at 2%, following four separate 25 basis point cuts in the first half of 2025.
In Japan, the benchmark Nikkei 225 Index hit a new all-time high in October amid hopes that Sanae Takaichi, the country’s first female prime minister, will pursue a pro-business agenda.
Closer to home, figures provided by NISRA (Northern Ireland Statistics and Research Agency) confirm that Northern Ireland’s economy has rebounded from the early months of the Covid pandemic (Q2 2020), surpassing levels not seen since mid-2007. Economic growth for Northern Ireland during this period does lag the UK as a whole, however.
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The value of your investment can go down as well as up and you may not get back as much as you originally invested.