Endowus Q3 2025 Market Update and Outlook — Stocks Soar, Gold Glitters

As equity markets continue to make new all time highs, investors are naturally worried about valuations as well as growth slowing down. Moreover, as seen in the selloff on 10 October, triggered by renewed tariff concerns between US and China, we may continue to witness volatility. However, historically, we have generally seen equities perform well during late-cycle slowdowns, provided we avoid a recession and especially, if there is policy easing. 

While it is important to be aware of your risk appetite and diversify into different asset classes and regions/sectors, it is not advisable to time the markets just because equity markets are at all time highs or look expensive.

Global equity market 

In a robust third quarter, the Materials sector led performance, driven by strong gains among gold miners. Technology followed closely, with both Information Technology and Communication Services rebounding sharply in the post-Liberation Day pullback. In contrast, traditional defensive sectors – Healthcare, Consumer Staples, and Utilities – underperformed, underscoring the market’s risk-on sentiment in the quarter.

Japan equities delivered strong returns, supported by expectations of an improving domestic political outlook following the LDP election, as well as a catch-up in performance relative to other markets. 

With China offshore markets performing well in Q1, Korea in Q2, and China onshore & Japan performing in Q3, the North Asia region has been strong performers year-to-date. Alongside Europe, it continues to offer compelling diversification opportunities outside of the US.

Read more: As global dynamics shift, where do opportunities lie? Fund manager views

Global fixed income market

The global aggregate index (on a hedged basis) rose 0.5% for the quarter. Similar to equities, emerging markets debt outperformed its developed market counterparts. Given the risk-on sentiment, high yield bonds also performed well, with spreads tightening to as low as 250 basis points by the end of Sep. However, following the equity market pullback on 10 Oct, spreads widened again later in the month. 

Yields on US 10-year Treasury fell 7.8bps to 4.15%, following the Federal Reserve’s dovish pivot and first rate cut in 9 months marked in Sep 2025. During the quarter, the yield curve steepened as the 2 year fell 11.1 bps to 3.6% while the 30 year fell 4.3 bps to 4.7%. 

With the yield curve steepening and investors demanding higher term premiums, higher quality longer duration bonds present greater opportunities to capture yield, but it also poses greater risk as longer duration bonds are more sensitive to changes in interest rates. 

Read more: A quick guide to bond investing

Building a long-term resilient portfolio with Endowus Hong Kong

It is almost impossible to predict exactly how macro events would play out. However, spreading your investments across asset classes and geographies will help with diversifying your risk. With market volatility comes opportunities. If you have a long-term investing horizon, as many of us do, these developments may offer an opportunity through steady, regular investing in diversified and risk-adjusted portfolios.

With digital wealth platform Endowus, you can plan and manage your money — by investing in Best-In-Class Funds and globally diversified, low-cost model portfolios seamlessly.

Click here to get started on your investing journey with Endowus Hong Kong today.

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Risk Warnings

Investment involves risk. Past performance is not an indicator nor a guarantee of future performance. The value of investments and the income from them can go down as well as up, and you may not get the full amount you invested. 

Opinions

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