WeeklyWatch – Investing in 2025: the round-up

16^th December 2025

Stock Take

The economic movements of 2025

2025 has been quite the year for investors! There’ve been periods of volatility, but towards the end, markets made some impressive gains. The usual groups – AI, inflation and interest rate cuts – steered investor sentiment both in the US and on a broader global scale. In the final edition of WeeklyWatch for this year, we’re taking a look back at some of the standout moments in each month.

We’ll be taking a break over the Christmas period. WeeklyWatch will return on Tuesday 13^th January 2026.

January

The big tech favourite and AI company Nvidia experienced a 17% fall on 27^th January, registering a near US$600 billion drop in value. This mirrored investor fear towards the threat from DeepSeek, a Chinese AI start-up. The subsequent Nvidia sell-off secured a historic moment as the worst single-day loss in dollar terms for a listed company.

In spite of the negativity, global markets ended the month higher. However, the AI shakeout resulted in the US lagging behind other regions.

February

Shaping a new economic landscape? At the start of February, US President Donald Trump announced tariffs on imports from Canada, Mexico and China. After last-minute negotiations, the 25% proposed tariffs on Canadian and Mexican goods were suspended for 30 days.

US shares fell, with investors redirecting their focus to less risky assets like US Treasuries, whose prices increased.

March

Europe, the US and the UK’s inflation data (February) revealed declines compared to January. Fears continued over a possible trade war, but the European Central Bank (ECB) still cut their interest rates by 0.25% percentage points to 2.5% as a way of addressing the region’s weak growth outlook.

Over in the UK, the March Spring Statement reinforced priorities put forward in the 2024 Autumn Budget. Key areas included:

• Investing in defence
• Fixing public services
• Accelerating economic growth

April

The term ‘Liberation Day’ frequently made our headlines following more US tariff announcements on 2^nd April. A wide range of reciprocal tariffs was announced on a long list of countries. This included the European Union (taxed at 20%), and a global tariff rate of 10% was placed on countries not affected by reciprocal tariffs.

For financial markets, this marked a spell of volatility. There was a sharp drop in shares, but they soon recovered following Trump’s announcement of a 90-day suspension on reciprocal countries that didn’t retaliate, allowing for a recovery of initial losses for the stock markets. Additionally, bond yields dropped before concluding the month with little change. The US dollar ended April lower.

On 1^st April in the UK, the stamp duty holiday ended when temporary increases to stamp duty thresholds came to an end. First-time buyers saw a fall in the threshold as to when they begin paying stamp duty, dropping from £425,000 to £300,000.

At the end of the tax year – 5^th April – the government said that unspent pensions would be included in estates for Inheritance Tax purposes from April 2027.

May

May became a good month for market recovery. The S&P 500 in the US generated its best monthly returns in 18 months. First quarter earnings in the US were supported by outsized returns from the ‘Magnificent 7’, plus an ease in trade tensions and more positive economic data played their role.

Moody’s Ratings had previously had the US sovereign credit rating at a perfect Aaa, but they decided to downgrade it to Aa1 – in step with other major rating agencies. The decision was influenced by the persistently high US budget deficits and the associated debt servicing costs.

In the UK, even though there was a temporary spike in inflation, the Bank of England (BoE) opted to reduce interest rates by 0.25% percentage points to 4.25%. There was also a boost in retail sales due to the UK’s maximum daytime temperatures being the highest on record.

June

There was a rise in US shares, and some major indices reached record highs. AI continued to boost investor sentiment (Nvidia’s first quarter sales rising almost 70% year-on-year) and negotiations were underway to stave off triggering the tariffs.

Oil prices spiked following Israel’s attack on Iranian nuclear facilities and then faded. The increased geopolitical tensions also contributed to a rise in bond prices and the US dollar weakened further to a multi-year low against the pound.

July

Finalising trade deals went a long way in calming investor sentiment as the 90-day US tariff extensions concluded. The S&P 500 and Nasdaq were boosted by AI-related enthusiasm and reached new highs.

The US President made comments about potential US government interference with the US central bank’s (Fed) independence that caused concern. The Fed chair, Jerome Powell, gave little sign of the possibility of a pending US interest rate cut, which resulted in some investors feeling unnerved.

August

Nvidia reclaimed the spotlight as leading AI firm Nvidia emerged as the world’s most valuable public company. This was a notable achievement amid analysts’ concerns surrounding the profitability of AI projects and considering the high levels of investment into AI and demanding sector valuations.

The month also saw the BoE break ranks with the Fed and make a 0.25% interest rate cut, even though UK inflation was way above the 2% target. August also saw emerging markets outperform developed markets. An easing in tariff tensions supported returns in China and commodity exporters in Latin America, which was helped along by a weaker US dollar.

September

US markets continued to grow thanks to increased optimism around AI. The Fed’s decision to cut interest rates early in September and increased hopes of another by the end of the year also played its role in boosting the markets.

Across Europe, the outlook was more challenging. Fears regarding the long-term sustainability of government finances resulted in a spike in UK yields. At one stage, the yield on UK 30-year gilts hit a 27-year high before a slight easing (it remains relatively high). Additionally, Fitch downgraded French government debt to A+.

October

The beginning of October saw a flurry of political instability. The French Prime Minister, Sébastien Lecornu, surprised many when he resigned on Monday 6^th October after less than a month in charge. As a result, French government 10-year bond yields increased to 3.58% – the highest in nine months – and French equities fell.

Volatility also re-emerged in the US when a partial government shutdown began, which would run into November. Shutdowns often make the headlines, but their impact on the stock markets is usually very limited. For example, the S&P 500 reached record highs towards the end of the month.

For the first time in history, gold broke the £3,000 per ounce mark. It began 2025 below £2,100, but persistent geopolitical uncertainty led investors to look for perceived ‘safe havens’, which resulted in prices going up.

November

UK Chancellor Rachel Reeves scheduled the Autumn Budget for as late as possible. As the day came closer, gilts and UK equities reacted to the rumours and leaks as to what she could reveal. The only certainty was that taxes would be increased.

Budget day ended up being rather eventful. An hour before the Chancellor delivered the Budget, the Office of Budget Responsibility (OBR) accidentally released their forecasts. Thankfully, as the OBR figures were better than expected, the markets remained calm (even though many of the expected tax rises came to pass). This slight reassurance of better fiscal headroom provided some comfort to gilt markets.

On 12^th November, after 43 days, the longest ever US government lockdown ended.

December

The end of the year saw the anticipated US interest rate cut come to pass. This quarter point cut was the third in a row, and interest rates are now at a three-year low between 3.5% and 3.75%. Inflationary pressures remain in place, and there are increased concerns surrounding the latest employment data that the Fed are now focused on tackling. After the cut, Powell said that interest rates were “now within a broad range of estimates of its neutral value”.

Figures published by the Office for National Statistics revealed that the British economy shrank by 0.1% in October. Analysts’ expectations had been geared towards a modest rise, but it reinforces hopes that the BoE will cut interest rates by 0.25% percentage points on 18^th December.

In the Picture 

The Fed decided to cut interest rates last week, and they’re now at their lowest level for three years. Fed chair Jerome Powell suggested that future cuts will only happen if there’s a material deterioration in the labour market.

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SJP Approved 15/12/2025