Global investors are wrapping up the year on a high note, reflecting on substantial gains across various markets. The MSCI All Country World Index, which encapsulates equities from both developed and emerging markets, has surged by over 21% during 2025, marking the best annual performance since 2019 and the second best since 2009.
Despite this optimistic outlook, the year has not been without its challenges. Early in 2025, markets faced uncertainty stemming from then-President Donald Trump’s proposed “Liberation Day” tariffs, which initially precipitated a market downturn in April. However, a subsequent recovery gained momentum as the U.S. administration reevaluated its strategy. In contrast, U.S. markets, while still robust, struggled to keep pace with their global counterparts. The S&P 500 index posted a commendable 17% increase but lagged behind other indices such as Germany’s DAX (+22%), the UK’s FTSE 100 (+20%), and Japan’s Nikkei, which boasted an impressive increase of 26%.
The U.S. dollar ended the year on a low note, experiencing its worst first-half performance in over five decades.
As several equity markets around the world prepare for their last trading sessions of the year, including in Japan, South Korea, and Thailand, analysts are beginning to reflect on the implications of market performance. Sylvain Broyer, S&P Global Ratings’ EMEA chief economist, shared insights on the resilience of the European economy. Broyer highlighted surprising developments, including stronger household consumption and decreasing unemployment rates, combined with a recovery in both confidence and productivity. Although there were fears regarding external shocks from U.S. tariffs on European goods, the European currencies managed to appreciate against the U.S. dollar, which was unexpected given the tariff pressures.
Germany, in particular, has been noteworthy this year, unveiling significant fiscal stimulus measures that have resulted in upward revisions of growth forecasts for the coming years.
The tech sector has also been a focal point in 2025, with artificial intelligence taking center stage. Alphabet, Google’s parent company, has seen its stock rise by 65% this year, largely attributed to the success of its Gemini service. In comparison, Microsoft’s growth has been more subdued at 15%. Nvidia, a chip manufacturer, garnered a 40% increase in its stock value, benefiting greatly from a surge in interest and investments in AI technologies, while Oracle has seen a 17% rise amidst concerns regarding its rising debt levels related to AI infrastructure initiatives.
Meanwhile, the London Stock Exchange opened higher, reflecting cautious optimism as it heads into its final trading hours. The FTSE 100 index was up slightly, buoyed by gains in mining stocks, including precious metals producer Fresnillo and copper miner Antofagasta.
In the UK energy sector, Octopus Energy is making headlines with plans to spin off its technology arm, Kraken, with a valuation of $8.65 billion. The company aims to sell a minority stake in Kraken to a group of investors, seeking to establish the tech platform as an independent competitor in the global utility market.
In Japan, trading concluded with historic results as the Nikkei 225 index closed above 50,000 points for the first time, reflecting optimism surrounding Prime Minister Sanae Takaichi’s anticipated government spending increases.
Overall, 2025 has been a year of significant crosswinds for global markets, marked by recovery, resilience, and notable technological advances, laying a complex yet promising foundation for the economic landscape ahead.
