This is part of our monthly series. Catch up on last month’s summary here: What happened to global investment markets in November 2025?
After a year of tariff shocks, government shutdowns, central bank uncertainty, and ongoing wars in Ukraine and Gaza, global markets finished 2025 on a remarkably calm note.
December itself saw little drama. Most major stock indices either posted modest gains or remained flat. But look at the full year, and 2025 delivered strong returns almost everywhere.
The S&P 500 posted double-digit gains for the third consecutive year, rising close to 17%. Asian markets had one of their best years in recent memory.
And in a surprise to many, the FTSE 100 delivered its strongest annual performance since 2009, rising over 21%.
The most notable moves came in the final days. On 30 December, the FTSE 100 closed at a record high of 9,940 points.
This marked a significant milestone for UK shares and capped off a year where the FTSE 100 beat both the S&P 500 and major European indices.
Keep reading to find out what happened to markets in December, why UK shares hit record highs, and what this means for your PensionBee plan.
What happened to stock markets?
In North America, the S&P 500 Index remained flat in December. This brings the 2025 performance close to +16%.
In Europe (excluding the UK), the EuroStoxx 50 Index rose by over 2% in December. This brings the 2025 performance close to +19%.
In Asia Pacific (excluding Japan), the Hang Seng Index fell by over 1% in December. This brings the 2025 performance close to +28%.
In Japan, the Nikkei 225 Index rose by over 2% in December. This brings the 2025 performance close to +26%.
In the UK, the FTSE 250 Index rose by over 2% in December. This brings the 2025 performance close to +9%.
UK shares and the record-breaking year
The FTSE 100 had a record-breaking year in 2025, rising over 21%. This beat the S&P 500, which gained close to 17%.
It’s often seen as a quieter index, especially next to the fast-growing US tech market.
But in 2025, this proved to be a strength rather than a weakness. What drove this strong performance? The FTSE 100’s mix of different sectors played a key role.
Banks staged a recovery
UK banks continued their strong performance from 2024, with shares rising sharply for a second consecutive year.
Interest rates fell gradually through 2025 after years of increases. This gave banks more certainty to plan and improve their profitability.
As their earnings grew, investors became more confident in the sector. The recovery showed how quickly sentiment can shift when fundamentals improve.
Energy and mining stocks drew cautious investors
The FTSE 100 includes many large mining and energy companies. In an uncertain year, these sectors appealed to investors looking for stability.
Most of these firms are globally diversified. They produce a wide mix of commodities, such as copper, iron ore, gold and natural gas, not just oil. That spread can help cushion returns when individual prices move around.
Gold and silver both reached record highs in December 2025. Gold rose by almost 65% over the year, while silver climbed by more than 140%. These gains supported companies focused on precious metals.
Many of these firms also pay regular dividends. For some investors, reliable income mattered more than rapid share price growth.
Defence spending boosted aerospace companies
Defence and aerospace stocks also saw an impressive year. Some companies such as Babcock International and Rolls-Royce nearly doubled in value.
Western governments increased defence spending significantly in 2025 in response to geopolitical tensions, including conflicts in Ukraine and the Middle East. This created strong demand for UK defence contractors and aerospace companies.
What does this mean for pension savers?
The FTSE 100’s strong performance shows why diversification matters. At the start of 2025, many investors were cautious about UK shares.
The US market looked more attractive, driven by technology and artificial intelligence (AI).
By the end of the year, the picture had changed.
PensionBee customers hold globally diversified pension plans. These can include UK shares alongside US, European, and Asian markets.
When one market has a quieter year, another may perform more strongly. That’s what happened in 2025.
For pension savers, this meant benefiting from:
strong US technology earnings;
a recovery in UK banking and defence stocks; and
continued growth in Asian markets.
No single region led throughout the year. Instead, different areas contributed at different times. That’s diversification working as it should.
For pension savers, this reinforces a simple principle. Short-term headlines don’t drive long-term outcomes. Over time, markets reflect the value companies create, not the worries of individual weeks or months.
The long-term perspective
December was a quiet month. But quiet months still matter. Markets don’t move in straight lines. Some months deliver strong gains, others see little change, and some fall. Over time, these ups and downs combine to shape long-term returns.
Technology cycles, economic shifts and policy changes can all add to market ups and downs. Over longer periods, markets have often moved in line with how businesses grow and adapt.
As we move into 2026, new questions will emerge:
technology valuations will come under scrutiny;
trade policy may shift again; and
central bank decisions will drive headlines at times.
Markets may be volatile. But the principles that supported pension savers in 2025 remain the same. Diversification across regions and sectors helps smooth returns.
Staying invested through uncertainty matters as pensions are intended to remain invested for the long term.
2025 ended quietly. But it delivered strong results for diversified, long-term investors. That’s worth remembering as a new year begins.
Have a question? Get in touch!
Do you want to know more about your pension plan with PensionBee? You can check out our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
