Camille Van Vyve
06 Jan 2026
2025: the year markets learned to take a hit
2025 will go down as a strong year for financial markets—but definitely not a smooth one. With headline-grabbing political announcements, unusual geographic shifts, central banks under pressure, and tech frenzies, investors had to navigate a loud and unpredictable environment. Yet, behind the noise and turbulence, markets once again proved their remarkable ability to adapt.
“Liberation Day”: when Trump reignited the fuse
In early April, Donald Trump’s announcement of sweeping new tariffs—quickly dubbed “Liberation Day”—shook global markets. The tone was aggressive, overtly protectionist, and reminiscent of the 2018–2019 trade war. Within days, major global indices dropped 20% to 25%, with industrial and export-heavy stocks hit hardest. But the shock was short-lived. Faced with negative market reactions and economic concerns, the measures were quickly watered down. The worst-case scenario failed to materialize. Once again, markets responded swiftly to political shocks, but recalibrated just as fast when the dust settled.
Europe takes the lead (yes, really)
A rare sight: in 2025, European markets outperformed their US counterparts for several months in a row. Between April and September, the Stoxx Europe 600 rose by around 23%, while the S&P 500 posted more volatile returns. Several factors drove this trend: initially lower valuations, strong exposure to financials and industrials, and ironically... Trump. His trade measures hurt US multinationals more than domestic-focused European firms. As tensions eased, European equities experienced a sustained revaluation—not just a technical rebound.
After the storm, a rally: tech’s revenge
Ironically, one of the strongest rallies of the year followed the Liberation Day shock. From May onward, global indices rebounded sharply, led by tech stocks. The Nasdaq surged more than 50% between April and summer, supported by strong earnings and renewed confidence in global growth. Many investors, still sidelined after April’s correction, were caught off guard. It’s a familiar lesson: the best market days often happen when sentiment is still fragile—not when everything finally feels safe.
Central banks: loud headlines, fewer cuts than expected
At the start of 2025, markets were pricing in 1.5% to 2% worth of rate cuts. Reality was more modest. The Fed lowered rates by just 0.75%, while the ECB went a bit further with a 1% cut, albeit on a delayed timeline. Despite political pressure—particularly from Trump, who was sharply critical of the Fed—central bankers stayed cautious, wary of re-igniting inflation. Meanwhile, in a historic move, Japan’s central bank raised rates for the first time in decades. These decisions triggered bond market volatility and drove sharp sector rotations in equities.
A weaker dollar… but still standing
The dollar weakened in 2025, but didn’t collapse. The euro moved from around USD 1.07 in early 2024 to 1.12–1.13 by 2025. For perspective, the euro traded at similar levels five years ago. So yes—softening, but far from a historic shift. That said, for euro-based investors, the impact was tangible: strong local performance in US equities was partially offset by currency effects. The episode reignited awareness around FX risk—often underestimated when US markets dominate.
AI: bubble or just hype?
By autumn, the focus had shifted to a burning question: are we witnessing an AI bubble? Valuations had soared, with multiples far above historical norms. Yet fears quickly eased. Earnings showed that while AI monetization takes time, long-term investments remain justified. As is often the case, it wasn’t a crash, but a normalization of expectations. Markets learned to tell the difference between empty promises and true value creators.
Gold on fire, crypto on standby
One of 2025’s stealth winners was gold, up more than 70% and hitting new all-time highs. Amid geopolitical tensions, monetary uncertainty, and a weaker dollar, the precious metal played its role as a store of value and diversification asset. Emerging market central banks added to their reserves, reinforcing the trend. Meanwhile, crypto assets staged a comeback, buoyed by clearer regulations and renewed appetite for alternative assets—though volatility remained high.
The Chinese wave that tariffs couldn’t stop
Ironically, while “Liberation Day” was meant to curb China’s trade dominance, 2025 saw China strengthen its position. Exports surged, particularly in energy transition and tech sectors, thanks in part to strategic access to rare earth elements essential for semiconductors, batteries, and AI. On the stock market, Chinese indices posted double-digit gains, staging a strong rebound after years of underperformance. The takeaway? China remains a systemic force in global markets—even when targeted directly by trade restrictions.
Why staying in the market matters
As always, 2025 rewarded not the best forecasters, but the best behaviors. First, diversification proved crucial: performance dispersion was massive across geographies, sectors, and asset classes. Second, staying invested made all the difference. Those waiting for “things to calm down” often missed the strongest rebounds. This year reinforced a simple but demanding truth: time in the market matters more than market timing. And 2025 offered a particularly vivid demonstration of that principle.