2025 IN RETROSPECT
As we approach the final weeks of 2025, markets are digesting a year that delivered historic milestones, jarring selloffs, and everything in between. From gold’s record-breaking rally to the Johannesburg Stock Exchange (JSE) breaching 115,000 for the first time in its 138-year history, the year offered opportunities for those positioned correctly – and painful lessons for the unprepared.
Winners
Gold was the undisputed champion of 2025. The precious metal surged roughly 60% year-to-date to reach an all-time high of $4,379/ounce in October, marking its best annual performance in 46 years. A United States (US) Federal Reserve (Fed) rate cut journey, persistent central bank buying of gold, geopolitical uncertainty, and inflation hedging demand combined to propel the yellow metal to levels few predicted.
The FTSE/JSE All Share Index delivered a stellar performance, climbing roughly 36% year-to-date, while the FTSE/JSE Top 40 Index gained even more impressively at around 41%. The benchmark breached the 115,000 level for the first time in the exchange’s history, driven by improved sentiment around South Africa’s reform trajectory and favourable global risk appetite.
US equities extended their multi-year bull run. The S&P 500 gained approximately 18% year-to-date, while the tech-heavy Nasdaq added around 23%. Emerging market (EM) equities outperformed developed markets, with broad EM indices up roughly 30% for the year.
Tech sector: A tale of two halves
The Magnificent Seven – Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla – delivered another solid collective performance in 2025, gaining approximately 25% as a group. However, the year was anything but smooth.
The sector faced its first major shock in late January when Chinese artificial intelligence (AI) startup DeepSeek unveiled a low-cost AI model that reportedly matched Western competitors at a fraction of the cost. Nvidia suffered its worst single-day loss in history, plunging 17% and shedding nearly $600 billion in market value – the largest one-day market cap loss ever recorded for any company. The selloff rippled through the semiconductor sector and raised questions about the sustainability of AI infrastructure spending.
The April tariff shock compounded tech’s woes, pushing the Magnificent Seven into deeply negative territory for the year. By mid-March, six of the seven names were down between 7% and 38% year-to-date, with Tesla bringing up the rear. At one point, the S&P 500 nearly entered bear market territory on an intraday basis.
The second half of 2025, however, saw the Magnificent Seven, stage a remarkable recovery. By December, Alphabet emerged as the group’s standout performer, while Meta proved most resilient during the first-half selloff. The Magnificent Seven now represents roughly 35% of the S&P 500’s market capitalisation – nearly triple its 12% weighting in 2015 – underscoring both the opportunity and concentration risk embedded in index investing.
Debate continues over whether AI spending has reached bubble territory. With the Magnificent Seven’s combined market capitalisation exceeding $21 trillion and AI capital expenditure from S&P 500 tech companies projected at $400 billion annually, the stakes for 2026 remain extraordinarily high.
Losers
Bitcoin experienced a rollercoaster year. After reaching an all-time high of near $126,000 in October, the cryptocurrency suffered a brutal fourth quarter selloff that saw it crash 36% to around $83,000. Despite a partial recovery to approximately $94,000, bitcoin remains in negative territory year-on-year – a sharp reversal from the euphoria that surrounded it earlier in 2025.
Oil struggled throughout 2025. Brent crude fell from around $76/barrel at the start of the year to approximately $62/barrel, a decline of roughly 18%. Concerns over weak Chinese demand, elevated global inventories, and uncertainty around the expanded Organisation of the Petroleum Exporting Countries, OPEC+, production discipline weighed on prices despite periodic geopolitical flare-ups.
The tariff shock
The defining market event of the first half of the year was President Trump’s “Liberation Day” tariff announcement on 2 April. Markets reacted violently: the S&P 500 plunged about 5% in a single session, the Nasdaq plunged around 6% in a day, erasing more than a thousand points, and Japan’s Nikkei 225 recorded its largest daily loss since March 2020.
While a 90-day pause on most reciprocal tariffs provided temporary relief, levies on China escalated to 100%, fundamentally reshaping supply chain assumptions and corporate investment plans. The episode served as a stark reminder of how quickly policy uncertainty can overwhelm even the strongest fundamentals.
