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Article | Global Markets Overview

Global Markets Overview: January 2026

By David Hoile | January 29, 2026

Looking back at what led and lagged in markets in 2025.
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2025 was a good year for financial asset performance relative to cash. Markets delivered positive returns across most of the major asset classes over the year, continuing the risk-on trend from late 2024. Equities led performance, with emerging markets significantly outperforming developed markets. US fixed income also posted gains, supported by the Fed rate cutting cycle and a softer US dollar. Overall, investor sentiment remained broadly constructive, while volatility stayed contained on average, despite the large global tariff and trade shock that occurred in April. Watch our latest video to learn more.

Global Markets Overview: January 2026

Looking back at what led and lagged in markets in 2025.

  • Equities: Emerging markets were the strongest performer, particularly in China, Taiwan, and Korea, which benefited from the AI capex boom and wider AI-related developments, and Latin America. Developed markets delivered good but comparatively lower returns.
  • Fixed income: Fixed income sectors benefited from global rate cuts and narrowing credit spreads, with sovereign and credit markets delivering mid-single-digit gains.
  • Commodities: Gold was the standout asset, posting exceptional returns and driving overall commodity performance. Oil and industrial metals also contributed positively.
  • Outlook: Performance was shaped by post-trade shock policy support, AI-related growth, currency dynamics, and continued investor interest in diversification beyond US assets. Looking ahead, we expect fiscal stimulus, AI and wider technological innovations, and geopolitics to remain influential themes in 2026 and beyond.
Video transcript

Global Markets Overview: January 2026

PHETCHARAT BUSAPAPONG: 2025 was a strong year for global markets, with most major asset classes delivering positive returns and continuing momentum from late 2024. December 2025 closed the year with meaningful shifts across market. Bond yields moved higher globally as investors adjusted expectations for interest rate in response to a strong economic activity and also persistent inflation.

Credit markets strengthened with credit tightened on improved risk sentiment, while equity posted modest gains overall. Policy easing in Europe and continued AI-driven demand in Asia supported performance as US market pulse following cautious guidance from the Federal Reserve. This move marked calibration after a year of strong return.

Overall, investor sentiment remained broadly constructive while volatility stayed contained on average. Despite the large global tariff and trade shock that occurred in April, equity led performance with emerging market, outpacing developed market driven by AI-related investment and a weaker dollar. China, Taiwan, and Korea were standout performers, while Latin America also contributed meaningfully. Developed market posted solid but more moderate gains.

Commodity had another strong year with gold delivering exceptional returns and reinforcing its role as a safe haven asset. Oil and industrial metal also supported overall commodity strength. Fixed income played an important role throughout the year. Early in 2025, global rate cuts and narrowing credit spreads supporting strong bond performance, particularly in US fixed income, helped by the Federal Reserve easing. Towards year end, the tone shifted as government bond yields rose across major markets, reflecting resilient growth and persistent inflation. Despite this, bond remained a key component for liability hedging and downside protection.

Over medium-term, we expect investment grade credit to moderately outperform government bonds, offering better compensation for risk. Currency market added another layer of complexity. The US dollar weakened against major peers late in the year, led by gains in Euro and Sterling, as narrowing rates differential and improve global growth shifted sentiment. Looking ahead, we believe supportive monetary and fiscal policy, strong earnings, and technological innovation, particularly AI, should continue to underpin growth. However, uncertainty around policy path and longer term impact of AI keeps the 5-year view more balanced. Diversification and active risk management will be essential as investors navigate an environment shaped by fiscal stimulus, innovation, and geopolitics in 2026 and beyond.

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David Hoile
Global Head of Asset Research at WTW

David is the Global Head of Asset Research at WTW, responsible for economic and capital market research. He also is a member of the Investment Assumptions Committee, who help guide investment policy globally.

Email+44 20 7170 2144
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