The week that was …
Economic round-up
UK inflation
The UK’s rate of inflation saw its first drop since March, hitting 3.6% in the year to October. Consensus expectations had been for a 3.7% rise in prices. Even though inflation remains well above the Bank of England’s 2% target, the news makes a rate cut more likely at its upcoming meeting. Read more from the BBC here
UK retail sales
UK retail sales slid in October, falling 1.1% month on month – the first monthly drop since May. Economists had expected sales to be flat compared, with the previous month. Read more from Reuters here
US inflation data delay
The US Bureau of Labor Statistics said it had cancelled the release of October’s consumer price report. According to the agency, the US government shutdown had prevented the collection of data and it was unable to do this retroactively. Read more from Reuters here
US employment
US initial jobless claims fell by 8,000 to a seasonally adjusted 220,000 in the week ended 15 November – slightly ahead of consensus forecasts. Continuing claims, which track those still receiving benefits, increased to 1.974m, which was more than expected and the highest level for insured unemployment since November 2021. Read more from Sharecast here
Eurozone consumer confidence
The November flash estimate for Eurozone consumer confidence remained stable in both the EU (down 0.1 percentage points) and the euro area (±0.0 percentage points). The index readings were -13.6 for the EU and -14.2 for the euro area. Read more from the European Commission here
German manufacturing
After showing signs of stabilising in October, Germany’s private sector saw a loss of momentum in November. The HCOB Flash Germany Composite PMI Output Index came in at 52.1 in November, down from a 29-month high of 53.9 in October. Read more from S&P here
Japan inflation
Japan’s core consumer prices rose 3.0% in October, compared with a year earlier – marginally behind expectations. This remains above the central bank’s 2% target, which makes a near-term interest rate rise more likely. Read more from Reuters here
Markets round-up
AI debt a new concern for investors
Large technology firms are turning to the debt markets to fund their artificial intelligence (AI) development – a significant shift for Silicon Valley firms that have historically relied on cash to fund investments. Alphabet, Amazon, Meta and Oracle have all tapped corporate bond markets since September to raise capital. Read more from Reuters here and in ‘In Focus’ below
Nvidia ahead of expectations …
Chip giant Nvidia reported a 62% rise in revenues to $57bn (£43.5bn) for the three months to October, driven by rising data-centre demand. Fourth-quarter sales forecasts also topped estimates, sending shares in Nvidia about 4% higher in after-hours trading. Read more from the BBC here
… but results fail to calm markets
Those strong sales at Nvidia as well as Walmart, the world’s largest retailer, alongside better-than-expected jobs data for September, did little to quell investor concerns as markets continued to be volatile for much of the week. Read more from the BBC here
Foreign investors target long-dated Japanese debt
Attracted by a sharp rise in yields, foreign investors are buying long-dated Japanese government bonds at the fastest pace for more than two decades. Data from the Japan Securities Dealers Association shows foreign investors bought a net ¥11.3tn (£54..8bn) of 10-year or higher JGBs for the year to date. Read more from the FT here
Eli Lilly value tops $1tn
Eli Lilly has become the first pharma company to hit a $1tn market valuation, buoyed by its strength in weight loss drugs. This is a sharp turnaround from the weakness seen over the summer, which centred on concerns around its new obesity pill. Read more from the FT here
Bitcoin falls
Bitcoin dropped to a seven-month low on Friday, closing in on the $80,000 level. This weakness was part of a broader flight from risk assets, as investors fretted about a potential AI bubble and uncertainty over US monetary policy. Read more from Reuters here
“Investors are certainly not selling because the UK stockmarket is expensive, but seemingly because they have lost confidence that the economic situation will improve.
Selected equity and bond markets: 14/11/25 to 21/11/25
| Market | 14/11/25 (Close) |
21/11/25 (Close) |
Gain/loss |
|---|---|---|---|
| FTSE All-Share | 5221 | 5134 | -1.7% |
| S&P500 | 6734 | 6603 | -2.0% |
| MSCI World | 4344 | 4243 | -2.3% |
| CNBC Magnificent Seven | 410 | 401 | -2.2% |
| US 10-year treasury (yield) | 4.14% | 4.07% | |
| UK 10-year gilt (yield) | 4.58% | 4.55% |
Investment round-up
IA’s Cummings to step down
Chris Cummings, chief executive of the Investment Association, is set to step down from June 2026. He said it had been an “extraordinary privilege” to lead the trade association through “a demanding time – but also one of great achievement”.
Artemis replaces Aberdeen on Murray Income
The board of the Murray Income Trust has appointed the equity income team at Artemis as its new investment manager following a strategic review. The £942m trust will now be managed by Andy Marsh, Nick Shenton and Adrian Frost, replacing Aberdeen’s Charles Luke.
Zopa and Invesco tie-up
Zopa Bank has appointed London based Invesco as its asset manager partner. Initially, Zopa will make two of Invesco’s Summit Responsible range of multi-asset funds available to its customers, opening the proposition to more customers in 2026.
