Our annual CIO Insights Report is now online, presenting a detailed overview of global market performance over the past year alongside perspectives on the risks and opportunities shaping the investment environment ahead. Written by our Chief Investments Officer, Jordan Portelli, the report outlines the key forces that defined 2025 and highlights important themes investors should monitor as 2026 unfolds.
Here are some of the key topics covered in this year’s CIO Insights report.
A year defined by volatility and opportunity
Global markets delivered strong results in 2025, although the journey was anything but smooth. Equity markets climbed to record highs despite experiencing a sharp correction in April, underlining a central characteristic of the year: heightened volatility alongside compelling opportunities.
Geopolitical developments were a major influence, particularly the role of the United States in global trade under President Trump. The introduction and threat of tariffs generated uncertainty during the early part of the year, weighing on sentiment. As policy direction became clearer, markets were able to refocus on underlying fundamentals.
With uncertainty easing, investor confidence recovered decisively. Market gains were largely driven by the rapid expansion of artificial intelligence, which emerged as the dominant theme supporting equity market performance.
The impact of shifting market behaviour
One of the defining features of 2025 was a noticeable shift in how markets function. Elevated levels of intraday volatility became increasingly commonplace.
The growing participation of retail investors played a significant role in this shift, with retail activity now estimated at 20–25% of total market turnover. While this has intensified short-term price movements, it has also created attractive opportunities for disciplined, long-term investors. Periods of excessive volatility, though uncomfortable, often provide favourable entry points when approached rationally.
Key reflections from 2025
The resilience of the U.S. economy
Contrary to many forecasts, the U.S. economy once again exceeded expectations. Economic growth outperformed the euro area, supported mainly by resilient consumer spending, even as inflation remained elevated.
Artificial intelligence continued to underpin U.S. equity markets, maintaining strong momentum heading into 2026. The long-term outlook remains supported by productivity improvements, cost efficiency, and wider adoption across industries.
Monetary policy under the spotlight
Heightened market volatility placed the Federal Reserve firmly in focus throughout the year. President Trump renewed criticism of the central bank, arguing that interest rates should have been cut more aggressively.
Looking forward, expectations that President Trump will appoint a new Federal Reserve Chair in 2026 have prompted debate around the future direction of monetary policy and the Fed’s approach to managing inflation.
Europe: Strong markets, weaker fundamentals
European equities also recorded a solid year, although performance was largely driven by expectations rather than strong economic data. Political developments in Germany were particularly influential, notably the announcement of a €500 billion fiscal stimulus programme to be deployed over 12 years.
Diverging paths for Asia
China continued to struggle to meet growth expectations despite extensive fiscal and monetary support. However, a shift towards greater openness to foreign direct investment, combined with advances in AI technology, triggered a much-needed rally in Chinese equity markets.
India stood out within the region, delivering economic growth of just over 8% despite the impact of U.S. tariffs, reinforcing its position as a long-term growth story.
Geopilitical developments show tentative progress
Encouraging signs emerged on the geopolitical front. President Trump was instrumental in facilitating a ceasefire and initiating negotiations towards a peace framework in Gaza. At the same time, the Russia–Ukraine conflict showed early signs of progress after three years, supported by U.S. mediation efforts.
Renewed interest in bonds
Bond markets performed well in 2025, driven primarily by:
- Emerging market debt, benefiting from U.S. dollar weakness
- U.S. high-yield bonds, which led performance within the asset class
Investor positioning remained closely tied to interest rate expectations. Significant inflows occurred towards year-end as markets anticipated and ultimately saw; Federal Reserve rate cuts despite persistent inflation pressures.
Local market performance
On the local front, equity markets delivered low to mid-single digit returns, with performance concentrated in large-cap stocks. Liquidity remained limited, while international markets continued to present more attractive alternatives.
Meanwhile, the local bond market experienced robust issuance activity from both new and existing issuers, a trend expected to persist in 2026.
The impact of a weaker U.S. dollar
One of the most notable macroeconomic trends in 2025 was the depreciation of the U.S. dollar, which declined by approximately 12% against the euro. This weighed on returns for euro-based investors holding U.S. assets.
Concerns around U.S. trade policy, political rhetoric, and the independence of the Federal Reserve contributed to a reassessment of the dollar’s traditional safe-haven status. While additional weakness cannot be ruled out, recent stability suggests that a repeat of 2025’s extreme currency volatility is unlikely.
Looking ahead to 2026
Many of the uncertainties that unsettled markets in 2025, particularly around tariffs, are now clearer. While optimism has improved, volatility is expected to remain a permanent feature of financial markets.
Investors should keep in mind that emotional responses, such as panic selling, can undermine long-term outcomes. History consistently shows that time in the market matters far more than attempting to time it.
Read the full report for deeper insights into market developments in 2025, expectations for 2026, and the investment philosophy of Calamatta Cuschieri Moneybase.
This report was written by our Chief Investments Officer, Jordan Portelli. Jordan holds over 15 years of experience in investment research. He oversees the group’s investment strategy and manages over €250 million in client assets, focusing on fixed income and multi-asset strategies. Jordan has been working with our group since 2016.
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Approved and issued by Calamatta Cuschieri Investment Services Ltd (“CC”). This document is prepared for information purposes only and should not be interpreted as investment advice or an offer or invitation to buy or sell any investment. No person should act upon any recommendation in this document without first obtaining professional investment advice. Security values may go down as well as up and past performance is not a reliable guide to future performance. This document may not be reproduced either in whole, or in part, without the written permission of CC. CC does not accept liability for any actions, proceedings, costs, demands, expenses, loss or damage arising from the use of all or part of this document.
CC is licensed to conduct Investment Services in Malta by the Malta Financial Services Authority. Ewropa Business Centre, Triq Dun Karm, Birkirkara BKR 9034, Malta. Company registration number C13729.
