2025: A Rollercoaster Year for Global Investors – By Charlotte Cunningham at FIM Capital

The year 2025 was quite the rollercoaster for global investors with many ups and downs throughout. Markets swung from tariff-driven selloffs to AI-fuelled rallies, and finally to valuation concerns as optimism collided with stagnating growth. For investors, the year emphasised the importance of diversification in a global market.

Early Shocks and Tariff Turbulence

Entering 2025, the year looked promising, but things quickly began to unravel. Donald Trump was inaugurated for his second term as US President in January. Two days before he entered The White House, he launched his own meme coin, $Trump, which saw its price soar by over 300% overnight and, within 48 hours, it had become the 19th most valuable cryptocurrency in the world, with a total trading value of nearly $13 billion. Was this a sign of the madness that was to come? Quite possibly it was. Within his first few weeks in office, President Trump sent shockwaves through global markets with tariff announcements. This triggered steep declines with technology and consumer discretionary stocks bearing the brunt of the selloff. During this time, Germany announced a €500 billion fund which dramatically increased its investment in defence, infrastructure and climate protection. US trade war fears mounted, which further made Europe stand out in a relative bright spot with investors rotating from US equities to their European counterparts. Around the globe, investors were eagerly waiting to see what China’s retaliation would be against US tariffs which weighed heavily on regional sentiment, reinforcing the fragility of export-driven economies. The gold rally began in the first quarter as investors sought protection from policy uncertainty.

Spring Sell-Off and Rebound

As we headed into spring, steep declines in US equities briefly pushed the S&P500 into bear market territory following the so-called “Liberation Day” tariffs. On this day, President Trump imposed a 10% baseline tariff on imports from nearly all countries, with country-specific tariff rates scheduled to begin a few days later. However, this announcement led to a global market crash and the White House responded by suspending the 9th April tariff increases to allow time for negotiation. With tariff pauses and progress in trade negotiations, it sparked a rebound in global markets led by technology stocks. Nvidia and Microsoft led the recovery, driving the S&P500 up roughly 11% by quarter end. Europe continued to shine throughout the second quarter, posting gains of about 10%. Fiscal support and investor rotation away from US volatility kept the Eurozone resilient. Despite these positive gains, risks remained. Geopolitical tensions flared in June, particularly in the Middle East, adding to volatility. Policy uncertainty persisted as Washington shifted its tariff strategy, creating sharp swings in sentiment.

Rate Cuts and AI Optimism

As we entered the third quarter, the Federal Reserve announced a the much-anticipated cut to interest rates, sparking a surge in equities. Technology stocks, already buoyed by the ever-increasing demand for AI, extended their rally, with Nvidia and Microsoft leading the way once again, pushing the S&P500 and Nasdaq higher. Commodities were a major story during this period. Gold prices continued to climb, cementing its role as a safe-haven even in a risk-on environment. Risks lingered with concerns over tariffs remaining unresolved. Central bank divergence created challenges for global asset allocation and, whilst AI optimism fuelled growth, valuations stretched higher, raising concerns about sustainability of the rally.

Overheating Markets and Safe-Haven Surge

By the final quarter, markets were strong but showing signs of overheating as US valuations continued to move higher. Growth indicators weakened, creating tension between optimism and fundamentals. Geopolitical influence, particularly defence spending in Europe and shifting US policies, shaped sector winners and, whilst AI continued to drive growth, their valuations posed risks of correction. Gold broke the $4,000 mark in October 2025, surpassing its prior inflation-adjusted peak from 1980. It continued to climb, reaching levels around $4,525 per ounce in December with its strong growth driven by economic uncertainty, a falling US dollar, and increased safe-haven demand. It saw a pullback shortly after the Christmas period settling around $4,350 per ounce.

Looking Ahead to 2026

Investors will enter 2026 with a renewed sense of optimism. The artificial intelligence theme will likely remain a dominant growth driver, fuelling productivity gains across industries. However, lofty valuations in leading tech names make diversification essential. Interest rates are expected to continue gradually declining, but not dramatically. Central banks, such as the Federal Reserve and the Bank of England, have already begun cutting rates and, while forecasts suggest modest easing will continue, factors like inflation and economic growth will determine the pace at which these cuts continue. Whatever may occur in the coming year, diversification remains the ultimate defence against uncertainty. By spreading investments across regions, sectors, and asset classes, investors can capture growth while limiting downside risk.

Charlotte Cunningham

INVESTMENT MANAGER

Charlotte Cunningham, Investment Manager (pictured)

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of FIM Capital Limited.

FIM Capital is licensed by the Isle of Man Financial Services Authority.