presentation Wealth Insights | January 15, 2026

Q4 2025 Global Market Review and Perspective

Written by Shan GaoWritten by Q4 2025 Global Market Review and Perspective

The quarter in summary:

Global markets finished Q4 2025 on a constructive note, rounding off one of the strongest years since the pandemic. Despite persistent political and policy noise throughout the year, most major asset classes delivered positive performance — some have called it a year of “a rally in nearly everything.” In USD terms, Global Equity (MSCI ACWI) gained +3.4% in Q4, bringing the full-year total to +22.3% for 2025, with gains broadening beyond earlier narrow leadership. Fixed income also posted positive returns for the year despite mid-year yield volatility.

Global Macro:

2025 wasn’t just a good year for returns — it was an eventful one, too. The first half was dominated by trade concerns as the United States raised tariff rates on nearly all its trading partners to levels not seen since the 1930s. April proved to be one of the most volatile months in recent history. By year-end, trade tensions eased as negotiations progressed and retaliatory threats diminished, supporting a rotation into international equities and emerging market assets. While markets and economies adapted well to higher tariffs, the risk of further trade disruptions remains significant. Despite these tariff shocks and geopolitical uncertainty, US inflation moderated steadily throughout the year. As of the end of Q4, US core CPI was cooler than anticipated, while still above 2% year-over-year. Adding to uncertainty late in the year, the U.S. federal government shut down for 43 days in October and November. Despite this, markets continued to advance. Congress reached a deal in mid-November to reopen the government, albeit only through the end of January.

Central bank decisions shaped market dynamics in the second half. Globally, most central banks either reduced policy rates or held steady after earlier cuts, with Japan being the notable exception. The Federal Reserve restarted its long-anticipated easing cycle in September, cutting rates three times in 2025 for a total of 75 basis points, bringing rates to their lowest level in three years. The Bank of England reduced rates by 100 basis points over four meetings, while the European Central Bank cut rates by 50 basis points across two moves.

Commodities delivered a mixed picture: precious metals surged, driven by tariff uncertainty and strong central bank demand, while oil prices fell nearly 20% amid elevated geopolitical risks. Meanwhile, the US dollar (DXY index) fell sharply by approximately 10%, driven by fiscal concerns and reduced confidence in policy. For USD-based investors, non-US exposure proved particularly rewarding as stronger foreign currencies amplified returns.

Equity Market:

Global equities delivered robust gains across regions in 2025, despite tariff uncertainty, interest rate changes, and concerns about the durability of AI-driven gains. US equities (MSCI USA) returned +17.3% for 2025, with +2.3% in Q4. The S&P 500 set new highs, marking its third consecutive year of double-digit gains.

The standout story was outside the US: non-US developed markets (MSCI World ex USA) soared +31.9% for the year and +5.2% in Q4, while emerging markets (MSCI EM) gained +33.6% for 2025 and +4.7% in Q4, their strongest relative performance since 2009. Gains were supported by a weaker US dollar and broader market participation beyond US mega-caps.

From factor perspective, value stocks (MSCI ACWI Value: +22.0% in 2025) lagged growth stocks marginally (MSCI ACWI Growth: +22.4% in 2025), but international value was among the best-performing asset classes of the year. Small caps lagged but still delivered solid gains, up +19.7% YTD, compared with large caps (MSCI ACWI Large Cap) at +23.0% YTD.

Source: Bloomberg.

DM ex US Value: MSCI World Ex USA Value NR USD; EM Growth: MSCI EM Growth NR USD; EM Value: MSCI EM Value NR USD; DM ex US Growth: MSCI World Ex USA Growth NR USD; US Growth: MSCI USA Growth NR USD; US Large: MSCI USA Large NR USD; Commodity: Bloomberg Commodity TR USD; US Value: MSCI USA Value NR USD; US Small: MSCI USA Small Cap NR USD; REIT: S&P Global REIT TR USD; US Fixed Income: Bloomberg US Agg Bond TR USD; Global Fixed Income Hedged: Bloomberg Global Aggregate TR Hdg USD; Cash: Bloomberg US Treasury Bill 1-3 M TR USD. Please see the disclosure page at the end for index definitions. All data represent total return for stated period. Past performance is no guarantee of future results.

Fixed Income Market:

Fixed income markets also delivered positive performance in 2025 despite mid-year yield volatility. Fiscal concerns continued to weigh on government bonds, and yield curves steepened across major markets. Against a backdrop of looser monetary policy, including the Fed resuming reinvestment into Treasury bills, the Bloomberg US Treasury Bill 1-3M TR USD returned +1.0% for Q4, outperforming long-term government bonds.

