The 2025 financial market rollercoaster ended on a positive note — what lies ahead in 2026?

Mantas Skardžius, Investment Strategist at the INVL Family Office.

Investors could liken the recently concluded year of 2025 to a good action movie. There were no gunshots or high-speed chases, but market participants still experienced chills of fear in the spring and, by summer, a surge of greed driven by the fear of missing out on the “hottest scenes” in the financial markets.

“Liberation Day”

The most dramatic phase of the 2025 financial markets unfolded when the newly elected U.S. president, Donald Trump, announced “retaliatory” tariffs against America’s trading partners. Financial markets reacted forcefully to what were widely perceived as amateurish decisions: global equities, measured in euros, plunged by around 20%, the U.S. dollar weakened by roughly 10% against the euro, and bewildered investors rushed to sell U.S. Treasury bonds, sharply driving up U.S. borrowing costs.

It was likely this last factor that forced the bold tariff strategists in Washington to retreat, allowing investors to breathe a sigh of relief. The remainder of 2025—marked by tariff rollbacks, negotiations, and repeated policy reversals—proved far less unsettling for markets. By year-end, global equity indices closed with an annual return of approximately 8%.

Gold Shines

As investors observed what at times appeared to be amateurish policymaking from the White House, and as the world continued to grapple with persistent geopolitical challenges, some chose to seek a safe haven for their portfolios in gold. Over the year, the precious metal gained more than 60%, and as it approached all-time highs, many investors began to question whether prices could climb even further.

Answering such questions is, of course, difficult. Gold generates no financial cash flows whatsoever, meaning its price is largely an emotion-driven agreement among market participants. As those emotions wavered toward year-end, gold—often regarded as a safe investment—experienced sharp short-term swings of several, and at times even double-digit, percentage points. This volatility served as a reminder to investors of the inherent instability behind popular investment trends.  

Hot AI Heads

Interestingly, at the very same time when some investors—driven by near-apocalyptic fears—were seeking refuge in the gold market, overall financial markets were dominated by unshakable optimism surrounding one of the hottest investment themes of recent years: artificial intelligence (AI). Shares of NVIDIA, widely seen as the flag-bearer of the AI theme, surged by more than 80% from their April lows, while the tech-heavy Nasdaq Composite rewarded investors with returns of nearly 50% over the same period.

As the first snowflakes of winter began to fall, such eye-catching returns started to unsettle financial markets. In the final quarter of 2025, the Nasdaq Composite’s performance barely managed to climb into positive territory. 

What Can Investors Expect Next Year?

For investors, 2026 is shaping up to be a truly eventful year, full of change and uncertainty. While predicting specific turns in financial markets remains difficult, several emerging trends and widely anticipated developments are already coming into focus and may help shape investor sentiment. Among the key topics worth discussing now are upcoming shifts in U.S. monetary policy, the sustainability of the artificial intelligence theme, and the twists of geopolitical risks and their potential impact on global financial markets.

The New Fed Chair

In any other year, the announcement of a new chair of the U.S. central bank would hardly attract rock-star-level attention. But 2026 will be anything but an ordinary year. Investors can largely thank U.S. President Donald Trump, who has so far consistently, stubbornly, and at times quite creatively pressured the current leadership of the Federal Reserve to cut interest rates immediately.

Naturally, with the current Fed Chair Jerome Powell’s term coming to an end in May 2026, Donald Trump will have a prime opportunity to appoint a highly favorable successor—one whose views are likely to be far more flexible than the Fed’s stance to date. Financial markets will undoubtedly be watching the first moves of the incoming Fed chair very closely, as faster interest rate cuts could not only provide additional stimulus to the economy (and financial markets alike), but also weaken the U.S. dollar against other currencies.

An AI Breather

Toward the end of 2025, investors witnessed rapidly shifting sentiment toward AI—perhaps best embodied by the sudden rise and near fade of Oracle’s stock star. Aggressively assumed business risks and massive capital investments had long seemed acceptable to investors, driven by promises of a world-transforming future and, naturally, spectacular profits ahead.

Against this backdrop—and as investors grow increasingly impatient for evidence of returns on these enormous expenditures—it is worth noting that enthusiasm around the AI theme has so far left very little room for disappointment. This means that even hints from AI-leading companies of slower-than-expected profit growth or incomplete monetization of AI could trigger an emotional rush for the exits, leading to sharp corrections in technology stocks and, by extension, broader financial markets.

Peace in Europe

Geopolitical risks that have dominated headlines for several years may not disappear in Europe in 2026, but they could change in nature. As the U.S. administration makes significant efforts to bring the war in Ukraine to an end as quickly as possible, there is a technical possibility that at least the active phase of the conflict could conclude this year.

Such a development could reduce European policymakers’ willingness to sustain elevated defense spending, thereby undermining the appeal of one of the hottest investment themes of early 2025—European defense stocks. As peace initiatives gained momentum, defense company shares were already showing signs of nervousness in 2025, suggesting this trend could well continue into 2026. Naturally, amid such market dynamics, shareholders of Rheinmetall and similar defense firms may enter the new year with heightened tension.

A Thriller or a Good Night’s Sleep?

So, in summary, if we could label the financial markets of 2025 as a thriller, what kind of movie will unfold in 2026? Without a doubt, the year ahead promises to be highly dynamic, with long-standing and familiar trends giving way to change. Whether investors can expect another happy ending in 2026 remains to be seen, but one thing is clear: those who navigate financial markets with discipline and diversification are likely to sleep the most soundly.