Saba reveals Pantheon International stake
Activist hedge fund Saba Capital Management has taken a position in private equity fund Pantheon International as it encouraged investors to seize on the “underinvested” opportunities available in the UK’s investment trust sector.
IHT receipts up
Inheritance tax receipts for April to October this year were £5.2bn – some £200m higher than same period of the previous tax year. This rise continues an upward trend over the last two decades.
… and the week that will be
Risk assets concerns
After a torrid week in stockmarkets, investors are likely to be analysing what has prompted a more cautious take on previously popular assets, such as technology stocks and cryptocurrencies. ‘Old economy’ stocks have been briefly back in favour, while riskier assets have slid. US investors will have the Thanksgiving holiday on Thursday to reflect. Read more from CNBC here
Delayed US data
That said, the week should still bring several economic releases, providing much-needed insight after the information hole created by the US government shutdown. US retail sales, plus weekly jobless claims, pending home sales, durable-goods orders and the latest consumer confidence survey are all on the agenda. Due too are earnings reports from companies including Alibaba, Applied Digital, Dell Technologies and John Deere. Read more from Investopedia here
The week in numbers
UK Budget: Chancellor Rachel Reeves will deliver the UK budget at 12.30pm on 26 November, during which a range of tax-raising measures are expected to be announced.
US consumer confidence: Consensus expectations for the November reading of the US consumer confidence index indicate a fall to 94.2 from 94.6 the previous month.
US business sentiment: The Chicago purchasing managers index is forecast to rise to 46 in November, up from 43.8 in October.
US goods orders: Consensus expectations for US durable goods orders in September indicate a month-on-month rise of 0.2%.
US commercial data: Consensus forecasts for September factory-gate prices in the US is for a month-on-month rise of 0.5%, compared with -0.1% in August. Meanwhile PPI sales are forecast to rise 0.3%, compared with 0.6% the previous month.
Germany inflation for November: Prices in Germany rose 0.3% month on month and 2.3% year on year in October.
In focus: UK confidence trick
It is presumably possible to design a pre-Budget run-up more likely to deter investment, slow the economy and stall the UK stockmarket than what we have witnessed over the last few months but it is difficult to imagine how. The endless speculation, policy contortions and ‘kite-flying’ on different measures have conspired to turn a mediocre economic backdrop into a distinctly tough one. The question now is whether the damage done is temporary or permanent.
Last week, saw UK retail sales for October slump 1.1%. Economists attributed the weakness partly to the ‘Black Friday’ effect – as consumers waited for deals – but also to the endless speculation around Wednesday’s Budget. This has left consumers fearful of the impact on their incomes as well as holding back spending.
“The constant pitch-rolling from the government this year has created so much uncertainty, it is hardly surprising shoppers are keeping their powder dry,” says Danni Hewson, head of financial analysis at AJ Bell. “Whether they will feel confident enough to make those big-ticket purchases during this year’s Black Friday sales is a question that must be keeping retailers up at night.
“This period is supposed to be the ‘Golden Quarter’, when businesses make enough cash to see them through the new year blues, so many will be questioning the chancellor’s decision to hold this Budget so late in the year.”
There are also clear signs this is deterring investment in UK equities – precisely the opposite effect the Chancellor needs to stimulate growth in the economy. EPFR data shows UK investors have pulled about £26bn from London-listed equities so far in 2025 – with October seeing the biggest monthly outflow of the year, at £3.4bn. Investors are certainly not selling because the UK stockmarket is expensive, but seemingly because they have lost confidence that the economic situation will improve.
There are still further worrying signs. Last week showed government borrowing at £17.4bn in October, for example – above consensus analysts’ forecasts of about £15bn. While this may be £1.8bn lower than the same month last year, borrowing is £9bn ahead for the fiscal year to October. Having dropped significantly in October, gilt yields have now started to edge higher – rising from 4.39% to 4.54% – following an apparent reversal on a decision to raise income tax in early November.
Even this was evidence of how the UK appears to be making a sow’s ear out of a silk purse. At the heart of this reversal on income tax lay a piece of good news – the fiscal ‘black hole’ appears to be around £10bn less than originally forecast, which means the Chancellor no longer has to break any manifesto promises. Once again, however, any good news was lost amid broad scepticism the Chancellor would be able to balance the books.
From a bond market perspective, it is difficult to believe you are getting into any kind of fiscal rigour when the chancellor keeps coming back for more taxes every year.”
Then there is the latest purchasing managers index (PMI) data. “At 50.5, down from 52.2 in October, the PMI headline composite output index was the second-lowest seen over the past six months, according to the initial flash estimate,” notes Chris Williamson, chief business economist at S&P Global Market Intelligence. “At this level, the PMI is broadly consistent with GDP stalling in November.”
