Q4 in review

Global equities maintained their positive momentum as 2025 drew to a close, with the MSCI All Country World Index rising about 3% over Q4 (in USD). The benchmark finished the year 22% higher than at the start of January. Stock markets shrugged off a wobble in November on AI-bubble fears and sticky inflation data, continuing their ascent in December as the US Federal Reserve (Fed) delivered another cut in policy rates and Chair Jerome Powell struck a more dovish tone. Solid earnings, a revival of the AI trade and some positive economic updates, including official data that showed the US economy grew significantly faster than expected in Q3, also supported equities in the last three months of 2025.

By region, emerging markets led advanced-economy equity benchmarks for the year, with a c.5% rise over Q4 helping the MSCI EM Index to a c.34% annual gain. Though US stocks modestly trailed the global index in the final quarter of 2025, over the full year they lagged by the largest margin since the Global Financial Crisis. Nevertheless, while US trade policy and concern about the high valuations of technology stocks hindered US equities in relative terms – as did China’s AI breakthroughs, which lifted Asian stocks – the S&P 500 Index still ended the year close to its all-time highs. Other developed market equity benchmarks also finished 2025 positively, including the UK’s FTSE All-Share Index, Germany’s Dax and Japan’s Topix, the latter reaching its highest ever year-end level on AI expectations and a better-than-feared outcome to trade negotiations with the US.

Source: Bloomberg as at 31 December, 2025