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Global market summary in the first half of 2025
Markets have performed exceptionally well in the first half of 2025, despite a challenging backdrop. Global stock indices have seen solid gains, and market confidence has improved across key sectors. While a trade war, geopolitical conflict and US bond market volatility created some uncertainty, their impact on the markets was ultimately limited over the first half of the year. Overall, the markets have demonstrated remarkable resilience during this period.
Early in the year, tensions in the tech sector escalated after China’s DeepSeek launched a more cost-effective large language model. This challenged US AI-dominance and triggered a broad selloff in US technology stocks. In addition, President Trump introduced new tariffs on Canada, Mexico, and China, intensifying global trade tensions. Volatility peaked in April, when the administration’s “Liberation Day” tariffs led to a steep global equity selloff that erased about $2 trillion in US market value. Fortunately, this soon settled after the US introduced a 90-day pause on tariffs for 60 countries.
The US bond market mirrored the broader market backdrop. Treasury yields spiked in April due to inflation concerns and aggressive trade policy. In May, Moody’s downgraded the US credit rating, prompting global investors to shift into gold and other safe haven assets. By June, both Treasuries and corporate bonds recovered as the Federal Reserve (the “Fed”) kept interest rates unchanged.
Despite these disruptions, financial markets remained resilient in H1. By the end of June, the S&P 500 reached new record highs, and the bond market stabilized, demonstrating once again that markets tend to recover after periods of uncertainty.
Performance of key asset classes of PensionBee Portfolios
Your retirement portfolio is invested in a range of assets like equities, bonds, property and cash, and your portfolio balance depends on how these assets perform. See below for a summary of their performance in the first half of 2025.
How did global stock markets perform in the first half of 2025?
Global stock markets delivered a strong first half in 2025, with stocks rallying on solid corporate earnings, particularly from the technology and industrials sectors. In addition, renewed optimism from investors from a 90-day pause in tariffs further boosted confidence, allowing markets to shake off early year volatility and finish the midyear on a positive trajectory.
All of PensionBee’s portfolios are invested in the following regional markets through underlying ETFs. For a detailed breakdown of sub-ETFs in each portfolio, click “View detailed asset allocation” of the portfolio on our investments page.
Please note that the market index serves as a benchmark for reporting purposes and doesn’t mean your funds are directly invested in that index.
^ All figures are presented in local currencies, except for MSCI Emerging Markets, which is reported in USD.
The top performer was emerging markets, with the MSCI Emerging Markets Index (an index that tracks the performance of stocks in emerging markets globally) surging 15.5% in H1. The gains were led by easing trade tensions, supportive monetary policies, as well as the weakening US dollar. Key drivers of the outperformance were driven by China’s strong technology and AI sector growth and robust semiconductor gains in South Korea and Taiwan. Additional support came from rising South American oil production, particularly in Brazil, which helped stabilize global oil supply volatility amid Middle Eastern conflict.
European markets posted strong gains, with STOXX 600 (an index that tracks the performance of the 600 largest stocks in Europe) up 9.4% and FTSE All Share (an index that tracks the performance of over 600 stocks in the UK) rising 9.1%. The performance was driven by a surge in defense stocks, supported by the European Union’s €500 billion defense plan and NATO members' commitment to boost defense budgets by 5% of their GDPs by 2035. Easing energy concerns and supportive policies from the European Central Bank and Bank of England further lifted corporate earnings across the region.
In contrast, the US market saw a more modest gain, with the S&P 500 posting 6.2% in the first half of 2025. An early April selloff, triggered by “Liberation Day” tariffs and heightened geopolitical tensions, weighed on investor sentiment. However, the index rebounded in the second quarter, supported by strong corporate earnings, particularly in the tech sector, and growing expectations of Fed rate cuts, which helped restore market confidence.
Despite major shocks such as the Liberation Day market crash and the conflict in the Middle East, global markets demonstrated resilience and adaptability. Strong gains in emerging markets, a rally in Europe driven by defense spending budgets, and a recovery in the US all contribute to a cautiously optimistic outlook for the remainder of 2025.