Interest rate divergence
The Fed held rates steady for most of the year before resuming cuts in September and then again on Wednesday this week. The fed funds rate now sits at 3.5% to 3.75%, with policymakers pencilling in just one additional cut for 2026. Fed Chair, Jerome Powell, has signalled a cautious approach, noting discussions centred on whether to pause entirely, or proceed with “a little” more easing.
The South African Reserve Bank (SARB) was more aggressive, delivering five rate cuts since the start of the cutting cycle. South Africa’s repo rate now stands at 6.75%, bringing cumulative easing since September 2024 to 150 basis points. With inflation well-contained and the new 3% target providing additional flexibility, the SARB has prioritised supporting growth without jeopardising price stability.
South Africa’s banner year
Beyond the JSE’s record highs, South Africa achieved two landmark milestones. In October, the country was removed from the Financial Action Task Force’s grey list after 33 months, eliminating a persistent overhang that had complicated international banking relationships and raised compliance costs for corporates.
In November, S&P Global upgraded South Africa’s sovereign rating from BB- to BB – the first upgrade in nearly 20 years – citing improved governance and reform momentum under the Government of National Unity. The positive outlook signals further upgrades are possible if fiscal consolidation continues. Bond markets responded enthusiastically, with 10-year yields reaching around 8.46%, their lowest level in nearly five years.
The rand traded in a wide range between its best level in three years, reached during trade yesterday at R16.89/$ and R19.75/$ earlier in the year. The unit strengthened around 10% year-to-date, and just over 6% over the past 12 months, as improved fundamentals attracted portfolio inflows.
Looking ahead
As 2025 draws to a close, markets face an uncertain landscape. Trade policy remains unpredictable, AI spending sustainability is under scrutiny, and geopolitical tensions show no signs of abating. Yet the year’s winners – gold, select equities, and reform-minded emerging markets like South Africa – have demonstrated that opportunities persist for those who navigate volatility thoughtfully. The foundation has been laid; 2026 will test whether it holds.
A FINAL LOOK AT THE YEAR’S MARKETS
The week’s key themes:
- Fed surprises markets with $40 billion in short-dated Treasury purchases
- Wall Street futures paint a mixed picture as we head towards the final trading session of the week
- Gold hovers at a seven-week high as data reinforces Fed rate cut decision
- US Dollar Index nears two-month low as Fed rate cut weighs
Bonds
US borrowing costs continued their downward trend on Thursday, with the benchmark 10-year yield shedding close to five basis points to touch 4.1%. The Fed stuck to its playbook, delivering another quarter-point cut (its third in succession) while maintaining guidance for one more reduction next year. Powell’s comments were notably dovish, essentially taking rate increases off the table and calming nerves about any hawkish pivot. The central bank also surprised markets by announcing $40 billion in short-dated Treasury purchases in an effort to manage market liquidity levels.
Across the Atlantic, British government debt has sold off sharply. The 10-year gilt yields jumped to 4.57% as traders wound back rate cut bets amid a worldwide fixed income selloff. The shift appears driven more by external pressures than domestic developments.
German Bunds are holding firm above 2.86%, sitting at multi-month highs. Attention now shifts to the European Central Bank’s (ECB’s) upcoming rate decision, where rates are expected to remain unchanged. Notably, swap markets are now implying meaningful odds of a hike by late 2026.
In South Africa, the 10-year bond yield softened to 8.42% on Thursday, declining 10 basis points on the day and sitting 43 points below the levels of this time last year.
Equities
Wall Street futures painted a mixed picture this morning as traders digested fresh corporate results. Blue-chip Dow futures edged up 0.1%, while the S&P 500 and Nasdaq 100 slipped 0.1% and 0.2% respectively. After hours, infrastructure technology company, Broadcom, shed nearly 5% despite beating estimates and providing upbeat guidance. Lululemon, surged over 10% following news that its chief executive would depart at month-end after a challenging year for the activewear brand. Thursday’s cash session saw the Dow and S&P 500 climb 1.34% and 0.21% to fresh all-time highs, even as the Nasdaq Composite dipped 0.25%. The most recent divergence in the equity market reflected investors rotating away from richly-valued tech and AI plays.
