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.

New Zealand’s economy bounced back in the third quarter, growing by 1.1% and exceeding forecasts of 0.9%. This follows a revised 1.0% contraction in Q2, signaling a clear turnaround. According to Statistics New Zealand, 14 out of 16 industries reported growth, with business services and manufacturing leading the charge. Construction also picked up, rising by 1.7%, while exports were boosted by strong dairy and meat sales.

Retail spending showed robust gains, especially in categories sensitive to interest rates, including a 9.8% increase in electrical goods and a 7.2% jump in motor vehicle parts. Despite the positive quarter-on-quarter growth, the economy was still 0.5% lower than the same period last year, with telecommunications and education the only sectors experiencing declines.

Cautiously optimistic, Reserve Bank Governor Anna Breman noted that monetary policy will continue to depend on incoming data, as financial conditions have tightened beyond earlier projections. While positive GDP numbers support current low rates, the services sector—comprising two-thirds of GDP—has contracted for 21 consecutive months, suggesting the recovery may remain uneven.

The US economy grew at a robust annual rate of 4.3% in Q3 2025, exceeding forecasts and marking its strongest quarterly expansion in two years. This growth comes despite lingering inflation concerns and political instability, showing that American consumers are continuing to spend and drive economic momentum.

Consumer spending, which accounts for roughly 70% of the economy, jumped 3.5% in the quarter, up from 2.5% previously. Much of this increase was fueled by healthcare expenditures, including hospital and outpatient services, along with purchases of recreational goods and vehicles. Exports surged 8.8%, while imports fell 4.7%, giving net economic activity a boost, and government spending bounced back 2.2% after a slight decline in Q2.

Remains optimistic

Despite the strong growth, inflation remains in focus. The personal consumption expenditures (PCE) price index rose 2.8%, up from 2.1%, with core PCE also climbing. Economists are closely watching the job market and tariff-related pressures. Meanwhile, the recent federal “Schumer shutdown” is expected to slow Q4 growth, potentially trimming GDP by 1 to 2 percentage points. Treasury Secretary Scott Bessent, however, remains optimistic that 2025 will still reach a 3% growth rate.

The Q3 numbers are also influencing expectations for the Federal Reserve. Analysts now see an 85% probability that interest rates will remain stable at the January 2026 meeting. Steady rates could provide a measure of certainty for investors, businesses, and consumers alike as they make decisions heading into 2026. Overall, the data paints a picture of a resilient US economy navigating both challenges and opportunities.