By Silvano Grimaldi, CEO of the independent asset management firm Grimaldi & Partners AG.
Monthly Review
International equity markets ended September 2025 with mixed performance.
United States — Gains in September 2025
Federal Reserve rate cut: The 25-basis-point rate cut on 17 September supported valuation multiples and investor risk appetite.
Goldilocks economic data: August CPI remained moderate, while price pressures in the PMI data eased. As a result, the probability of an interest rate cut had already increased before the meeting.
Risk-on sentiment following the rate cut: Strategists highlighted broader support for equities, including small-cap stocks.
Europe — Decline in September 2025
Weaker investor sentiment: The Sentix investor confidence index fell sharply to –9.2, with Germany showing particular weakness.
Rising interest rates and bond yields: Higher yields weighed especially on real estate and defensive stocks, while the STOXX 600 temporarily fell to a one-month low.
Sector headwinds: Automotive and medical technology stocks repeatedly pulled the broader market lower.
Stocks in Focus
United States — Microsoft
Microsoft continued to deliver stable and broadly diversified growth in artificial intelligence and cloud computing, supported by strong performance from Azure.
The company recorded a strong financial year 2025, with revenue growth of 15% and substantial cash generation. Ongoing dividend payments and share buybacks provided additional support.
Visibility for Q4 2025 remains favourable due to the continued monetisation of artificial intelligence through Copilot and Microsoft’s cloud services.
Europe — ASML
ASML remains a key supplier within the AI semiconductor value chain.
Management expects revenue growth of approximately 15% in 2025, alongside significant growth in its EUV business. The company’s order backlog and bookings continue to support the investment cycle.
The share price has recently lagged behind the broader market, potentially offering positive leverage if investment in artificial intelligence and memory semiconductors accelerates during Q4.
Outlook – 4th Quarter 2025
Opportunities
Central-bank support: The FOMC meetings on 28–29 October and 9–10 December, as well as the ECB meeting on 30 October, could signal or confirm more accommodative monetary-policy guidance, supporting equity valuations.
Q3 earnings season: The reporting season begins in October. Expectations for technology-sector earnings have been raised, and positive surprises could extend the market rally.
Cooling inflation data: Scheduled CPI and HICP releases in October, November and December could increase expectations of further interest rate cuts if inflation figures remain subdued, supporting investor risk appetite.
Risks
US budget dispute and shutdown risk: Political deadlock surrounding the beginning of the 2026 fiscal year on 1 October could weigh on investor sentiment and economic growth.
Upward pressure on oil prices: OPEC+ is expected to discuss November production levels in early October. Changes to production policy or official selling prices could support energy prices and place pressure on corporate margins.
Earnings and valuation risk: Following strong year-to-date gains and elevated expectations for technology companies, results that are good but not good enough could trigger profit-taking.
Performance Expectations
For Q4 2025, we expect a slightly positive, or neutral-to-positive, trend in international equity markets, accompanied by periods of volatility.
Supportive monetary policy: The FOMC meetings on 28–29 October and 9–10 December remain important. Following the September rate cut, the possibility of further monetary easing remains in place, which is generally supportive for equities.
Earnings momentum: The Q3 reporting season begins in mid-October, led by the major US banks. Positive earnings surprises could provide additional market support.
Seasonality: The fourth quarter has historically been one of the stronger periods for equity markets. The traditional “Santa Claus rally” often supports the final trading days of the year.
Europe remains stable but cautious: The ECB interest-rate decision is scheduled for 29–30 October. Recent communication from the ECB has indicated policy continuity, suggesting no immediate headwind from interest rates.
Stock Recommendation: Microsoft
This publication is provided for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial instrument. Past performance is not indicative of future results.
