Q4 2025 Economic & Market Commentary

Global Overview

Global financial markets ended 2025 on a generally positive note despite persistent macro uncertainties. Global equities, as measured by broad benchmarks such as the MSCI All Country World Index, finished the fourth quarter with modest gains, helping lift annual returns substantially across regions. Emerging markets led developed markets in the final quarter, with positive performance underpinned by improving risk appetite and strong returns in select regions. Developed markets also advanced, though US equities lagged relative to international peers over 2025 as a whole.

South Africa

South African equities rallied strongly in Q4, with the JSE All Share Index rising about 8.1% for the quarter and delivering robust full-year returns above 40%. Strong performance was broad-based across resource, financial and industrial stocks.

Annual inflation remained moderate and aligned with the South African Reserve Bank’s (SARB) lowered 3% target regime, after policy changes in 2025. Headline CPI edged around the low-to-mid single digits, with inflation expectations trending lower into Q4. The SARB maintained a repo rate around 6.75% with the potential for further modest cuts as inflationary pressures eased, contributing to supportive financial conditions.

South African bond markets outperformed, with local government yields declining, bolstering returns in the All Bond Index. The rand experienced periods of relative stability, partly reflecting global dollar softness and improved risk sentiment.

United States

Major US equity benchmarks delivered moderate gains in Q4 2025, with the S&P 500 and Nasdaq Composite climbing modestly over the quarter. By year-end the S&P 500 ended close to all-time highs, though its full-year gain was more subdued compared with global indices.

The US economy continued to grow through the final quarter, buoyed by resilient corporate earnings and solid consumer spending. Inflation remained above the Federal Reserve’s 2% target, keeping markets focused on the central bank’s policy stance. However, the Federal Reserve cut interest rates twice late in the year, reflecting easing pressure on price dynamics and signaling a more accommodative stance moving into 2026. Interest rate cuts were a major driver of equity market resilience late in the year, although the Fed emphasised that further easing would be contingent on sustained inflation progress.

US inflation softened somewhat, with consumer price increases coming in below market expectations at various points, helping underpin hopes for future rate cuts and supporting risk assets.

United Kingdom

UK equities enjoyed a strong fourth quarter, with the FTSE 100 index advancing and outperforming many developed market peers. FTSE indices benefited from strong performance among internationally focused sectors including mining and defence.

The Bank of England (BoE) held its policy rate at around 4% through Q4 2025, choosing to pause cuts as inflationary pressures were judged to have peaked and started to moderate. Headline inflation in the UK remained elevated above the BoE’s 2% target into late 2025 but showed signs of easing; markets interpreted the central bank’s stance as cautiously neutral.

The IMF noted slowing economic growth in the UK into 2026, tied to moderating inflation and a weakening labour market, although growth was still expected to be among the stronger G7 economies.

China

China’s economy met its full-year 2025 growth target of around 5% despite a gradual slowdown to near 4.4–4.5% in Q4, its weakest pace in several years. Export strength contributed to growth, yet domestic demand and consumption remained weak. Inflation in China was still modest, with consumer prices rising less than 1%, reflecting ongoing structural challenges and underlining persistent deflationary pressures in some sectors.

The People’s Bank of China maintained a generally accommodative stance, including targeted rate cuts and liquidity injections to support credit growth, though broad stimulus was more cautious relative to past cycles.

Developing & Emerging Markets

Emerging markets broadly outpaced many developed peers in Q4 2025. The MSCI Emerging Markets Index ended the quarter with solid gains, completing a strong year for risk assets outside the US. Commodity exporters and certain Asian markets benefited from resilient external demand and technology sector momentum.

Inflation and monetary policy across these regions diverged, with some central banks easing policy amid slowing growth, while others maintained tighter stances to combat elevated inflation.