From trade tensions to tech tailwinds: 2025 in review
Despite policy shocks and uncertainty, investors were rewarded for staying invested
2025 was a year of resilience in the face of unpredictable policy and economic uncertainty. While headlines were dominated by trade disputes, the growing government debt burden, and geopolitical risks, markets ultimately rewarded those who stayed invested. The major asset classes saw robust returns: equities delivered growth, bonds provided income and stability whilst gold offered protection and performance.
Artificial intelligence (AI) was the standout structural theme, driving significant investment and earnings growth across technology sectors. At the same time, bonds provided reliable income to investors amid higher yields. Gold surged on safe-haven demand and geopolitical turmoil, reinforcing its value as both a hedge and a contributor to returns.
Taken together, 2025 reinforced the importance of staying invested, maintaining diversification across asset classes, and focusing on long-term structural drivers rather than short-term noise.
2025 Round-up by asset class
Equities: fundamentals outweighed risks
Equities started the year on solid ground, supported by strong earnings and enthusiasm for technology-led growth. That early momentum faltered later in January with the launch of DeepSeek, a Chinese AI firm whose breakthrough model disrupted US tech valuations. The broader market stumbled again in April when aggressive US tariffs sparked a sharp sell-off and heightened uncertainty. Investors braced for prolonged disruption, but sentiment gradually improved as policy uncertainty moderated and US tax cuts and large-scale spending under the One Big Beautiful Bill Act, complemented by targeted stimulus in Europe, gained traction.
From mid-year onward, investor confidence rebounded. Technology regained leadership, with AI returning as the defining growth engine of the year. AI adoption accelerated across sectors, driving demand for semiconductors, cloud infrastructure, and automation. Hyperscalers – tech giants like Alphabet, Meta Platforms, Amazon, Oracle, and Microsoft - invested heavily in data centres to support AI workloads1, while software firms capitalised on automation and productivity trends.
So far, earnings growth across the top tech companies has kept pace with lofty investor expectations, reinforcing AI as a structural driver rather than a passing trend.
Europe also contributed meaningfully, helped by falling energy costs and improving supply chains, while defence and industrials benefited from higher spending. UK equities attracted renewed interest thanks to relatively attractive valuations. Emerging markets rallied later in the year, supported by a weaker dollar and optimism around technology and infrastructure investment.
By year-end, global equities were back near record highs. The rally was underpinned by structural growth themes and resilient earnings -even as inflation remained sticky and labour markets softened slightly. For investors, 2025 reinforced the importance of staying invested through volatility.
Bonds: Income and stability despite uncertainty
Bond markets provided reliable income despite turbulence from politics, inflation, and shifting central bank policy. Early in 2025, yields climbed sharply on worries about rising government borrowing and persistent inflation2. In the US, large-scale spending under the One Big Beautiful Bill Act pushed debt issuance higher, while tariff-related price pressures reinforced fears that borrowing costs could stay elevated.
In the UK, the Autumn Budget became a late-year focal point. Investors had braced a much more punitive budget through significant tax increases, stifling growth. In the end, the measures—tax threshold freezes and targeted levies -were seen as credible enough to calm markets. Gilt yields, which had surged to multi-decade highs earlier in the year, eased after the Budget announcement, signalling relief that borrowing costs might stabilise.
The picture improved further toward year-end. Inflation began to moderate globally, and the Federal Reserve cut interest rates twice in the autumn, with another reduction widely expected in December. These moves helped bond prices recover and reaffirmed the role of fixed income as a source of stability and diversification in portfolios. Crucially, elevated yields throughout the year meant bonds delivered compelling income, reinforcing their contribution to overall returns.
Gold as a hedge against uncertainty
Gold was the undisputed star of 2025. After starting the year at $2,623 per ounce, it surged past $3,500 in May before breaking through the $4,000 mark by October3—its strongest annual performance in decades.
This rally was driven by a powerful mix of factors: record-breaking central bank purchases as countries diversified away from the US dollar, heightened geopolitical tensions that reinforced gold’s safe-haven appeal, and a surge in retail demand. These dynamics reinforced gold’s dual role -providing a reliable hedge against risk while contributing meaningfully to portfolio returns during a period of heightened uncertainty.
Conclusion: lessons from multi-asset investing
2025 ran the gauntlet of macro risks and geopolitical uncertainty, proving that staying calm and invested remains a worthwhile strategy. While equities dominated headlines, bonds provided consistent income even amid volatility, and gold delivered exceptional protection against macro risks. Multi-asset portfolios that included these assets were well positioned to navigate uncertainty and capture opportunities this year.
The key takeaway: markets (and companies) can ‘climb the wall of worry’ and overcome what may seem like insurmountable challenges.
Sources
1 Goldman Sachs Research, “AI Requires a New Kind of Data Center,” 9 September 2025
2 LSEG Datastream, Evelyn Partners, Global Bond Yield Trends, 30 November 2025
3 World Gold Council, Annual Gold Demand and Price Report, 15 November 2025
