Investment market update: November 2025

One of the biggest factors affecting investment markets in November 2025 was concern about an AI bubble. Despite this, there were still market highs recorded during the month.

Remember to consider your risk profile when you invest and review your portfolio’s performance with a long-term outlook.

AI concerns led to volatility throughout November 2025

With UK chancellor Rachel Reeves set to deliver a fiscal Budget at the end of the month, speculation led to market volatility on 4 November. Indeed, the FTSE 100 fell during a speech Reeves delivered, but clawed back most of the losses, with shares in housebuilders rising.

On 5 November, worries that AI stocks were overvalued led to global volatility.

In Europe, the falls were modest, with London’s FTSE 100 down 0.1%, and Germany and Spain’s main indices both declining by almost 0.8%. The falls were more dramatic in Asian markets, including Japan’s Nikkei (-2.5%) and South Korea’s KOSPI (-2.85%).

The US technology-focused index, Nasdaq, was also down 2%. All of the “Magnificent Seven” – seven of the largest and high-growth companies in the world, made up of Nvidia, Amazon, Apple, Microsoft, Tesla, Meta, and Alphabet – suffered falls.

On 7 November, Wall Street continued to fall amid economic and valuation worries. The Dow Jones index, which consists of the 30 largest US companies, was down 0.45%, while the broader S&P index fell 0.6%.

The Financial Times calculated that $800 billion (£566 billion) was wiped off major AI stocks – including Nvidia, Meta, Palantir, and Oracle – in the first week of November.

Hopes that the US government shutdown was coming to an end led to both US and European markets rising, including London’s FTSE 100 hitting a new high on 10 November.

The rally continued in London, with the FTSE 100 hitting a record high on 12 November, nearing the 10,000-point mark for the first time. The biggest riser was energy company SSE. Its share prices jumped 17% after the firm announced a five-year investment plan.

Concerns about an AI bubble reared again on 14 November, with indices down globally, and the tech sell-off continued when markets opened the following week.

Google’s boss warned that “no company is going to be immune” if an AI bubble burst happens. The FTSE 100 fell 1%, with mining companies Fresnillo (-6.4%) and Endeavour Mining (-4.7%) among the biggest losers. It was a similar picture across the wider European market, with the main indices in Germany, France, Italy, and Spain all experiencing volatility.

There was some investor relief on 20 November when AI firm Nvidia revealed its sales were up 62% year-on-year. The company beat expectations and reported revenue of $51.2 billion (£38.6 billion) from data centre sales in the second quarter of 2025. The firm expects revenue to reach $65 billion (£49 billion) in the final quarter of 2025.

The news led to Asian-Pacific markets soaring, including Japan’s Nikkei (2.6%), South Korea’s KOSPI (2%), and Taiwan’s TW50 (3.6%). Wall Street also rallied, and the Nasdaq was up 2.18%.

The UK’s Budget also affected markets, particularly the FTSE 100.

Ahead of the speech, it was reported that UK banks would be spared a tax raid, which led to shares in the sector jumping on 25 November. Among those benefiting were NatWest (2.2%), Barclays (2.9%), and Lloyds Bank (2.95%)

Betting companies didn’t fare so well. The chancellor revealed a new tax hike on gambling firms, which led to shares sliding on 27 November. Rank Group told its shareholders it expected a hit of around £40 million to its annual operating profit, leading to shares falling by 10%. Similarly, Evoke shares fell 5% after it estimated duty costs would increase by around £125 million a year.

UK

Inflation in the 12 months to October fell to 3.6%, suggesting it has peaked.

The Bank of England (BoE) opted to leave interest rates where they are, but the latest inflation data suggests a cut could happen before the end of 2025 or at the start of 2026. Indeed, Goldman Sachs predicts interest rates will fall to 3% by July 2026.

Economic growth data was disappointing. Between July and September 2025, GDP increased by just 0.1%. Once GDP is adjusted for population growth, it remained unchanged when compared to the previous quarter. The figure is the slowest quarterly growth recorded since the short recession experienced in the second half of 2023.

The BoE’s data suggests that economic growth will pick up in the final quarter of 2025. The economy is expected to grow by 0.3% between October and December.

Official data also shows the impact of US trade tariffs on economic growth.

In September, the value of UK exports to the US fell by £500 million, or 11.4%, to the lowest level since January 2022. More broadly, UK goods exports fell by £1.7 billion, a 5.5% decrease. This led to the trade deficit widening to £59.6 billion in the third quarter of the year.

However, there was some good news, with UK factory output rising for the first time in a year. S&P Global’s Purchasing Managers’ Index (PMI) was 49.7 in October. While this is still below the 50 mark that indicates growth, it’s heading in the right direction.

Europe

The European Commission has increased its growth forecast for the eurozone economy.

The eurozone is now expected to grow by 1.3% in 2025, compared to the earlier spring forecast of 0.9%. The upward revision was linked to a surge in exports as companies tried to beat incoming tariffs. Looking ahead, the European Commission anticipates growth of 1.2% in 2026 and 1.4% in 2027.

As the largest EU economy, Germany’s economy plays an important role in the bloc. However, it’s a gloomy picture.

The German Economic Council revised its 2026 growth forecast down to 0.9%. In addition, an Ifo report found that German business morale is low, as companies lose faith in the economic recovery.

US

On the surface, US manufacturing data appears positive, with output and new orders rising, according to S&P PMI data. However, Chris Williamson at S&P Global Market Intelligence said the underlying picture is “not so healthy”. He explained there was an unprecedented rise in unsold stock due to weaker sales, especially in export markets.

Job data also appears positive initially. Official figures show more than 119,000 jobs were created in September, helping to recover from a summer lull. The figure is more than twice the number expected.

However, data from recruitment firm Challenger, Gray & Christmas, suggests the data could be very different in October. The firm suggests job cuts hit a 22-year high as employers embraced AI, which led to employers shedding more than 153,000 jobs in October – up 175% when compared with 2024.

Asia

Economic data from Japan revealed the economy contracted in the third quarter of 2025. The country’s GDP was down 0.4% between July and September when compared with the same period a year earlier. The fall was partly linked to exports falling 4.5% when compared with 2024 amid US trade tariffs.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.