Global financial markets are wrapping up a turbulent yet ultimately positive year in a holiday-thinned trading environment

As of December 27, 2025, global financial markets are wrapping up a turbulent yet ultimately positive year in a holiday-thinned trading environment, with many exchanges operating on reduced volumes or still closed following Christmas and Boxing Day observances. In Asia, stocks edged higher to reach six-week highs amid light activity, with Japan's Topix index climbing to a record level and rising about 0.5%, while South Korea's benchmark advanced 0.6% and remained on track for an extraordinary roughly 72% annual gain, making it the world's top-performing major market in 2025. China's CSI 300 blue-chip index showed modest gains, positioning it for around an 18% yearly increase—the strongest since 2020—supported by easing deflation risks and stabilizing core inflation. Tokyo's core CPI rose 2.3% year-over-year, and the yen faced ongoing weakness despite recent Bank of Japan rate hikes, prompting warnings about potential intervention as it approached levels near 160 per dollar. Precious metals continued their strong rally, with gold and silver hitting fresh records driven by central bank purchases, ETF inflows, and concerns over global debt and currency debasement.

European markets closed the holiday-shortened week near all-time highs, on pace for their strongest annual performance since 2021, fueled by significant monetary easing from major central banks—the largest in over a decade—along with Germany's fiscal initiatives and investor diversification away from elevated U.S. valuations. The pan-European Stoxx 600 and other benchmarks held firm, with standout gains in sectors like luxury goods and banks, where some institutions posted annual advances of 60-140% amid expectations of continued benefits from AI-driven efficiencies. Borrowing costs in periphery countries such as Italy and Spain reached multi-year lows, reflecting improved fiscal discipline and a fading "periphery" label.

In the United States, trading remained subdued in the post-Christmas session on December 26, with major indexes fluctuating near record levels after logging solid weekly gains during a shortened holiday week. The S&P 500 hovered around 6,930—having recently touched fresh highs and posting an approximately 18% gain for 2025 overall—while the Nasdaq led with over 20% yearly returns despite earlier volatility from tariff announcements. Stocks benefited from resilient economic data, including accelerated third-quarter GDP growth and optimism around AI-related capital expenditures offsetting trade policy pressures, though consumer confidence weakened in December amid job and income concerns. The "Santa Claus rally" appeared underway in the final trading days of the year, supporting positive sentiment into year-end window dressing, even as volumes stayed low and investors eyed an uncertain 2026 path under evolving fiscal and monetary conditions. Overall, risk appetite remained buoyant globally, bolstered by easing cycles and precious metals strength, though the quiet holiday period limited dramatic moves.