Insights
Market review for September 2025
This month:
The first US rate cut in 2025
More US tariffs – pharma swallows a bitter pill
French, Australian and UK recognition of Palestine
Microsoft’s stance against the Israeli army
China’s emissions’ pledge vs. Trump’s climate change denial
NZ’s economic slumber – is a spring awakening due?
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September brought more global disruption, both geopolitically and financially, but encouragingly we saw some glimmers of hope for ethical investors.
The big development for investors generally came from the US, where the Federal Reserve (Fed) - the US equivalent of NZ’s Reserve Bank- ushered in its first rate cut of 2025. The 0.25% reduction in the fed funds target range was a cautious attempt to boost the slowing US economy.
Towards the end of the month, Trump announced punitive tariffs of 100% on some imported pharmaceuticals and medicines. Meanwhile, kitchen cabinets and bathroom vanities were hit with 50% tariffs, and heavy-duty trucks copped a 25% tariff – all in the name of US national security (1). The decisions will undoubtedly have unintended consequences beyond just higher inflation for the US; J.P Morgan predicts they’ll cause significant headwinds (think ‘opposition’) for international economic growth prospects (2).
Meanwhile, the price of gold reached record highs, in a sign of investor nerves and a growing appetite for portfolio protection. As a reminder, gold is considered a safe-haven asset, something that’s expected to retain its value, or even increase, during market turbulence. In parallel, US equity markets marched ever higher. It is somewhat unusual for bearish investor behaviour (i.e. the flight to gold) to exist alongside bullish behaviour (i.e. robust US stock markets), albeit periods of inflation concern can produce both. Typically, it’s an either/or scenario.
Today’s dichotomy is not a cause for panic, but it does remind us of the value in holding diversified assets in the face of uncertainty. At some stage the bullish investors or the bearish investors will claim to have been right.
Palestinian recognition
As an ethical investor, we noted with interest two significant events in the month related to the conflict in Gaza.
First, came the news that France, Australia, Canada and the UK were all moving to formally recognise the State of Palestine.
Advocates of Palestinian statehood argue that it is a vital stepping stone towards peace in the region, as it gives Palestinians hope of life beyond war and a formalised role on the international stage. Critics argue that the recognition will achieve little given US and Israeli support is required before statehood can become reality. Time will tell, but this move to international recognition could be an important and persuasive step.
Secondly, we were encouraged by the news that Microsoft - a company in which some of our funds are invested - had withdrawn certain services used by the Israeli army to support its fight in Gaza. They had breached Microsoft’s Terms of Service by using their technology to operate a powerful surveillance system that collected millions of Palestinian civilian phone calls (3). This is important for our ongoing research into the companies in our portfolio mentioned in the special rapporteur’s report to the UN on the subject of Gaza. More details of which you can find here.
China’s targets vs. Trump’s dismissal
Last month, China announced that it was establishing its first-ever target to reduce greenhouse gas emissions. It will aim to cut emissions by 7% to 10% over the next 10 years, and pledged to increase the proportion of renewables in its energy infrastructure by 30%, over the same time period (4).
Critics were quick to argue that the targets aren’t big enough or quick enough to stem the damage caused by China, in its role as the world’s biggest emitter.
In our view, one target is better than no target. But there is definitely room for improvement. We would hope that is a stepping stone towards a radical shift in how China’s emissions are managed longer-term.
It’s worth noting that China is simultaneously the world leader in the renewable energy space and also went through their industrialisation later than many of those criticising it from the West. In this area at least, it has set itself up well for a future that is less reliant on fossil fuels – a trend which should have wider environmental benefits and which not all Western countries can also claim
In contrast, a very different tone was struck by Donald Trump. Speaking at the UN General Assembly last month, he labelled climate change as “the greatest con job ever perpetrated on the world, in my opinion” (5).
Global progress to tackle the biggest contributors to climate change relies on co-operation. The fact that the leadership of the world’s two super-powers have such strikingly different ideologies on this issue is a significant challenge (and rather counterproductive).
NZzzzzz’s sleepy economy
Meanwhile in New Zealand, the GDP data release for the June quarter showed an economic contraction of 0.9% - worse than many analysts had forecasted.
Speculation subsequently mounted that a minimum cut of 0.50% to the OCR in October was all-but-inevitable if the Kiwi economy is to be brought back to life.
It wasn’t all bad news, however. Tentative signs of an improving jobs market emerged, with a 0.2% lift in jobs filled recorded in August, compared to July. This came on the back of recent research by SEEK that pointed to a 4% annual rise in job ads(6). Greenshoots for the local economy, hopefully, as we head into Spring.
Performance and Returns
As for the Pathfinder KiwiSaver Plan and Managed Funds, the short, medium and long-term performance data can be viewed here at any time.
Factsheet for:
Ethical Growth Fund
Ethical Trans-Tasman Fund
Global Responsibility Fund
Global Property Fund
Global Water Fund
Green Bond Fund
KiwiSaver Funds
View our ethical performance
Ethical Scorecard for:
Ethical Growth Fund
Ethical Trans-Tasman Fund
Global Responsibility Fund
Global Property Fund
Global Water Fund
KiwiSaver Growth Fund
KiwiSaver Conservative Fund
KiwiSaver Balanced Fund
View our Sustainability Report
Sources & Further Reading
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Pathfinder Asset Management Limited is the issuer of the Pathfinder KiwiSaver Plan and Pathfinder Investment Funds. Product Disclosure Statements for these offers are available at pathfinder.kiwi. Learn more about how we invest ethically by reading our Ethical Investment Policy & Exceptions Register on our website.