London’s FTSE 100 added 0.4% yesterday, building on Wednesday’s modest advance. Bullion strength lifted miners – Fresnillo rallied nearly 4% and Endeavour gained close to 3%. Heavyweight names like banking and financial services company, HSBC, biopharmaceutical company, AstraZeneca, fast moving consumer goods company, Unilever, and pharmaceutical giant, GlaxoSmithKline, firmed 0.4% to 0.7%, while mining company, Rio Tinto, and financial services company, Barclays, each rose over 1%. Events company, Informa, and aerospace and defence companies, BAE Systems and Rolls-Royce, were notable laggards.
European bourses recovered from a sluggish start to Thursday, with the STOXX 50 gaining 0.2% and the STOXX 600 ticking up 0.1%. Industrial electronics manufacturer, RS Group, topped gainers after a JPMorgan upgrade, jumping over 5%. Software giant, SAP, dropped 2.2% amid lingering tech sector concerns.
South Africa’s main stock market index, the SAALL, climbed 0.97% to 112,124, up nearly 29% year-on-year despite a 0.7% monthly decline.
Commodities
Gold is trading around $4,270/ounce, hovering near seven-week highs and heading for a weekly gain. Softer US labour data reinforced easing expectations, with US jobless claims rising to a two-month high. The Fed’s third consecutive cut and Powell’s dovish tone, which effectively dismissed any prospect of further hikes, prompted traders to price in two rate cuts for 2026, despite official projections suggesting just one. The announcement of $40 billion in short-term Treasury purchases is also supporting bullion by capping near-term yields.
Brent crude is holding near $61.50/barrel but remains on track for a weekly loss exceeding 3%. The International Energy Agency maintained its outlook for record oversupply, noting stockpiles have hit four-year highs, while OPEC kept its 2026 forecasts unchanged, signalling a more balanced view. Geopolitical risks surfaced as Washington seized a sanctioned Venezuelan tanker – drawing accusations of “piracy” – while Ukraine launched its fifth strike on a Russian shadow-fleet vessel since late November.
Currencies
The US Dollar Index is lingering near two-month lows around 98.3, heading for a third straight weekly decline. The Fed’s expected rate cut and dovish messaging is weighing on the greenback. A sharp rise in US jobless claims, the largest in over four years, has reinforced expectations for continued easing. Meanwhile, hawkish repricing in Australia, Canada and Europe has added further pressure, and the dollar is set for its steepest weekly loss against the euro.
The European Union’s single currency has pushed toward $1.17/€, its highest level since mid-October. ECB officials tempered easing expectations, with ECB President, Christine Lagarde, flagging improved growth forecasts ahead. French political tensions eased after the National Assembly narrowly passed the 2026 social-security budget, though the broader fiscal outlook remains uncertain.
Sterling has rallied toward $1.34/GBP, touching late-October highs as traders scaled back Bank of England (BoE) easing bets for 2026. Markets still assign an 84% probability to a cut next week despite sticky United Kingdom wage growth and lingering inflation concerns. A second BoE rate cut is largely priced in by June.
The rand has rallied to R16.86/$ following a retreat in the dollar, and a perceived dovish Fed. The recent positive change in fundamentals continues to support the local currency, while additional positive news of South Africa’s inaugural infrastructure bond sale raised R11.8 billion, signalling robust investor appetite. Meanwhile, the ruling party faces criticism over sluggish reforms ahead of next year’s local elections, as the ANC’s fifth National General Council plays out.
All information is at the time of writing.
This will be our final Weekly Market Wrap for 2025. We will resume our weekly analyses on 16 January 2026. We would like to wish you and your loved ones a safe and happy festive season.
Written by Citadel Advisory Partner and Citadel Global Director, Bianca Botes.
Key indicators:
USD/ZAR: 16.83
EUR/ZAR: 19.76
GBP/ZAR: 22.53
GOLD: $4,286.67
BRENT CRUDE: $61.63
Sources: Investing.com, LSEG Workspace, Trading Economics and Weekly Wrap articles from 2025.
