Insights
Market Review for December 2025
Did December yield festive cheer for investors, or more shenanigans in an already hectic year?
No ‘Santa rally’ but lots to cheer for equities in 2025.
Gold and silver prices spike amid US-Venezuela drama.
Japanese interest rates reach 30-year high. US and UK rates fall.
Canada’s rocky path towards weakened sustainability credentials.
NZ business confidence ticks up to three-decade high.
Terror attack in Australia reinforces the value of peace.
A hectic year
The end of December brought the curtain down on a hectic year of global events, both inside and outside of financial markets.
While there was no significant ‘Santa rally’ – the light-hearted name for whenever stock markets are buoyant in the final two months of the year – the overall performance of equities across 2025 was good. As an example, the US S&P 500 index was up 16.4% by year-end (1), while the MSCI World Index of global shares was up 21.1% (in US dollar terms) (2). Closer to home the gains were more muted but there was still good news – Australia’s S&P/ASX 200 index closed 6.8% higher in 2025 (3), while the NZX 50 index gained 3.65% across the year (4).
This healthy performance was noticeably on show in the US, where (some) investor concerns about the legitimacy of the AI investment story weren’t enough to stop big US-listed tech stocks from powering indices like the S&P 500 to record-breaking highs.
The doomsayers who predicted a bursting of the tech bubble in 2025 were proven wrong. Could 2026 prove to be different?
Precious metals rise, again
Geopolitical tensions flared in December as the US started seizing Venezuelan oil tankers in an attempt to squeeze President Nicholas Maduro’s anti-US regime.
In hindsight, we now know that this was a precursor to events in the new year when US special forces launched an extraordinary raid and extradited Maduro on charges of drug trafficking.
The story has significance on a global scale for a number of reasons. First, Venezuela has the world’s largest oil reserves (5) with China being its biggest buyer (6). Both China and Russia publicly declared their support for Maduro in December, following America’s actions. The move also reasserts US control on its doorstep as it attempts to rebuff the increasing influence of China in the region.
More broadly, there are serious questions about the legality of the military operation under international law, marking another significant move away from the so-called "rules-based order" that has loosely guided international relations in the years following World War II. In the face of this rising tension, gold and silver prices jumped to new highs across the month (7). Gold and silver are seen as so-called ‘safe haven’ assets and typically rise in line with investor nerves, and vice versa. In terms of December, their appeal was also boosted by falling US interest rates, as some investors looked to diversify portfolios and funds away from traditional asset classes.
As an ethical investor, any geopolitical dispute involving oil has all sorts of problematic layers. And in a war-laden year like 2025, we hope this doesn't signal the start of more conflicts around the world.
Japan takes rates to 30-year high
Across the month there was a flurry of activity from central banks in key economies. The catalyst was uncertain economic growth prospects running parallel with stubborn inflation.
In the US and the UK, there were rate cuts last month. The US Federal Reserve opted to lower its rate range by 0.25%, taking it to 3.5-3.75% (8). The Bank of England took its own base rate to 3.75% (9). In the case of the latter, the vote was split 5:4 in favour of cutting (10), a sign of just how uncertain the economic outlook has become since the tax-raising Labour government took office.
Meanwhile in the eurozone, rates were held steady in the face of less problematic inflationary pressures (11). Conversely, there was a big update in Japan where the central bank increased rates to a 30-year high of 0.75% (12). Policy makers also hinted at more hikes to come should inflation in the country keep rising.
Why do we cover this in our monthly updates? It’s because inflation (i.e. rising prices), and the monetary policy used to control it, influence economic growth prospects as well as asset class performance, particularly in bond markets. Communicating how inflation is trending, and the trajectory of interest rates in regions where we might look to invest on behalf of our members, is therefore very relative to the work that we do on your behalf.
Canada’s rocky path
Away from financial markets, December saw disappointing climate-related news emerge from Canada.
Prime Minister Mark Carney – a long-time sustainability advocate and one-time UN climate envoy – signed a new deal that will see Canada producing an extra million barrels of crude oil a day. He had previously pledged to double production of liquefied natural gas, and he also removed the country's carbon tax (13).
The decisions are driven by changing economic priorities since Trump’s trade tariffs saw neighbourly relations deteriorate throughout 2025. Canada feels like it needs alternative sources of revenue in the face of US trade hostility.
From a Pathfinder perspective, we think it is wholly reasonable for a country to want to protect its economy. But, and it’s a big ‘but’, we believe that short-term energy policies rowing back on recent sustainability progress are simply not the answer.
Global warming is a short, medium and long-term problem and oil production plays a significant role. Decisions such as Canada’s to increase production are very frustrating to see, especially where they ‘lock-in’ fossil fuel use for an extended period of time.
Happy new year?
On a cheerier note, in New Zealand there were yet more signs that the worst of the recent economic toil may be behind us.
The ANZ’s Business Outlook survey for December showed business confidence reaching a 30-year high. Corporate activity levels were also recorded as being up (14).
Say it quietly but better times look to be ahead. New Zealanders may at last be able to shake off the cobwebs of the lingering downturn that soured the mood in 2025.
Here's to more peace in 2026
Lastly, it would be remiss of us not to mention the tragic events on Bondi beach and one of the worst terrorist atrocities in Australia’s history. It was also the worst terrorist attack (in terms of fatalities) for that month, globally (15).
If you regularly read our monthly updates, you will know how strongly we feel about the need to avoid ‘human harm’ – something that comes in many forms. We are also passionately against the funding of armaments, as we know the pernicious role that weapons can play in warzones, and in societies more broadly.
Terror attacks like the one at Bondi are an important reminder that peace is to be cherished. We can all play our part in building respectful and vibrant communities, whether as citizens or as investors.
Here’s to a happier and more tolerant 2026.
Sources & further reading
[1] https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview
[2] https://www.msci.com/indexes/index/990100
[3] https://www.spglobal.com/spdji/en/indices/equity/sp-asx-200/#overview
[4] https://www.spglobal.com/spdji/en/indices/equity/sp-nzx-50-portfolio-index/#overview
[9] https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
[10] https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/december-2025
[11] https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.mp251218~58b0e415a6.en.html
[12] https://www.cnbc.com/2025/12/19/bank-of-japan-boj-rate-cpi-inflation-takaichi-ueda.html
[13] https://www.ft.com/content/e5a0fe37-4d36-489b-95ce-9467ed02efe8
[14] https://www.rnz.co.nz/news/business/582323/business-confidence-rises-to-30-year-high
[15] https://en.wikipedia.org/wiki/List_of_terrorist_incidents_in_2025
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Pathfinder recommends all investors receive financial advice before making an investment decision. Pathfinder Asset Management Limited is the issuer of the Pathfinder KiwiSaver Plan and Pathfinder Investment Funds. Product Disclosure Statements for the offers are available at pathfinder.kiwi. Learn more about how we invest ethically by reading our Ethical Investment Policy & Exceptions Register.
