2025: Year in review, global economic and financial market highlights by Omnis Investments

2025 was a year that contained sharp swings in investor sentiment, but one where sentiment was ultimately buoyed by better-than-expected macroeconomic outcomes and unprecedented levels of technological investment.

From China's entry to the artificial intelligence (AI) arena to Donald Trump's tariffs and the outbreak of war, markets proved resilient, finding support from robust economic growth, falling interest rates and a surge in AI investment.

January

Global markets surge higher on optimism surrounding the inauguration of President Donald Trump. Chinese AI company DeepSeek releases a more cost effective AI model that sees US AI companies pullback sharply.

February

Rotation into European equities gains momentum. Chinese equities rally on optimism surrounding AI development in China. Germany announces major defence and infrastructure spending package.

March

Heightened trade war concerns between the US & China results in deteriorating consumer sentiment. Germany announces major defence and infrastructure spending package in response to US policy.

April

2nd April President Trump announces sweeping tariffs across the globe, seeing global markets plummet. 9th April President Trump announces 90 day suspension of tariffs for all countries (ex China) igniting a global equity rally.

May

Equities extend rally as the US and China reach a trade agreement, and progress with the US and EU helps alleviate global recessionary concerns. Bank of England cuts interest rates by 0.25 percentage points.

June

Geopolitical tensions escalate between Israel & Iran resulting in US intervention and a subsequent ceasefire. Equities rally as global contagion concerns and short-term inflationary impacts subside.

July

EU agrees to buy US$750bn of US energy and invest US$600bn in US economy, along with increased defence spending. US and China trade negotiations ongoing as both regions seek to extend the tariff pause.

August

Bank of England reduces interest rates by 0.25% to 4%. Strong corporate earnings from US mega-cap technology companies boosts investor sentiment.

September

The US Federal Reserve (central bank) resumes interest rate cutting cycle and reduces rates by 0.25%. US government failed to pass appropriations legislation, which led to a government at the end of September 2025.

October

US and China reached a preliminary trade deal. Sanae Takaichi becomes first female prime minister of Japan. US Federal Reserve reduces interest rates by a further 0.25%.

November

UK Budget leaves few surprises, which boosts UK Gilt prices. China’s economy slows, weighed down by weak consumer demand and the property slump. US data backlog from government shutdown creates mixed signals.

December

The Bank of England reduces interest rates by 0.25% to 3.75%, the lowest level since early 2023. The Bank of Japan raises interest rates to 0.75%, a 30-year high.

Chart: MSCI ACWI Index 2025 return. Source: Bloomberg