Equity markets ended 2025 on solid footing, with US indices setting new highs. While large-cap technology continued to play a central role in driving returns, December saw a broader rally that included smaller firms and traditionally cyclical sectors like financials and industrials.
Recent US economic data revealed a disconnect between headline growth and employment trends. Third-quarter GDP growth came in above forecasts, driven by strong household spending and business investment. Yet job market indicators softened, with unemployment rising and hiring becoming more selective. Sectors such as healthcare and construction continued to expand payrolls, but manufacturing and public roles weakened.
Looking into 2026, investors will be watching for concrete returns on corporate investment in artificial intelligence. After heavy spending through 2025, the narrative must now shift to productivity gains and margin improvement. Without clear contribution to earnings, market enthusiasm for AI-led strategies could fade, especially if cost pressures remain persistent.
Arbuthnot Banking Group PLC (LON:ARBB), operating as Arbuthnot Latham, offers private and commercial banking products and services in the United Kingdom. Established in 1833, Arbuthnot Banking is headquartered in London, United Kingdom.
