2025 Market Recap: Tariffs, AI, and Economic Shifts

2025 won’t be remembered as a quiet year. Tariffs, the end of “Pax Americana” and AI going mainstream reshaped every market you trade.
This is my final Kyriwealth note of the year – a quick reset on what actually happened, and how to think about 2026.

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2025 in one pass

2025 will be remembered for three things: Trump’s tariff wars, the clear erosion of US leadership, and AI stepping fully into the mainstream. US growth held up better than many feared, but inflation stayed above target and the labour market softened, with unemployment rising to 4.6% by November.

Europe and the UK faced slower growth, squeezed by weak productivity, sticky wage inflation, higher taxes and growing debt concerns. In the euro area, Spain grew strongly with stable inflation, while Germany and Italy struggled with weaker output and poor industrial sentiment. Eurozone inflation settled near 2.1% headline and 2.4% core, with the ECB cutting rates several times before stopping in June.

The UK’s story was driven by fiscal expansion. Public debt stood around 94.5% of GDP by October, with borrowing in the financial year up 13.1% on 2024, and interest costs biting because of index-linked gilts and persistent above-target inflation.

Against that backdrop, markets didn’t drift – they lurched. And they still offered plenty to trade.

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Markets in 2025 – what stood out

Equities

• The S&P 500 is up over 14% year-to-date, despite violent swings.
• Nvidia lost almost $589 billion of value in a single January session – the largest one-day loss ever – yet AI remained the dominant equity theme.
• “Liberation Day” tariffs in April triggered a $10 trillion wipeout in global equities between 2 and 9 April, before a 90-day tariff pause sparked a sharp rebound.
• US markets went on to make new highs through most of the year, until a 43-day government shutdown injected renewed uncertainty into the data and growth outlook.
• European equities outpaced parts of the US, supported by ECB rate cuts, a large German fiscal package and higher expected defence spending across the EU.
• The FTSE 100 gained over 18% by mid-December, helped by mining, metals, financials and defence – plus the fact that around 70% of FTSE revenues are earned overseas.

Bonds

• 2025 was a steepener’s year. Bond markets saw heavy volatility, driven by Trump’s tariff policy, expectations for sharply rising US debt after his “big, beautiful bill”, and major holders such as Japan and China cutting Treasury exposure.
• Fiscal worries forced governments to shorten issuance: the share of bonds longer than 10 years fell from 42% to 31% by Q3.
• Short-duration, higher-quality paper generally outperformed as long-dated yields hit multi-year highs and many holders of long bonds saw negative returns.
• The key flashpoint came as tariffs took effect in April, when 2-year US yields jumped 0.3 percentage points in a single day – their biggest intraday move since 2009 – as funds dumped bonds to raise margin cash.

FX and crypto

• The dollar saw its steepest fall in more than fifty years. The dollar index dropped about 11% in the first half, from above 110 in January to around 96.4 by early July, before partially recovering.
• The move reflected tariff uncertainty, worries over deficits and Fed independence, and the sense that fiscal dominance is becoming harder to ignore – even as the dollar still anchors around 58% of global FX reserves.
• Crypto went through a full boom-and-bust cycle. The GENIUS Act and a new Strategic Bitcoin Reserve gave long-awaited regulatory clarity and institutional support, while faster ETF approvals unlocked product supply.
• Bitcoin hit an all-time high near $126,000 in October, helped by institutional demand and corporate treasuries treating it as a strategic asset.
• Ethereum gained through most of the year on DeFi and layer-2 growth, plus its role underpinning stablecoins, before both it and the wider market sold off after a $19 billion liquidation linked to a 100% tariff on Chinese imports.

Commodities

• Gold broke to record highs above $4,300, up roughly 65% year-to-date, driven by safe-haven flows, rate cuts, and anxiety about debt sustainability.
• Central banks bought about 634 tonnes by Q3, including 220 tonnes in Q3 alone, tipping their holdings so that gold now exceeds US Treasuries for the first time in nearly thirty years.
• Silver was the standout performer, hitting all-time highs above $66 and gaining nearly 130% on the year, helped by a supply deficit and strong industrial demand.
• Oil had its worst year in seven, with WTI and Brent down around 20% despite persistent geopolitical tension, as supply outpaced demand and producers – including OPEC+ members and the US – kept pumping.

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Human Truth

Most traders obsess about headlines; the ones who last obsess about process, risk and survival.

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Into early 2026 – what matters now

As 2025 closes, the work for traders is not predicting the next headline. It is understanding how these shifts – tariffs, debt dynamics, AI, the dollar’s slide, central bank behaviour – feed into your own book over the next twelve months. The official review you’ve just seen ends by reminding investors that the real question now is how policy paths will affect earnings, valuations, currencies and commodities from here, not just what they did this year.

Early 2026 will bring fresh inflation data, new signals on growth and labour markets, and more clarity on how far central banks are prepared to go with easing. At the same time, higher defence targets, stretched public finances and shifting reserve preferences mean fiscal policy stays front and centre – especially in the US, UK and Eurozone.

For traders, that means going into January with scenarios rather than fixed views:

• What if inflation re-accelerates and bond markets revolt again?
• What if AI spending disappoints and sector rotation accelerates?
• What if tariffs escalate rather than fade and liquidity tightens?

You don’t control any of those outcomes. You control how you size, where you place risk, and whether your trading matches your capital and time.

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Wrap + CTA – Thanks for this year

If you’re reading this on the last day or two of the trading year, you’re not a tourist. You’ve traded through tariff shocks, a historic dollar move, bond-market tantrums, crypto’s boom and bust, and a commodity market where gold and silver soared while oil sank. You’ve seen how quickly narratives change, and how unforgiving leverage can be when they do.

I’ve been around FX and CFDs a long time. Long enough to know that these “once in a lifetime” years turn up regularly. The traders and investors who last don’t jump at every story. They build a simple, robust framework that lets them respond calmly when politics, policy or positioning surprise the market.

Going into 2026, my focus with clients is very clear:

• Turn the big macro themes – tariffs, debt, AI, central banks – into a trading or investment plan that actually fits you.
• Tighten risk: position sizing, margin usage and worst-case thinking, so a bad week doesn’t end your year.
• Link your FX, index, commodities and crypto exposure to one coherent view, instead of a collection of unrelated trades.

Nothing here is investment advice, and you should never trade money you cannot afford to lose. But you can absolutely upgrade your process, your risk discipline and the way you think about opportunity. That’s where I come in.

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