Categories: News

December 2025 market update

Global markets ended 2025 on a cautious upswing, with resilient North American growth, soft demand in China, and record highs in key commodities shaping the outlook for 2026.

January 8, 2025

Introduction

Global equity markets finished slightly higher over the month of December. The U.S. Federal Reserve Board (Fed) lowered its policy interest rate in December, while signalling the possibility of another rate cut in 2026. However, positive sentiment was muted amid concerns the valuations of artificial intelligence stocks are too high.

Canada’s economy continues to demonstrate its relative strength despite ongoing trade tensions with the U.S. The labour market showed more signs of stabilizing towards the end of the year as the economy added jobs, helping to push the unemployment rate lower. The U.S. announced that its gross domestic product (GDP) expanded by 4.3%, annualized, in the third quarter of 2025. The U.S. inflation rate moved lower, raising hopes the Fed would keep cutting interest rates in 2026. The Fed lowered the target range of its federal funds rate by 25 basis points to 3.50%–3.75% at its final meeting of 2025.

The S&P/TSX Composite Index edged higher, led by the financials sector. U.S. equities moved slightly lower. Yields on 10-year government bonds in Canada and the U.S. increased. Oil prices ticked lower, while the price of gold moved higher.

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