The final month of a tumultuous year brought with it multiple central bank meetings and more US economic data releases, having been spared much of the latter recently due to the US government shutdown. A not-so hawkish message from Fed Chair Powell dampened the mild upward trend in Treasury yields which hit the dollar. The world’s most important central bank did cut rates as expected but did not push back against market pricing, which currently sees slightly more than 50bp of additional cuts for the coming year.

Whether the data was useful for investors was a talking point, as CPI came in sharply lower than expected, with no monthly readings released. Notably, the core was 0.2% below the lowest forecast on Bloomberg, which meant some scepticism due to possible collection issues. Fortunately, markets did look through this release with muted price action. Other figures were mixed, with the monthly US NFP employment figures showing a better headline print while the jobless rate increased to the highest level in four years at 4.6%. The flip side saw retail sales signalling continued brisk consumer spending and blockbuster GDP numbers.

Stock markets continued to tangle with questions around AI valuations and huge infrastructure capex. US tech giants are expected to spend $500 billion a year on AI by 2026, up from $150 billion in 2023. The traditional Santa rally in the final couple of days of the year did not materialise, for a third year in a row, though the broad-based S&P 500 did make fresh record highs over the holiday period. Otherwise, metal markets grabbed many of the headlines through the month, with gold, silver, copper and platinum all surging higher and breaking historic milestones. Fundamental reasons for demand have been obvious for some time, but momentum chasing hedge funds and retail investors were the drivers for wild price action to finish off 2025.

Quote of the month:  Warren Buffett, legendary investor, who stepped down as his company’s CEO, once said, “Be fearful when others are greedy, and greedy when others are fearful.”

Major events of the month, in numbers:

*S&P 500 6,945: The benchmark US stock index printed a new record high, driven mainly by better-than-expected US growth and also expectations of more supportive policy easing and Fed rate cuts into 2026. Corporate earnings came in more positive than feared, while some seasonal and sentiment effects likely came early with the index tracking for an eighth straight monthly rise. A broadening in sector performance also helped even though the index’s cap-weighted structure means megacaps have an outsized impact.

*Silver 27%: Silver added to its incredible gains this year with prices moving wildly over 16% across two trading sessions at the end of December. Its monthly gains just shy of 30% added to its annual increase of near 150%. Interestingly, the precious metal’s history is punctuated by periods of parabolic explosion and collapse. Long-term bullish reasons this year have included the big US deficits, the debasement trade and solar demand. But this month’s rally mostly happened in an impulsive way with momentum chasing investors to the fore. China’s export restrictions and CME raising margin requirements for futures to $25k for traders, triggered debate over whether the top is in or not. 

*Tesla $498.83: Elon Musk’s EV-maker posted a record high in December, lifting the stock more than 120% off its April lows, though the stock came under pressure at the end of the month. The world’s richest person gave a bullish update on the robotaxi rollout, with investors seeing this as progress toward turning existing EVs into revenue-generating autonomous taxis. The ongoing thawing in US-Sino relations also likely helped with a series of trade truces and framework deals. Longer-term, the focus is on the potential from AI, robotics, and energy storage as the primary bullish drivers heading into 2026.