Despite facing geopolitical turmoil and uncertainty in tariff policies, global stock markets have shown remarkable resilience in 2025. As the final trading day came to a close, major US stock indices achieved double-digit growth for the third consecutive year, marking a record not seen since 2019 to 2021.
While profit-taking by investors led to a slight decline in indices at the year-end, the overall performance for the year undoubtedly marked a high-return conclusion to this turbulent year.
On Wednesday, December 31st, the three major US indices closed lower, with the Dow Jones Industrial Average falling by 0.63%, the S&P 500 dropping by 0.74%, and the Nasdaq Composite declining by 0.76%.
However, looking at the full year, all three major indices saw consecutive gains for the third year in a row. The S&P 500 rose by 16.39%. The Nasdaq Composite, driven by investments in AI giants, achieved a 20.36% increase. The Dow also saw a rise of 12.97%.
Of note, the Dow closed higher in December, marking not only the eighth consecutive monthly gain but also the longest winning streak since 2018.
Nvidia became a symbol of this surge, with its market value surpassing $5 trillion for the first time during the year.
Meanwhile, within the S&P 500, the communication services sector index became the best-performing sector of the year, primarily driven by a 65% increase in Alphabet’s stock price.
Looking back on the year, the market was evidently not without challenges. In April, US President Trump’s announcement of comprehensive tariff policies on “Liberation Day” triggered global market volatility, with US stocks briefly approaching bear market territory.
However, the market subsequently demonstrated remarkable resilience. Analysts pointed out that strong corporate fundamentals, better-than-expected financial performances, and prospects of the Federal Reserve resuming rate cuts effectively countered the negative impacts of policy uncertainty, leading to renewed inflows of funds into the market and multiple record highs in the latter half of the year.
Overall, the MSCI All Country World Index (ACWI) also rose by more than 20% for the year.
Kasper Elmgreen, Chief Investment Officer of Equities and Fixed Income at Nordea Asset Management, told the Financial Times, “If you had told me at the beginning of the year that global trade would undergo such a reshaping, I would not have predicted such a strong year for the stock market.”
He added, “But what we have seen is a resilient economy and extremely strong corporate fundamentals.”
Unlike previous years, the upward trend in 2025 was not limited to just US tech giants, with funds beginning to show evident cross-regional and cross-asset allocation.
The MSCI Asia Pacific ex-Japan Index rose by nearly 27% for the year, outperforming the S&P 500 index. Europe and emerging markets also attracted substantial funds seeking to diversify investment positions due to relatively low valuations.
Driven by rate cut expectations and hedging demand, gold reached a 46-year high, rising by over 64% for the year; silver had an even more astounding performance, recording a record-breaking increase of over 141%.
Amid recurrent tariff uncertainty and shifts in monetary policies, the US dollar index recorded an annual decline amid fluctuations.
Crude oil, however, was one of the few underperforming assets, marking its largest annual decline since 2020.
Behind the impressive gains in the market, warning signals also emerged. Some economists cautioned about current asset prices.
The Shiller CAPE ratio of the S&P 500 index is approaching 40. Historical experiences suggest that this level is surpassed only by the eve of the bursting of the dot-com bubble in 2000, indicating limited long-term return potential.
Market performance also heavily relies on a few tech giants, the so-called “Magnificent Seven,” accounting for about a quarter of the weight in developed markets worldwide.
Altaf Kassam, Head of European Investment Strategy and Research at State Street Global Advisors, told the Financial Times, “When you see funds concentrated in companies with very similar business models, it is concerning… It can make the market more fragile.”
“It’s like playing Jenga. If you remove a key block, the entire structure could collapse,” he said.
The last four trading days of 2025 saw consecutive declines, breaking the traditional “Santa Claus rally,” with some investors viewing it as a signal of a slowdown in market momentum.
Heading into 2026, investors are expected to witness structural changes. The market focus will shift from mere “AI infrastructure” to how companies leverage new technologies to enhance profitability.
Additionally, the trajectory of the Federal Reserve’s monetary policy, the next steps in tariff policies, and whether corporate earnings can support the current high valuations will be key factors in determining whether the global stock markets can sustain the bullish sentiment in 2026.
Analysts also warn that in the backdrop of a high base period globally, investors should maintain cautious optimism and rely more on fundamental analysis.
Keith Buchanan, Senior Portfolio Manager at Globalt Investments, told CNBC, “We see changes in the internal structure of the market, which leads us to believe that 2026 might… be very different from 2025.”
He stated, “The market will be more driven by fundamentals, with less reliance on monetary policy and AI infrastructure construction.”