US investment-grade corporate credit spreads spiked in April but narrowed to multi-decade lows by year-end, finishing at 0.8% on 31 December, among the lowest levels since 1989. Investment-grade corporate bonds (Bloomberg USD Corporate 1–5Yr TR USD) returned +6.8% in 2025 and +1.3% in Q4, outperforming short-dated global government bonds (FTSE WGBI 1–5 Yr Hedged USD), which delivered +5.1% for the year and +1.1% in Q4.

Summary, Outlook and Investment Considerations

2025 was a standout year by many measures. Despite the steep sell-off in April, global markets delivered exceptional returns. International and emerging market equities dominated the leaderboard with annual returns above 30%, while the S&P 500 posted its third consecutive year of double-digit gains. This reinforces the case for global diversification.

Similar to the recent years, the market headlines have been dominated by AI and the so-called “Magnificent 7,” with NVIDIA briefly becoming the first public company to reach a $5 trillion market cap. Yet diversified portfolios don’t need to chase big names to gain exposure to big themes — AI touches many sectors. Broad diversification helps investors participate in these themes while mitigating concentration risk.

After 2025’s “rally in nearly everything”, the consensus view is broadly optimistic on the market outlook for 2026. We believe the stage is set for another constructive year ahead, unlocking opportunities across regions, market caps, and sectors. At MASECO, we continue to favour globally diversified multi‑asset portfolios, supported by disciplined rebalancing and targeted tilts where valuation and quality are compelling. This approach aims to keep portfolios resilient through short‑term volatility while aligned with long‑term objectives.

The Legal Stuff

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Source: All index data from Bloomberg as of 31 December 2025, unless otherwise stated. See end of report for further information. Please note any past performance mentioned is not a guide to future performance and may not be repeated.

Notes:

MSCI All Country World Index (ACWI) is a market capitalisation-weighted index that measures the performance of large- and mid-cap stocks across 23 developed markets and 24 emerging markets.

MSCI All Country World Value Index captures large- and mid-cap securities exhibiting overall value-style characteristics across 23 developed markets and 24 emerging markets.

MSCI All Country World Growth Index captures large- and mid-cap securities exhibiting overall growth-style characteristics across 23 developed markets and 24 emerging markets.

MSCI All Country World Large Cap Index captures large-cap representation across 23 developed markets and 24 emerging markets.

MSCI All Country World Small Cap Index captures small-cap representation across 23 developed markets and 24 emerging markets.

​MSCI World ex USA Value Index measures the performance of value-style large- and mid-cap securities in developed markets excluding the United States.

​MSCI World ex USA Growth Index measures the performance of growth-style large- and mid-cap securities in developed markets excluding the United States.

​MSCI Emerging Markets Value Index captures value-style large- and mid-cap securities in 24 emerging markets.

MSCI Emerging Markets Growth Index captures growth-style large- and mid-cap securities in 24 emerging markets.

​MSCI USA Growth Index captures large- and mid-cap U.S. securities exhibiting overall growth-style characteristics.

​MSCI USA Value Index captures large- and mid-cap U.S. securities exhibiting overall value-style characteristics.

​MSCI USA Large Index captures large-cap representation of the U.S. equity market, covering approximately 85% of the free float-adjusted market capitalisation in the United States.

​MSCI USA Small Cap Index captures small-cap representation of the U.S. equity market, providing focused exposure to smaller U.S. companies.

​Bloomberg US Aggregate Bond Index is a broad, market value-weighted index that measures the investment-grade, U.S. dollar-denominated, taxable bond market, including U.S. Treasuries, government-related, corporate, mortgage-backed, and asset-backed securities.

​Bloomberg Global Aggregate Bond Index Hedged USD measures global investment-grade, fixed-rate debt markets, including Treasury, government-related, corporate, and securitised bonds from developed and emerging markets, with currency exposure hedged back to the U.S. dollar.

​Bloomberg Commodity Total Return Index reflects the total return of a fully collateralised investment in a broad commodity futures index, combining commodity futures price performance with the return on collateral invested in U.S. Treasury bills.

​Bloomberg USD Corporate 1-5Yr TR USD Index is a measure of USD‑denominated, investment‑grade, fixed‑rate, taxable corporate bond market with remaining maturities from 1 to 5 years.

S&P Global REIT Total Return Index measures the total return performance of global real estate investment trusts, including both price changes and reinvested dividends, in U.S. dollars.

FTSE World Government Bond 1-5 Year Index Hedged (WGBI) Is a broad index providing exposure to the global sovereign fixed income market. The index measures the performance of fixed-rate, local currency, and investment-grade sovereign bonds. It comprises sovereign debt from over 20 countries, denominated in a variety of currencies.