2025 markets rally through turbulence

In 2025, global markets delivered a broad-based advance, with equities generating strong yet differentiated gains, fixed income producing positive returns across sectors, and commodities delivering standout performance—most notably gold’s remarkable 64.6% surge alongside a 15.8% rise in the broader commodities complex. This marked the first post-pandemic year where equities, bonds, and commodities all delivered positive returns, despite a backdrop of political uncertainty, sweeping tariffs, inflationary pressures, and geopolitical tensions.

Weekly highlights

Source: FactSet and LBMA, as of December 31, 2025. Equity data based on gross total return unhedged USD; silver return based on LBMA silver price ($/ozt) in USD. Past performance is not a reliable indicator of future performance.

Three biggest surprises of 2025

The year 2025 delivered its share of shocks to global markets. Here, we explore a few of the biggestsurprises of the year.

Extent of liberation day tariffs

On April 2, 2025, President Trump stunned global markets with sweeping “Liberalization Day” tariffs, far more aggressive than expected, pushing the average effective US tariff rate to 22.4%, its highest since 1909. It included a universal 10% import tax on nearly all countries, plus punitive “reciprocal” surcharges: 34% on China, 20% on the EU. These measures threatened global supply chains and trade flows, triggering fears of a full-scale trade war.

Markets reacted violently. The S&P 500 plunged 10.5% in two days. International markets¹ tumbled by 5.5%, while safe havens surged—gold spiked above $3,100/oz, and US Treasury yields collapsed as investors scrambled for safety. Emerging markets were hit hard, with Brazil’s real and India’s rupee sliding sharply amid concerns over export competitiveness and capital outflows.

Yet the panic proved short-lived. Within a week, the White House paused many tariffs amid negotiations, easing fears of prolonged disruption. Investor focus quickly shifted to a booming AI investment cycle, which buoyed tech stocks and restored confidence. By year-end, the S&P 500 had fully recovered, finishing up 18% for 2025, as trade-war anxiety gave way to optimism about US growth and transformative tech spending.

EM outperformance versus US markets

Emerging markets (EM) delivered one of 2025’s most striking surprises, outperforming U.S. equities by the widest margin since 2009. The MSCI EM Index surged 34.4%, beating the S&P 500’s 18% gain by 16.5 percentage points. This rally defied consensus expectations and unfolded against a volatile macro backdrop, supported by a weaker U.S. dollar, easing inflation in key EM economies, and a commodity windfall for exporters like Brazil and South Africa. China’s late-year stimulus pivot further stabilized sentiment, amplifying the rebound even as geopolitical risks lingered.

Attribution analysis reveals that sector breadth was a defining feature of EM’s rally. Information Technology (+54.9%) was the largest contributor, accounting for 11.81 percentage points of total return, fueled by global AI infrastructure demand and semiconductor strength. Materials (+63.9%) added 3.42 points, benefiting from higher copper and lithium prices amid energy transition and EV supply chain growth. Financials (+29.5%) contributed 7.48 points, supported by early rate cuts that boosted credit growth and margins as inflation cooled faster than in developed markets. Communication Services (+37.5%) delivered 3.90 points, driven largely by Tencent’s strong rebound.

Country-level performance added another layer of differentiation. Korea delivered a staggering 100.5% return, driven by a semiconductor export boom and memory chip recovery. Taiwan rose 39.8%, supported by its dominance in AI hardware and advanced foundries. China gained 31.0%, aided by stimulus measures and rallies in internet and EV-related names. Together, the combination of sector breadth and country-specific catalysts underscores that EM’s resurgence in 2025 was broad and structural, marking the decisive break from years of US dominance.

Commodities rebound led by precious metals

Bloomberg’s Commodities Index delivered a standout year, with four of its six sectors finishing in the green-grains and energy being the exceptions. Precious metals led the upside: gold surged to record highs above $4,794/oz, delivering a 64.6% annual gain, while silver advanced an extraordinary 149%. The move began with April’s tariff shock, which funneled capital into safe havens amid inflation and recession worries. From there, the rally broadened as central banks, led by emerging markets, stepped up purchases, reinforcing gold’s status as a strategic reserve. A weaker dollar, falling real yields, and persistent geopolitical risks sustained the bid. This culminated in a historic surge in investor participation, with global physically backed gold ETFs absorbing a record US$89 billion in inflows during 2025-doubling AUM to new all-time highs and pushing total holdings to 4,025 tons².

Silver’s explosive gains reflected a dual narrative: booming industrial demand from solar and EV supply chains tightened the market, while speculative and systematic inflows chased momentum. The twin surge in gold and silver reflected a market shaped by monetary easing, persistent geopolitical tensions, and a broad rotation into hard assets.

As we turn to 2026, our Global Market Outlook highlights key opportunities and risks investors should watch, and our recent piece The Top 5 Themes for the US Market in 2026 expands on the trends that we expect to shape the year.