Bubble, Bubble, Taxes & Trouble...

Politics may be dominating headlines, but markets were largely unbothered. The US

government shutdown has rolled into a second month, while the Federal Reserve cut

interest rates again but the UK kept theirs on hold. At home, all eyes are on the Autumn

Budget, where higher taxes look inevitable. Technology and artificial intelligence have

investors buzzing once again, though high spending and a few eerie echoes of the

dot-com era have left some questioning the hype.

Interest rates: Diverging paths

The US trimmed interest rates by 0.25%, marking their second consecutive cut and bringing borrowing costs to their lowest since 2022. UK homeowners were less fortunate, with the Bank of England holding rates steady as inflation continues to linger.

Anticipation builds for the Autumn Budget

In the UK, the Chancellor is preparing for the Autumn Budget and signalling a series of “tough decisions”, inevitably raising expectations of further tax increases. While speculation continues, current polling suggests this Budget is unlikely to reverse political momentum.

Markets rise, but AI valuations draw attention

Global markets have continued their climb from April lows, and AI remains the defining theme of the year. Nvidia recently became the world’s first $5 trillion company, and the scale of investment from major tech players is drawing comparisons to the dot-com era.

The key difference today is profitability, many of the leading tech firms now generate robust cashflows. But concerns remain: companies are spending aggressively, valuations look stretched, and market concentration means any stumble could reverberate globally.

Bottom line

Despite political chaos, markets remain composed. Inflation is easing, interest rates are gradually falling, and economies continue to move forward. That said, risks haven’t vanished. Investors should remain prepared for turbulence, especially if leadership within markets begins to shift. A diversified, disciplined approach continues to serve well.

Q&A

Is there a bubble in technology and AI stocks?

A bubble happens when prices rise far beyond what underlying fundamentals support. Recent enthusiasm around AI has driven technology stocks to record highs — none more so than Nvidia, which has grown from a $1 trillion company in 2023 to being worth more than $5 trillion today. It’s part of the “Mag-7”, a group of major US tech firms that have dominated market performance in recent years.

Memories of the late-1990s dot-com bubble understandably make investors cautious. US stocks currently sit around 40% above long-term valuation averages, and market concentration is high, the Mag-7 account for nearly 40% of the US market and 25% of global equities.

However, today’s environment is different in key ways:

• Many leading tech firms are highly profitable

• Balance sheets are stronger

• Earnings growth is robust

That said, concerns remain. AI investment is extraordinarily expensive, and only time will tell whether companies can convert that spending into long-term profits.

Is it all taxes and bad news in November’s Budget?

The upcoming Autumn Budget on 26 November arrives against one of the tightest fiscal backdrops in years. Slow growth, higher borrowing costs, and strict fiscal rules leave limited room for manoeuvre. While the government has pledged not to raise the main taxes on working people, wealth and capital are firmly in the spotlight.

Possible areas of focus include:

• Capital Gains Tax changes

• Inheritance Tax reforms

• Property-related taxes (e.g., Stamp Duty)

• ISA adjustments

• pension relief tweaks for higher earners

  
  

Rather than big headline tax rises, this Budget looks likely to rely on quieter measures: frozen thresholds, reduced reliefs, and rebranded taxes, all designed to raise revenue without overtly breaking pledges.

Month by Numbers

As at 31 October 2025

Based on the data visual on page 1 of your document, key market moves included:

Equities

• UK: +4.18%

• Europe: +2.28%

• US: +2.35%

• Emerging Markets: +4.61%

• Japan: +7.85%

  
  

Bonds / Rates

• UK Base Rate: 4.00% (unchanged)

• Fed Funds Rate: 4.00% (-0.25%)

• UK 10-Year Yield: 4.41% (-0.29%)

• US 10-Year Yield: 4.10% (-0.05%)

  
  

Currencies

• GBP/USD: -2.40% (now $1.31)

• GBP/EUR: -0.79% (now €1.14)

• USD Index (DXY): +2.08%

  
  

Commodities

• Gold: +3.73%

• Oil (Brent): -2.91%

  
  

Noteworthy

• Meta (Facebook): -11.71%