In Short:
– World equities are expected to reach record highs in 2025, driven by anticipated Federal Reserve rate cuts and AI gains.
– The MSCI index gained nearly 21% in 2025, while the S&P 500 achieved its 39th record close this year.

Global equity markets ended 2025 on a historic high, capping off a year of extraordinary gains. The MSCI world equity gauge recorded an almost 21% year-to-date increase, while the S&P 500 closed at 6,932.05 on Christmas Eve—its 39th record close of the year. European shares also touched intraday records, as investors bet on continued Federal Reserve interest rate cuts and strong AI-driven growth.

Asian markets led the year-end surge, with Taiwan’s benchmark index hitting a record high of 28,832.55, fueled by gains from Taiwan Semiconductor Manufacturing. South Korea’s Kospi rose 2.2%, marking its best year since 1999. Across the region, investors placed big bets on artificial intelligence, overshadowing concerns about trade tariffs and economic uncertainty.

The U.S. Federal Reserve’s rate cuts provided further optimism for global markets. After lowering its main funds rate to 3.5%-3.75% in December, money markets are anticipating additional cuts in 2026. While gold dipped slightly, it still recorded its largest annual gain since 1979, and copper hit a new record high. Investors are balancing bullish AI exposure with safe-haven hedges, signaling cautious confidence as 2025 draws to a close.