Weekly Market Update: 25th Sept
25/09/2026
Rachel Winter discusses the unexpectedly strong US PMI data, the latest UK government borrowing figures, and Meta’s new AI agent.
Transcript
Hello and welcome to the Killik & Co market update.
We’ve had a few wobbles in markets towards this end of this week. The trigger was actually some strong economic data that came out of the US - the latest flash PMI – or purchasing managers index – showed that US business growth is at its highest level since 2021.
Here’s the US monthly PMI data for the last 3 years. A number above 50 shows indicates economic expansion, so you can see the last 3 years have been strong overall, but there have been declines in March of this year when the tension in the middle east escalated, and in spring last year when the tariffs were introduced. The latest reading of 58 was higher than expected, and the commentary that accompanied the latest set of results suggested the current environment is quite inflationary.
“Price pressures intensified in September. Average input costs measured across both goods and services surged higher, the overall rate of inflation hitting the highest since October 2022. The increase was blamed widely on higher fuel and transport costs, though wage pressures were also noted to have picked up in many cases.”
As a result, the implied probability of US interest rates rising next month is now 70% - up from just 8% a month ago.
The prospect of higher rates caused a little bit of weakness in equity markets. on here we have the Nasdaq composite in black, the S&P 500 in pink, and the Dow Jones in green. All three have dropped a little in the past couple of days, but it has still been a very positive 12 months. The Nasdaq has the most exposure to the technology sector and has been the most volatile, while the Dow has the least exposure to technology and has been the least volatile.
The office for national statistics published the latest UK government borrowing figures this week, and the borrowing figure for August was quite a bit higher than expected at £18bn. Here’s the data over the last 2 years. The dark green bars show total spending, the bright green show tax receipts, and the pink line shows the different between the two – the net borrowing requirement.
We can also consider borrowing as a percentage of GDP, rather than as an absolute figure. Here’s the data going back to 1900. Borrowing spiked to 25% of GDP during both world wars. There was then a rise during the financial crisis, and another during covid. Borrowing has been fairly stable at 5% of GDP for the past couple of years, but this is deemed by some to be too high. The head of the IMF warned the US and the UK this week that their government borrowing levels are too high.
This higher borrowing figure will eat into the chancellors headroom and will have connotations for the Autumn Budget, which is currently scheduled for 28th October.
Lastly, it’s been a good week for Meta. The company has recently launched a new consumer-facing AI agent called Muse, which can help with tasks such as booking restaurants and shopping. The early reviews have been strong, and Muse is currently performing well in the app charts.
It’s currently ranked at number one in terms of the rate of current downloads. Muse was downloaded 2.5 million times in its first 13 days, slightly behind ChatGPT but significantly ahead of Claude and Grok.
Meta’s share price has had a good bounce as a result. Here’s the ten year chart – the shares are up 30% in a month. This is quite a turnaround as Meta has significantly lagged the S&P 500 over the last year. we can see on here that Meta has trading at a relatively low valuation in comparison to the broader index, suggesting it has been a bit out of favour. The price/earnings ratio measures how expensive a share or index is – the higher the number, the more expensive it is deemed to be. Meta, in the green, had been trading at a lower valuation than the S&P in the pink, although that gap will now have closed given meta’s share price bounce this week. do give us a call to discuss meta in more detail.
Next week -results due from Accenture, Nike and SSE.
You may also like...
Sign up to our newsletter
Sign up to receive the latest news from Killik & Co, including our Market Update and Killik Explains educational videos, and be one of the first to hear about upcoming events and webinars. You can unsubscribe at any time and learn how we use your data in our Privacy Policy.