2025 Year Review and Outlook

The report described 2025 as a year in which confidence in the dominance of US markets was questioned. It noted that the US accounted for roughly 26% of global gross domestic product, while US equities represented around 70% to 72% of the MSCI World index. In early April the US administration announced sweeping new tariffs, which initially implied an effective tariff rate close to 30%, the highest since the beginning of the twentieth century. Revisions lowered the rate to around 15.6% by mid-December, which the report still described as the most protectionist trade stance since the Second World War. The report said policy uncertainty made it difficult for companies to plan investment, and that the US dollar dropped by around 10% against major currencies.

In technology, a Chinese start-up launched an artificial intelligence application in January 2025 that appeared competitive with established leaders at significantly lower development cost, triggering a sharp but short-lived sell-off in US technology stocks. By mid-October, US equity markets had recovered strongly and reached new record highs in US dollar terms, but they underperformed European equities, emerging markets and Japan. The report also noted the rising financing needs of AI leaders. Concerns about a potential AI bubble and signs of a slowing US economy led many investors to look beyond the US, and the year ended with investors taking profits on AI-related stocks and reallocating to other sectors.

The report also looked ahead to 2026. It noted that geopolitical risks, trade frictions and political fragmentation continued to influence sentiment in the opening days of the year, and that financial markets had broadly maintained the constructive tone seen towards the end of 2025.

Its currency section considered the US dollar, sterling, the euro and the Swiss franc, and the factors bearing on each, including interest rate differentials, government debt, the US mid-term elections, inflation and central bank policy in the UK and the euro area. It noted that the Swiss franc was trading at historically elevated levels.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.