November 2025 index market overview: equities face headwinds despite rebounds

The financial landscape in November 2025 presents a complex picture, with US stocks recently rebounding on the easing of government shutdown fears, yet facing significant    macroeconomic and valuation challenges. Meanwhile, the FTSE100 continues its strong    run, and the DAX40 is stalled amid valuation concerns.   

US equities: a post-shutdown recovery in question    

US equity indexes, including the S&P500 and Nasdaq100, initially shrugged off the October government shutdown to hit fresh all-time highs by month-end, driven by robust earnings. However, early November saw a swoon as investors refocused on a less-than rosy macroeconomic and policy outlook.    

• Recent rebound and technicals: Stocks have partially recovered following an agreement to end the longest-in-history, 43-day federal government shutdown. Technically, the S&P500 needs to reclaim its October 29th high of 6,920 to signal a continuation of the recovery.    
• Valuation and concentration risk: The S&P500 is currently trading at an elevated 22.8x its 12-month forward IBES earnings. Compounding this risk is the increasing concentration of the US indexes. While the S&P500 is up 14.5% Year-over-Year (YoY), its equally-weighted index is up only 3.6% YoY, highlighting concentration    risk.     
• Key macro headwinds: The market faces multiple concerns, including high economic policy uncertainty (which looks set to remain elevated), fiscal challenges    (with debt-to-GDP continuing to climb), and trade issues. 

The generative-AI narrative under scrutiny 

The generative-AI narrative, which has been a primary driver of the K-shaped stock market rally since October 2022, is now being openly challenged by investors.    

• Concerns over funding and depreciation: Investor concern centers on the use of off-balance sheet financing vehicles and the accounting treatment of depreciation    on IT equipment, which has the potential to flatter earnings.    
• The Burry estimate: US investor Michael Burry commented that hyperscalers may be understating depreciation, estimating an understatement of $176 billion between 2026 and 2028. A failure to account for depreciation appropriately creates the risk of write-downs and a "violent re-appraisal of prices".    
• Technology slowdown: There are also concerns that advances in generative-AI models may be slowing, encountering more frequent issues with "hallucinations"— the tendency to present misinformation as fact.   

FTSE100 strength & High Street banks   

Despite significant headwinds, the FTSE100 index continues to climb and appears set to breach the 10,000 psychological level.    

• Strong performance: The FTSE100 has yielded a total return of 26.7% YoY, rising 23.4% with a dividend yield of 3.3%.    
• Key support: This outperformance is supported by strong showings from High Street banks, defense industrials, and non-energy resources companies.    
• Bank re-rating: High Street banks, whose performance over the past year has    been strong (e.g., Standard Chartered up 74.7% YoY ), appear to have relaxed valuations. The re-rating of High Street banks alone is projected to lift the overall FTSE100 index by around 6.4%.    
• Valuation: The FTSE100's 12-month forward P/E ratio is 13.1x, slightly below its    post-millennium average (13.3x). Assuming its P/E rises to its post-GFC peak (16x), the index could climb to 11,800 (+19.5%), suggesting valuation is not a significant constraint.   

DAX40 stalls amid optimistic expectations    

The DAX40 index has essentially stalled since mid-May, trading in a broad range, and exhibiting weakness towards its 200-day moving average.  

• Concentration and vulnerability: The DAX40 is vulnerable due to increasing concentration among a handful of large-cap firms and a high negative correlation with the S&P500 VIX Index.    
• Stretched valuations: Earnings growth expectations are elevated at 11.7% YoY. Assuming this growth, the forward P/E ratio is 14.6x, well above its long-run    average of 12.3x.    
• Improbable scenario: Regression analysis suggests that an 11.7% EPS expansion is consistent with goods exports expanding 20.5% YoY, which seems improbable. With earnings expectations optimistic and valuation stretched, return expectations for the DAX40 appear low.   

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