As we enter 2026, global markets have shown a surprising degree of resilience despite a year marked by political uncertainty, shifting interest rate expectations and ongoing geopolitical tensions. While volatility has made headlines, investors who remained focused on the long term were rewarded as many markets finished 2025 on a strong footing.
Global equities closed 2025 positively, with most major indices delivering robust gains. Markets largely looked through concerns surrounding President Trump’s trade tariffs, with global equities recording a third consecutive year of double-digit growth.
The US market remained a key driver of returns, supported by strong corporate earnings, continued enthusiasm around artificial intelligence and optimism that interest rates were approaching their peak. Meanwhile, the UK’s FTSE 100 recorded its strongest annual performance since 2009, benefiting from easing inflation and improved investor confidence.
December proved particularly supportive for markets. Both equities and bonds rallied following interest rate cuts from major central banks, including the US Federal Reserve and the Bank of England. However, policymakers also signalled that the pace of rate cuts may slow during 2026, reflecting ongoing concerns around inflation and wage growth.
Inflation trends remained central to market movements. In the US, inflation eased towards the end of the year, although data remained uneven. The Federal Reserve cut rates to a three-year low but indicated that further reductions may be more limited than previously expected.
In the UK, the Bank of England also reduced interest rates, offering some relief to borrowers. However, stubborn inflation and rising unemployment suggest that the economic environment remains fragile, reinforcing the need for careful monetary policy in the months ahead.
Elsewhere, Japan raised interest rates to their highest level in three decades, reflecting persistent inflationary pressures. In contrast, China continued to struggle with weak domestic demand, falling property prices and slowing growth, which weighed on investor sentiment in the region.
Throughout 2025, markets were shaped by a series of recurring themes. Trade tensions dominated headlines early in the year, with fears that tariffs could reignite inflation and slow global growth. Despite periods of market volatility, strong corporate earnings and improving economic data helped equities recover quickly.
Geopolitical risks also played a role, particularly during periods of heightened tension in the Middle East. However, markets demonstrated an ability to “look through” short-term uncertainty, reinforcing the importance of staying invested during periods of disruption.
Interest rate cuts later in the year provided further support, helping markets finish strongly despite concerns around valuations in certain sectors, particularly technology stocks.
While the outlook for 2026 remains uncertain, history has shown that markets can progress even during challenging times. Short-term volatility is often the price investors pay for long-term returns. At TJD Financial Services, our approach remains unchanged. We believe that a well-managed, globally diversified portfolio is key to navigating periods of uncertainty.
Our investment management partners continue to monitor economic developments closely, ensuring portfolios remain aligned with long-term objectives rather than short-term market noise. Our Investment Management Committee meets regularly with our partners to review strategy, assess risks and identify opportunities — providing reassurance that client portfolios are actively overseen as conditions evolve.
As always, if you have questions about your investments or would like to review your financial plan in light of current market conditions, please get in touch with the TJD team.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
TJD Financial Services Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
Approved by The Openwork Partnership 20/01/2026.
TJD Financial Services Ltd is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
Membership Number: 1014457
Registered number 13690787