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Capital Ideas™ 
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World Markets Review
Global markets advance on solid corporate earnings: Q4 roundup
January 7, 2026

Global stocks rallied in the fourth quarter and full-year 2025, generating double-digit gains for the third year in a row. Driven by strong returns in international and emerging markets, the MSCI All Country World Index rose more than 22% for the year. U.S. markets lagged other major regions of the world but still posted solid gains, with the S&P 500 Index rising more than 17%, fueled by investor enthusiasm for artificial intelligence.


Shrugging off worries of a tariff-induced trade war, all sectors of the MSCI ACWI enjoyed positive returns for the year, led by communication services, materials and financials. Banks and computer-chip makers were among the top returning stocks. Real estate, consumer staples and consumer discretionary sectors lagged the overall market returns.


Bond markets advanced as many central banks around the world moved to reduce interest rates or hold them steady. With inflation sitting at moderate levels, the U.S. Federal Reserve and the European Central Bank both slashed policy rates multiple times during the year. One exception was the Bank of Japan, which hiked its key interest rate to a 30-year high.


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MSCI All Country World Index is a free-float-adjusted market-capitalization-weighted index that is designed to measure equity market results in the global developed and emerging markets, consisting of more than 40 developed- and emerging-market country indexes. When applicable, results through December 31, 2000, reflect dividends gross of withholding taxes, and dividends net of withholding taxes thereafter. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.

 

S&P 500 Index is a market capitalization-weighted index based on the results of approximately 500 widely held common stocks. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.

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