Investors finished 2025 with a celebratory hum — global equities notched another banner year, precious metals ran hot, and a few familiar worries returned with the holiday crowds.
A year of rallies — and nerves
World stocks are on track to finish the year with double-digit gains for a third consecutive year, driven by a late surge in US tech and broad optimism that the Federal Reserve has room to loosen policy. The MSCI world index has climbed roughly 20% this year, while US benchmarks flirted with record highs in the last sessions of December. Short, sharp sentences capture the mood: risk appetite is back, but confidence is cautious.
Traders point to one main catalyst — expectations of easier monetary policy. The Fed trimmed its main funds rate to about 3.5–3.75% this month, and markets are pricing in further quarter-point cuts over the coming months. Portfolio managers who survived the 2022–23 tightening cycle are now repositioning, piling back into growth areas that benefitted most from falling bond yields.
That repositioning has a familiar face at its centre: artificial intelligence. A blistering run in AI-related names pushed the Nasdaq and the S&P higher, even as some strategists warn valuation signals look stretched. The rally has been fed by product launches, model integrations and corporate bets on new AI services — the kind of infrastructure shifts that can lift entire sectors. For context on the broader AI tooling boom, see how finance and product teams are folding models into everyday tools in Google Finance’s Gemini Deep Search integration and Microsoft’s moves on image-generation models like MAI-Image-1.
Metals went vertical — then paused
If stocks were the party's dance floor, precious and industrial metals were the VIP lounge. Gold posted what may be its biggest annual gain since 1979, leaping more than 70% at one point. Silver briefly pierced $80 an ounce — a milestone that grabbed headlines — before a wave of profit-taking sent it lower. Copper, the industrial metal tied to electrification and renewables, rallied by more than a third this year and tested record highs on supply fears.
Why metals? The story is a two-headed beast: easier rates that reduce the carrying cost of holding non-yielding assets, and persistent geopolitical and fiscal uncertainty that pushes investors toward tangible hedges. 'We’re not seeing runaway inflation risk as a base case so we’re still thinking the Fed has room to cut,' said a portfolio manager at a large asset manager this month. That combination has been a powerful tailwind for bullion and battery- and grid-related metals.
But there’s also a technical, crowd-driven element. When a market moves parabolically, it invites leverage and momentum flows — and those flows can unwind fast. Traders reported that long positions in silver and some mining names became crowded, producing the sharp intraday reversals seen in late-December sessions.
The mining sector felt the push–pull acutely. Miners soared as metal prices climbed, only to be hit when traders took profits or when metal prices retraced. Volatility in metals markets translated to outsized moves in miners’ shares, with some large-cap names dropping sharply on profit-taking days.
Oil, geopolitics and an uneasy calm
Energy prices added another twist. Brent and US crude moved higher after a high-profile meeting between the US president and Ukraine’s leader, and amid fresh flare-ups in the Middle East. Markets priced the combination of a potentially longer conflict backdrop and occasional diplomatic progress as a recipe for higher near-term risk premiums on oil.
Investors are negotiating a complex matrix: softer policy paths that favor risk assets, explosive gains in a handful of tech and metals plays, and geopolitical flashpoints that keep safe-haven demand alive. That mix explains why some sectors are booming while others look precarious.
How fragile is the rally?
Here are the main fault lines to watch in the months ahead:
- Policy surprise risk: If inflation re-accelerates, the central-bank narrative of 'room to cut' would flip quickly.
- AI valuation stretch: Big gains in a narrow group of AI names create concentration risk for equity indices.
- Metals corrections: Rapid price spikes can invite sellers back into markets, pressuring miners and producing sharp equity moves.
- Geopolitics: Any escalation in supply-sensitive regions will reverberate through energy and safe-haven markets.
Seasonal patterns can mask structural shifts. A Santa rally at year-end is one thing; sustained returns across 2026 will depend on earnings growth, real investment in AI and clean-energy infrastructure, and whether central banks can ease without reigniting inflation.
Markets rarely move in a straight line. As investors trade optimism for evidence, expect sharp intraday swings and brisk rotation between winners and laggards. For those watching the AI infrastructure race and its spillover effects on markets, recent product and platform rollouts offer useful context about where corporate tech budgets might flow next — and why certain stocks are still the market’s centre of gravity.
The close of 2025 leaves a clear impression: investors are willing to pay for future growth and refuge assets at the same time. That posture worked well this year. Whether it holds will hinge on a few data points, a Fed cadence and, perhaps, the next dramatic headline.