- Liberation Day
- Indian stocks slump
- Gold’s continued upward march
- No manifesto-breaking Budget
- UK banks smash global tech
Hal Cook, senior investment analyst, Hargreaves Lansdown:
“2025 has delivered a number of surprises and, like Christmas crackers, some ended up being underwhelming. Here are five things that were unexpected for investors this year.
- Liberation Day
It was well-telegraphed that the US was going to implement higher tariffs. It was not well-telegraphed that these were going to be of levels up to 50%. Neither was it expected that ‘countries’ such as the Heard and McDonald islands (that form part of Australian territory but are uninhabited and are believed to have last been visited by people 10 years ago), would be targeted.
While the immediate market sell-off was significant – wiping a reported $9.5 trillion off global markets – the market rebound has been quite astonishing. For the year to 27 November, the MSCI AC World index is up 14%, with UK and European stock markets up 21% and 24% respectively. Just looking at those figures, you wouldn’t think that the US had increased its average tariff rate from 2.3% at the end of 2024 to somewhere in the mid to late teens today. Perhaps the biggest surprise here isn’t actually what was announced on Liberation Day, but the market reaction since.
- Indian stocks slump
While many stock markets across the globe have performed well in 2025, that doesn’t apply to India. The MSCI India index has returned -1% so far in 2025. After a few years of strong performance, particularly within the emerging markets space (the MSCI India index returned 36%, compared to the MSCI Emerging Markets index return of 3%, for the 3 years to the end of 2024), it’s perhaps not a surprise that stock market returns there have slowed in 2025.
At the same time, emerging market investors have been rotating their investments into China, which has had a strong year. Even so, in the context of broad stock market gains during 2025 and the Indian economy recently announcing 8.2% growth in the latest quarter, negative returns for the Indian stock market are a bit surprising.
- Gold’s continued upward march
The gold price hit $2,000 in August 2020 and hovered around that price until the start of 2024. By the end of 2024, it was $2,600 and it’s around $4,200 today. We flagged that gold had potential to continue rising this year as part of our outlook issued at the end of 2024 – and I’m very happy we made that call on behalf of our clients. But the level of the continued rises in 2025 has most certainly been a surprise, even for the gold bulls at HL.
- No manifesto-breaking Budget
This weeks’ Budget ultimately proved quite uneventful, from an investment market perspective at least. Gilt yields, the FTSE All Share, and the pound all barely reacting following confirmation of the various policy measures announced. All three are at similar levels to where they were at the start of November. No doubt this comes down to the very high volume of leaks about what might be contained in the Budget, including the OBR data immediately before Chancellor Reeves took to the podium. And the fact that, despite early concerns, the Chancellor did not break the manifesto pledge of no increases on income tax, National Insurance or VAT. The outcome has been calm and somewhat underwhelmed investment markets, which is probably exactly what the government wanted.
- UK banks smash global tech
UK banks have seen share price rises of more than 2.5 times those achieved by global technology firms so far in 2025. The FTSE All Share Banks index is up 56% for the year to 27 November, while the FTSE World Technology index has returned ‘just’ 22%. With profits soaring following interest rate increases in recent years, alongside lower levels of loan defaults from both companies and individuals, share prices have followed profits in 2025.
The rises continued last week, as banks seem to have dodged a potential raid on these heightened profits from the Chancellor, which had been anticipated in the build up to the Budget. While our very own senior equity analyst, Matt Britzman, predicted that UK banks might have another good year in 2025, I’m not sure anyone went as far as suggesting this level of outperformance versus tech. Who knew that boring old UK banks had it in them?!”
