Synopsis

Global stocks began the new year positively, with US equity futures and precious metals advancing. Despite a recent pullback, 2025 saw strong gains driven by earnings expectations and AI optimism. Investors anticipate continued growth, though US monetary policy and valuations pose risks.

TIL Creatives

Market research firm Bespoke Investment Group cautioned against expecting solid market performance during the first trading day of the new year.

Stocks kicked off trading in the new year on a positive note with US equity-index futures advancing, while gold and silver gained.

Futures for the S&P 500 and the Nasdaq 100 indexes rose 0.2% in early Asian trading, while Australian shares were little changed. Precious metals rebounded from losses at the end of last year, with spot gold rising 0.5% and silver jumping 1.4%. Cryptocurrencies were a touch stronger. Australia’s sovereign bonds dropped.

Trading is likely to be thin across the region with several markets shut for holidays, including Japan and China, while South Korea has a delayed start. The S&P 500 extended a stretch of post-Christmas losses on Wednesday and the Nasdaq 100 had a fourth day of declines. Even so, both indexes have posted double digit gains for three consecutive years.

The dollar recorded its worst year since 2017, with investors saying more declines are coming if the next Federal Reserve chief opts for deeper interest-rate cuts. US Treasuries posted their best year since 2020.

Despite the recent pullback, global stocks posted their strongest year since 2019, as expectations for higher earnings and optimism around artificial intelligence supported investor demand. Even so, uncertainty over the outlook for US monetary policy and elevated valuations remain key risks.

“The end of 2025 was a fizzer in global markets but it doesn’t detract from the fact it was a very good year for investors,” Kyle Rodda, a senior analyst at Capital.com, wrote in a note. “Naturally, the start of the new year comes with the question everyone asks moving from one year to the next: will this continue? The consensus is that, yes, it will.”

Wall Street is now well aware of the risks surrounding the AI boom. But when it comes to the year ahead, few advocate walking away from what they describe as a “revolutionary technology.”

The economic impact of AI was a top story in 2025 and will remain so in 2026, Goldman Sachs Group Inc. economists including Joseph Briggs and Andrew Tilton, wrote in a note Wednesday.

While AI-related capex has clearly surged, the impact on GDP has been minimal and the AI spending boom doesn’t look particularly large when appropriately benchmarked against past technology investment cycles, they wrote.