In September 2025, the UK stock market recorded yet further gains with the FTSE 100 finishing the month at another all-time high, up 1.8% over the month. The UK’s mid-cap and small-cap markets also made useful advances as the FTSE 250 and FTSE Small-Cap indices both rose by 2.0%. The banking and mining sectors were amongst the biggest contributors to the market movement, and the defence-related stocks, BAE and Rolls-Royce, were strong too.
The background was not especially favourable: the latest headline inflation figure remained unchanged at 3.8%, while the political situation was turbulent with the resignation of the Deputy Prime Minister and sacking of the UK’s ambassador to the United States. These factors contributed to bond yields rising. In general, it is risk assets that have been performing well, with the prices of gold, silver and platinum all reaching record highs and a clear momentum effect building –those shares and commodities that have risen most in the recent past are being chased by new investment inflows, driving their prices higher still.
Inflation in the UK is widely expected to have peaked in September, which, if confirmed, may allow the Monetary Policy Committee to resume interest-rate cuts and help to restore some optimism in the economy. We remain in the long, long run-in to the government’s autumn budget. The Chancellor’s situation is clearly difficult, and the uncertainty about future tax rises, which will almost certainly be introduced, is knocking confidence in the private sector and hence reducing growth. It’s possible to look beyond the budget to a situation where there is greater clarity about future taxation, interest rates are coming down to be more in line with international peers, and confidence is returning to the UK.
As at 31 September 2025
Investment risks
The value of your investments and any income from them can go down as well as up and you may not get back the original amount invested. Gearing is used for investment purposes to obtain, increase or reduce exposure to an asset, index or investment. The mention of any stocks and bonds is not a recommendation to deal. All information is sourced from Columbia Threadneedle Investments, unless otherwise stated.
Issued by Columbia Threadneedle Management Limited and approved for distribution 18/08/2025.
