Tariff turbulence dominated headlines earlier in the year, but global equity markets defied the noise to close 2025 with double-digit gains. By the fourth quarter, momentum shifted as investors broadened their focus beyond mega-cap technology companies, fuelling strong annual performance across Europe and Japan.
The Federal Reserve (Fed) and Bank of England (BoE) both delivered rate cuts as labour markets softened and inflation moderated. Over the quarter, we saw the yield curve steepen further, as 10-year Treasury bond yields were largely unchanged while two-year Treasury bond yields continued to decline as rates were cut. The Bank of Japan (BoJ) raised interest rates to the highest level in three decades.
As markets rallied, geopolitics added new levels of uncertainty, with events that could reshape regional dynamics. In January, Venezuela entered a period of uncertainty after President Nicolás Maduro was seized by US forces, raising questions about regional stability and signalling more assertive government behaviour going forward.