Resilience Tested as Markets Navigate Rate Cuts, Trade Tensions, and Record Gold

The third quarter of 2025 tested global markets as investors navigated shifting central bank policies, persistent trade uncertainties, and evolving economic signals. Despite considerable volatility, equity markets demonstrated surprising resilience, while gold emerged as the standout performer, breaking successive records to surpass $3,800 per ounce.

Central Banks Signal the Long Awaited Turn

Central banks began easing policy as economic uncertainty grew. The Reserve Bank of Australia held rates steady in July, then cut by 0.25% to 3.6% in August as inflation pressures eased. The Bank of England and Reserve Bank of New Zealand also lowered rates during this period.

In the U.S., Federal Reserve Chair Jerome Powell noted in July that the Fed might have already cut rates if not for trade tensions. A weak August jobs report, showing just 73,000 new positions, pushed markets to expect action. The Fed responded with a 0.25% rate cut in September, though Powell’s comment that policy was "not on a preset path" cooled hopes for further aggressive moves.

Trade Tensions Maintain Uncertainty

Trade developments continued to inject volatility throughout the quarter. July saw swift resolution of the U.S. Canada digital services tax dispute, but unexpected tariff announcements targeting Japan, South Korea, South Africa, and other nations followed, with rates ranging from 25% to 40%. By September, new tariffs on 68 countries and the European Union reignited supply chain concerns, though Europe's swift removal of tariffs on American goods offered some relief.

Markets Defy Expectations

Major equity indices reached record highs by the end of the quarter in September, propelled by strong technology sector performance. Oracle's AI related contract wins and Apple rejoining the $3 trillion market cap club exemplified enthusiasm for artificial intelligence. However, the Australian reporting season proved challenging, with unusual earnings misses highlighting stretched valuations.

European manufacturing slowed, even as the euro climbed to a four-year high against the dollar. Chinese equities showed quiet resilience despite broader economic challenges. The Japanese Nikkei reached record highs, benefiting from yen weakness.

Australia emerged as a notable performer, with the dollar climbing over 3% to 66.7 U.S. cents. However, the ASX 200 gave back gains as inflation drifted above 3% in September.

What This Means for Portfolios

The third quarter reinforced that markets could remain resilient even amid considerable uncertainty, particularly when supported by strong liquidity and easier monetary policy prospects. The value of diversification across regions and asset classes proved evident, as different markets offered varied return profiles.

Looking ahead, markets remain sensitive to central bank messaging and the pace of rate cuts. The upcoming earnings season will reveal how corporations are managing tariff related costs. The portfolios remain positioned to navigate this environment through broad diversification and focus on quality assets that can capture both stability and opportunity.