Investment update - December 2025
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Published on 22 Jan 2026Venezuela’s escalating political crisis has taken on global importance due to its vast oil reserves. Oil prices softened following higher OPEC+ output, with WTI down sharply in December and across 2025, while uncertainty around Venezuela added to volatility rather than immediate supply relief.
In the US, the dollar weakened as the Federal Reserve cut rates again in December to 3.50%-3.75%. Economic growth surprised on the upside in Q3, inflation eased toward the Fed’s target, but labour market momentum softened. Equity markets performed strongly in 2025, led by technology and AI, while fixed income delivered modest gains. Emerging Markets outperformed both Australia and developed markets, supported by easing inflation and a softer USD, returning 24% over the year.
Australia lagged global equity peers despite solid returns, supported by resources and selective rate-sensitive sectors. Economic momentum remained mixed, with business investment driven by data centres, aviation, and renewables. Inflation eased late in the year, allowing the RBA to hold rates at 3.6%, though inflation risks remain.
In Europe, growth slowed as manufacturing weakened, while inflation hovered near target. Japan showed firmer momentum with stable inflation and employment, while China saw tentative stabilisation as manufacturing returned to expansion and exports rebounded outside the US. The ECB kept rates unchanged for a fourth consecutive meeting, the Bank of England cut rates for the fourth time in 2025, and the Bank of Japan raised rates to 0.75%, its highest level since 1995.