The final quarter of 2025 closed out a remarkable year for investors. Markets that had weathered one shock after another since January rose still further in the three months to end-December. Despite enormous changes in the global trading system, in US governance, and in US relations with the rest of the world, US equities ended 2025 in record territory, after climbing 2.7% in the three months to end-December. Around the world, the story was largely the same.
RockCreek sees three takeaways for 2026:
Prospects for AI will be critical to markets and the economy. Belief in an AI revolution that will drive profit and productivity gains across the global economy has buoyed markets and supported investment demand – in technology, data centers and energy production. If progress falters or doubts grow about profitability, stock market valuations will be challenged.
US monetary credibility could be called into question as Federal Reserve Chair Powell’s term ends amid conflict with the Administration. Further rate cuts may be delayed. The still sluggish labor market is likely to limit any immediate inflationary impact while the odds of recession are low.
Upcoming mid-term elections in the US will increasingly be the focus of the White House, encouraging the Administration to search for supportive economic policies and bold international moves.