Slight Decline in Global Stocks in the Last Sessions of 2025 After Strong Annual Gains

SadaNews - Global stocks recorded a slight decline in the last trading day of 2025, which reduced some of the gains that had pushed them to record their third consecutive annual gain.

Asian stocks dipped slightly on Wednesday, while futures for the S&P 500 and Nasdaq 100 indices fell by 0.1% each in Asian trading. This followed declines in major indices in New York on Tuesday.

Trading was relatively light as a number of markets, including Japan and South Korea, closed for the year. Silver plummeted by 5.5%, while gold saw a slight increase.

Strong Annual Gains for Global Markets

Despite this, the MSCI All Country World Index, one of the broadest measures of the stock market, remains up by 21% this year, supported by interest rate cuts from the Federal Reserve and enthusiasm for artificial intelligence.

Silver outperformed most other assets, recording a jump of 150%. Asian stocks are also on track for their best year since 2017.

Precious metals had a strong year, with both gold and silver heading for their best annual gains since 1979. In contrast, Bitcoin was poised for its second annual decline in four years. The Bloomberg Dollar Spot Index fell by 8.1% this year, marking its largest drop since 2017.

Record Peaks and Challenges Ahead of 2026

Stocks reached new record levels throughout 2025, driven by optimism about economic growth, corporate profits, and monetary policy easing, which helped markets recover from the downturn in April due to tariffs imposed by President Donald Trump.

As we approach 2026, investors face elevated valuations and increasing divides among policymakers regarding the extent of further easing, as reflected in the minutes of the Federal Reserve's December meeting published on Tuesday.

Kathleen Brooks, Director of Research at XTB, wrote that "the prevailing theme is that global stock indices have lost their momentum as the year-end approaches." She added, "There are several reasons for this, including achieving good returns in 2025, and investors waiting until after the Christmas holiday before making significant trading decisions."

Big Bets and Sharp Volatility

Throughout this year, investors heavily bet on political shifts, inflated budgets, and fragile narratives, fueling significant stock rallies, crowded yield trades, and debt-based, hope-upon-hope cryptocurrency strategies.

Trump's return to the White House quickly confused global financial markets and then revived them, while European defense stocks soared, encouraging speculators who fueled wave after wave of speculation.

Some positions saw notable gains, while others faltered when momentum reversed, financing dried up, or debts backfired.

Brendan Fagan, a macroeconomic strategist at Bloomberg Markets Live, stated: "As we approach year-end, market dynamics are shaped by division rather than a clear direction, limiting marginal risk appetite, even as the underlying resilience continues to provide a supportive environment for U.S. corporate stocks."

Movements in Oil and Currencies

In other markets, oil is on track for its deepest annual loss since the COVID-19 pandemic in 2020, as prices come under pressure due to fears of a severe surplus expected to dominate market sentiment and trading at the start of the new year.

In Asia, currency movements have gained significant attention recently, with the Chinese yuan in the domestic market surpassing the level of 7 yuan per dollar on Tuesday for the first time since 2023.

Nonetheless, investors still have at least one reason for optimism as the new year begins. Data compiled by Bloomberg showed that the MSCI Global Equity Index rose by an average of 1.4% in January over the past ten years, achieving gains in six of those years.

Kyle Rodda, Senior Analyst at Capital.com, wrote: "Wall Street is ending the year on a quiet note, wrapping up a good year for stocks, albeit with one or two moments of concern. He added that "markets are expecting an almost perfect set of circumstances in the coming year."