Williamson highlights the real dilemma for UK investors – whether this represents a ‘doom loop’, or merely a temporary blip in confidence. “Some of this malaise has been blamed on paused spending decisions ahead of the Autumn Budget, but there is a real chance this pause may turn into a downturn,” he says.
“The drop in confidence about the year ahead reflects a growing conviction that business conditions will deteriorate further in the coming months, largely linked to speculation further demand-dampening measures will be introduced in the Budget.”
For his part, David Zahn, head of European fixed income at Franklin Templeton Fixed Income, believes the ‘doom loop’ theory is a genuine risk. “The market would have taken an increase in income tax well enough but the piecemeal tax rises proposed make investors and consumers pull back,” he argues. “They don’t want to spend, they don’t know what’s happening and this is going to be repeated next year. It is not going to be a one-off.
“There also appears to be no effort to curb spending, which continues to rise and rise. From a bond market perspective, it is difficult to believe you are getting into any kind of fiscal rigour when the chancellor keeps coming back for more taxes every year. Equally, you get to a point where the tax take doesn’t keep going up, you drive more people out of the country and you disincentivise work.”
To be fair, the other side of the argument is that the UK is nowhere near as bad as some of its peers and chancellor Rachel Reeves at least appears to respect the concept of fiscal prudence. Spending cuts may be forced upon her eventually and Labour backbenchers may well fall into line as the prospect of a Reform government looms.
“The very fact we are worried about the fiscal rules is a good thing,” reckons James Klempster, deputy head of multi-asset at Liontrust. “People are tying themselves in knots when the economy is not in that bad a shape. We are as overweight the UK as we have been.”
There is a significant contrast between the UK’s view of itself and the perspective of international buyers – measured by fund flows, for example, foreign investors have added about £15bn to their UK exposure this year.”
One of the most curious elements of the current situation is the extent to which Britain appears to be talking itself into a darker economic position. Whether it is a government determined to blame the previous incumbents for the malaise, or a hostile media determined to paint the Treasury as incompetent, the net effect is to deter UK investors and consumers, and to prevent UK companies hiring and investing.
Indeed, there is a significant contrast between the UK’s view of itself and the perspective of international buyers – measured by fund flows, for example, foreign investors have added about £15bn to their UK exposure this year.
International buyers appear to have no qualms about snapping up UK companies either – according to Peel Hunt, around half of the M&A in the UK market for the year to date has come from here. This would also help explain the difference between the strong performance of the FTSE 100 and the wider market since the start of the year.
This suggests the UK could still revive, were confidence to improve. The same is true for consumers, who are sitting on large savings, requiring only better vibes on the economy to start spending again. The damage may be temporary and the Budget could prove a ‘clearing event’ – but that very much depends on what is in it.
The UK could reverse the recent damage with a revival in confidence, but it is increasingly difficult to see where that confidence might come from.
Read more on this from the FT here, from Peel Hunt here and from Standard & Poor’s here
In focus: AI levers
There was a lot to like in Nvidia’s results last week. Revenues were ahead of expectations while forward guidance was optimistic. All things considered, this bellwether results statement seemed to give investors worried about AI good reason to cheer. So why did markets continue to tumble?
The problem appears to be that strong results for Nvidia do no necessarily imply AI is not in a bubble – indeed, if anything, they may support the idea that companies are overspending on AI. Nvidia is providing the ‘picks and shovels’ of the AI gold rush, after all, so if businesses are overspending, these are exactly the type of results that might be expected.
A further issue is that the results have coincided with the many of the AI hyperscalers tapping up the bond markets to accelerate their developments. According to calculations from Reuters, corporate bond issuance by Alphabet, Amazon, Meta and Oracle since September has been some $90bn. In the case of Oracle, it comes on top of a relatively high existing debt burden while, with the other ones, it shows they are no longer funding their spending from existing cashflow.
Demand for the bonds has been strong yet the hyperscalers have had to pay more than their existing debt to attract buyers. – around 10 to15 basis points in the case of Alphabet and Meta. There are also potential implications for the corporate bond market: spreads are at historically tight levels but that may change if issuance starts to pick up.
“Investors are increasingly questioning the logic behind massive investments by mega tech groups to build data-centres and develop computing capacity,” note analysts at private banking group Edmond de Rothschild. “These worries are being amplified by companies turning more and more to leverage – either through public or private debt markets. In addition, elevated valuations for certain stocks leave little room for disappointment.”
So what would convince investors there is no bubble? Markets would need to see tangible gains from companies employing AI. At the moment, AI spending often remains a FOMO trade, rather than companies having a clear idea about what they are going to do with it.
As Ben Preston, manager on the Orbis Global Equity Strategy, points out, OpenAI typifies this trend. “So far, vastly more of its money has come from investors than from customers,” he says. “Add in the circular money flows – the ‘infinite money glitch’ – between the likes of OpenAI, Nvidia, and Oracle, and alarm bells should be ringing.”
