2025 in Review: How Policy, Trade, and Technology Shaped Markets
- WISF International
- Dec 30, 2025
- 4 min read
By Arlette Espinosa
As 2025 comes to a close, we can safely say that markets were shaped by shifting economic cycles, renewed trade tensions, technological optimism, and a decisive turn by central banks. From equity rallies and sharp sell-offs to policy changes and liquidity injections, 2025 reminded markets that views can change quickly. Below is a summary of the year and the forces that defined it.
US trade policy was in the spotlight in market narratives since the beginning of the year
US-President Donald Trump’s decision to reintroduce tariffs on goods coming from China, Europe, and other countries raised worries about a slowdown in global trade. Investors became concerned that companies would face higher costs, that supply chains could be disrupted, and that prices might rise again. Stock markets reacted negatively, with prices falling when trade tensions increased and uncertainty spreading across many types of investments. Even though some of the tariff plans were delayed or reduced, the overall aggressive approach kept investors uneasy and made them more cautious throughout the year.
What about Switzerland? Initially, on the 1st of August, the Trump administration announced steep tariffs of up to 39% on a range of Swiss exports. After negotiations, the countries reached a preliminary agreement to reduce those tariffs to around 15%, applied retroactively from mid-November onward, bringing significant relief to Swiss exporters. This reduction eased market concerns and risk to Switzerland’s export-driven economy with particular attention to pharma companies.
Central bank policy played a crucial stabilizing role
As economic momentum slowed in 2025, the Federal Reserve shifted toward a more supportive stance, cutting interest rates in response to easing inflation and early signs of softening in the labour market. While price pressures moderated from previous highs, unemployment began to edge up, giving the Fed room to act to sustain growth and stabilize financial conditions. These policy decisions were made even with the backdrop of the longest U.S. government shutdown in history, which delayed the release of key economic data and increased uncertainty for investors, policymakers, and businesses alike. Alongside rate cuts, the Fed started the purchase of short-term Treasury bills to help inject liquidity into markets, easing funding stress at a time when visibility on the true state of the economy was unusually limited.
In Europe, the European Central Bank kept rates steady while signalling support for growth amid moderate inflation, and the Bank of Japan maintained its ultra-accommodative policies, feeling confident with rising rates and asset purchases to sustain slow expansion. The People’s Bank of China rolled out targeted stimulus and liquidity measures to support steady but slowing growth, while the Bank of England cut rates to counter a cooling economy and rising unemployment. Meanwhile, the Swiss National Bank maintained a cautious approach, cutting the reference rates twice this year towards zero, to balance inflation control with support for export-driven growth.
Technology stocks: the investment sector of the year
Enthusiasm around artificial intelligence drove extraordinary gains early in the year, pushing valuations of major tech and semiconductor companies to extreme levels. As capital spending surged and expectations became increasingly optimistic, concerns about an AI-driven tech bubble began to surface. Those concerns materialized sharply in the final weeks of the year, when tech stocks fell heavily as investors reassessed growth assumptions, funding needs, and valuation risk. The sell-off served as a reminder that even transformative technologies are not immune to cycles and corrections. In the final weeks of the year, investors reassessed the sector, distinguishing between companies with strong fundamentals and those with heavy spending on AI projects.
The result: global investment markets delivered uneven and region-specific outcomes
In the United States, equity markets were volatile, driven by political uncertainty, trade policy concerns, and an increasing concentration of returns in large technology stocks. Valuations became stretched, making the market vulnerable to corrections. In contrast, the Eurozone and the UK benefited from easing inflation and growing expectations of interest-rate cuts, which supported equity performance and improved investor sentiment. Japan’s markets fluctuated as economic data weakened at times, while policy support remained a key stabilizer. One factor of concern was the election in that country and the potential increase in public spending and fiscal deficit from the new government, which made both the Bank of Japan and investors move their expectations to raise interest rates in the country. China experienced alternating rallies and pullbacks, reflecting policy stimulus efforts weighed down by soft growth and lingering property-sector concerns. Same as in Japan, this weighed on the cost of the government’s debt. Switzerland stood out for its relative resilience, supported by strong corporate activity and defensive sectors despite a strong currency. In the last month(s), the Swiss healthcare sector showed strong relative strength compared to more cyclical sectors both in the country and the world.