Content

• Content

• UK: Markets deliver strongest returns in years, but growth slows

• Europe: Markets lag, but inflation and growth remain steady

• US: Growth remains strong, while market returns slow

• Asia: Markets deliver the strongest returns of the year, as inflation edges towards target levels

• How this affects your investments

• Looking ahead

Summary

In the final quarter of 2025, global markets continued to grow, rounding off a standout year for returns. While economic growth slowed in many regions, inflation continued to move back towards target levels.

In a year marked by uncertainty, the strong performance of markets highlights the importance of keeping focused on your long-term goals, rather than reacting to short-term noise or trends.

UK: Markets deliver strongest returns in years, but growth slows

The UK ended 2025 on a mixed note. The economy slowed, but falling inflation and strong stock market performance helped improve the overall picture.

Economic growth weakened during the year, and the economy grew by just 0.1% in the third quarter of 2025, down from 0.3% in the previous quarter. This was the slowest pace of growth since late 2023 and was mainly caused by weaker performance in manufacturing and production¹.

At the same time, inflation continued to ease, falling to 3.2% in November, down from 3.6% in October, marking the lowest level since March. Lower price rises for food, drink, and tobacco played a big part in this slowdown².

As inflation started to come down, the Bank of England reduced interest rates to 3.75% in December and suggested that further cuts could follow if inflation continues to ease³.

UK markets performed well towards the end of the year. The FTSE All-Share, which covers around 900 of the country’s largest companies, increased by 6.4% in the final quarter. Overall, it was an excellent year for investors, with the index rising 24% across 2025, which marks its best annual performance for over 10 years⁴.

Europe: Markets lag, but inflation and growth remain steady

Europe finished the year in steady shape, though its stock markets lagged behind many global peers throughout the year.

Inflation in the eurozone was at 2.1% in November, unchanged from October. Of the major economies, France and Italy saw the lowest inflation readings, with 0.8% and 1.1% respectively. Germany and Spain experienced higher rates, with respective readings of 2.6% and 3.2%⁵.

The eurozone economy grew by 0.3% in the third quarter of 2025, up from 0.1% in the previous quarter, suggesting a gradual pickup in activity⁶.

European shares ended the year on a positive note. The MSCI Europe ex-UK index, which tracks many of the region’s large and mid-size companies, rose by 5.9% in the final quarter of the year. Although European markets lagged behind some global peers across the year, they still delivered a healthy gain of 20.1% in 2025⁷.

US: Growth remains strong, while market returns slow

The US had a mixed end to the year. The economy grew strongly, but the stock market lagged behind other regions, though it still produced solid returns over the year.

Prices rose more slowly towards the end of the year. Annual inflation fell to 2.7% in November, the lowest since July and down from September’s reading of 3%⁸.

Despite inflation remaining above the target rate, the central bank cut interest rates to a range of 3.5% – 3.75% in December to help strengthen the job market, marking the lowest level since 2022⁹.

US economic growth was particularly strong in the third quarter. The economy expanded by 4.3%, up from 3.8% in the previous quarter and the fastest growth in two years. This was mainly driven by higher consumer spending, stronger exports, and increased government spending¹⁰.

On the markets, the S&P 500 rose 2.7% in the final three months of the year. Although it remained the weakest-performing major index in 2025, it still delivered a respectable gain of 17.9% for the full year¹¹.

Asia: Markets deliver the strongest returns of the year, as inflation edges towards target levels

Asian markets were the strongest performers globally in 2025, and the latest inflation data for the region was encouraging.

In Japan, the TOPIX index, which tracks a wide range of companies, rose 8.8% in the final quarter and delivered an impressive annual gain of 25.5%¹². Inflation in Japan eased slightly, falling to 2.9% in November from 3% in October, its highest level in three months¹³.

Elsewhere in the region, the MSCI Asia ex-Japan index also performed well, climbing 4.3% in the last quarter and finishing the year up 33%¹⁴. In China, annual inflation rose to 0.7% in November, up from 0.2% in the previous month, reaching its highest level since February 2024¹⁵.

How this affects your investments

The final quarter of 2025 delivered positive returns across all major markets. The year as a whole was exceptionally strong, with even the weakest-performing indices still posting solid gains.

Although the year was marked by geopolitical uncertainty and periods of volatility, overall market performance remained firmly positive. This reinforces the idea that long-term outcomes matter far more than short-term disruption.

Looking ahead

While there may be some twists and turns on the horizon in the year ahead, many of the key conditions that support future growth remain in place, including easing inflation, broadly stable economic fundamentals, and the potential for interest rate cuts.

A well-constructed portfolio should be positioned to make the most of a favourable economic climate, without the need for constant changes in response to market noise.

If you have any questions about your portfolio, speak with your adviser to ensure you’re on track with your goals.

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Succession Wealth Management Ltd is registered in England and Wales at The Apex, Brest Road, Derriford Business Park, Derriford, Plymouth PL6 5FL. Registered Number 07882611. 

Please note: This guide is for general information only and does not constitute advice. The information is aimed at retail clients only.

The content of this guide was accurate at the time of writing. While information is considered to be true and correct at the date of publication, changes in circumstances, regulation, and legislation after the time of publication may affect the accuracy of the guide.

¹06.01.26 United Kingdom GDP Growth Rate Trading Economics ²17.12.25 Consumer price inflation, UK: November 2025 Office for National Statistics ³18.12.25 Interest rates and Bank Rate: our latest decision Bank of England ⁴02.01.26 Review of Markets over 2025 JP Morgan ⁵06.01.26 Euro Area Inflation Rate Trading Economics ⁶06.01.26 Euro Area GDP Growth Rate Trading Economics ⁷02.01.26 Review of Markets over 2025 JP Morgan ⁸06.01.26 United States Inflation Rate Trading Economics ⁹10.12.25 Fed lowers interest rates but future cuts uncertain BBC ¹⁰06.01.26 United States GDP Growth Rate Trading Economics ¹¹02.01.26 Review of Markets over 2025 JP Morgan ¹²02.01.26 Review of Markets over 2025 JP Morgan ¹³06.01.26 Japan Inflation Rate Trading Economics ¹⁴02.01.26 Review of Markets over 2025 JP Morgan ¹⁵06.01.26 China Inflation Rate Trading Economics

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