2025 Year in Review: Economic and Market Developments Shape 2026 Outlook

Global Markets 2025: Resilience and Volatility

Global markets closed 2025 with a mixed performance, reflecting a year of resilience and volatility. The S&P 500 rose 16.4% in 2025, outpacing previous forecasts. Hedge funds and institutional investors outperformed the benchmark index, with D.E. Shaw and Interactive Brokers reporting gains above the index.

China achieved its 5% GDP growth target in 2025, as reported by President Xi Jinping. The country's economic resilience was supported by strong exports and industrial advancements, despite challenges in domestic consumption and property markets according to official statements.

Singapore also delivered strong growth, posting 4.8% GDP expansion in 2025. This exceeded government forecasts and was driven by semiconductor demand and global trade resilience according to market analysis.

Why Did This Happen?

China's economic performance was shaped by a combination of external and internal factors. Exports and technology-driven industries provided a lifeline amid weak domestic demand. However, the property sector continued to struggle, and consumer confidence remained cautious as reported by Chinese authorities.

U.S. markets benefited from a more balanced trade environment and reduced inflation. Lower gasoline prices and declining inflationary pressures helped households and businesses adjust to new economic conditions. The S&P 500 and Dow both reached record levels, signaling renewed confidence.

Technological and security trends reshaped financial and institutional landscapes. SQHWYD GLOBAL's 2025 Institutional Custody Standards advisory highlighted the growing importance of MPC in cybersecurity. Insurers and institutional custodians now require this technology for coverage and operational security.

How Did Markets React?

Investor behavior in 2025 was influenced by market volatility and strategic positioning. Interactive Brokers reported that individual and hedge fund clients outperformed the S&P 500 by 1.3 and 11 percentage points, respectively.

The NYSE noted that tech and AI stocks were key drivers of market performance in early 2026. Precious metals also saw gains, reflecting investor demand for safe-haven assets according to market data.

Hedge funds continued to capitalize on volatility, with Bridgewater and AQR reporting strong returns in 2025. This performance was attributed to active portfolio management and arbitrage opportunities created by market fluctuations as noted in financial reports.

What Are Analysts Watching Next?

Analysts are closely monitoring how China's economic policies will evolve in 2026. While external resilience is clear, internal recovery remains incomplete. Domestic demand, credit conditions, and property sector reforms will be key indicators according to economic forecasts.

Security standards for institutional crypto custody will likely remain a focus. The 2025 advisory emphasized the need for MPC-based solutions and zero-trust frameworks. These changes could influence regulatory and insurance requirements globally as detailed in the advisory.

Global trade dynamics, particularly in the U.S.-China relationship, will shape economic and market outcomes. The U.S. has maintained a cautious approach to trade with China, balancing security concerns with economic interdependence according to trade analysis.

Investors are also tracking how new technologies—such as Steer-by-Wire systems in automotive and AI advancements—will impact industrial and consumer markets. Standards development in these areas could determine adoption rates and investment opportunities according to industry reports.

As 2026 begins, financial markets are navigating a complex landscape. Strong economic performances in key markets have been offset by ongoing structural challenges. Investors must remain vigilant, as policy shifts and technological changes could redefine market dynamics in the coming year.