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Calamatta Cuschieri Moneybase has published its annual CIO Insights Report, offering a comprehensive review of global market developments over the past year and an outlook on the opportunities and risks shaping the investment landscape. Written by Chief Investments Officer, Jordan Portelli, the report provides investors with context on what defined 2025 and what to watch as we move into 2026.
Read the full CIO Insights report
Here are some of the topics covered in this CIO Insights report.
A year of volatility and opportunity
2025 proved to be another successful but far from predictable year for global markets. Equity indices reached new all-time highs despite a sharp correction in April, reinforcing a defining theme of the year: volatility paired with opportunity.
As anticipated, geopolitical dynamics played a significant role. The United States, under President Trump's leadership, leveraged its economic strength in global trade, creating uncertainty particularly around tariffs. While this initially weighed on market sentiment, clarity eventually emerged, allowing markets to refocus fundamentals.
Once uncertainty subsided, investor confidence rebounded strongly, with gains largely driven by the accelerating adoption of AI, the primary engine of equity market performance.
Structural shifts in market behavior
One of the most striking developments in 2025 was a structural shift in market dynamics. Elevated levels of daily intraday volatility became the new normal.
A key contributor to this phenomenon has been the growing influence of retail investors, now estimated to account for 20–25% of total market activity. While this influx has amplified short-term price swings, it has also created meaningful opportunities for disciplined investors. Unjustified volatility can be frustrating, but it often presents attractive entry points for long-term investors willing to act rationally.
Key reflections from 2025
The U.S. economy defying expectations
Despite widespread skepticism from economists, the U.S. economy once again demonstrated remarkable resilience. Growth outpaced that of the euro area, supported primarily by robust consumer spending, even in the face of persistently elevated inflation.
AI continued to be a core driver of U.S. equity market performance. Momentum remains strong heading into 2026, supported by long-term productivity gains, cost efficiencies, and expanding adoption across sectors.
Monetary policy and the federal reserve
The Federal Reserve found itself under intense scrutiny amid heightened market volatility. President Trump once again criticized the Fed for not cutting interest rates more aggressively.
Looking ahead, President Trump is expected to nominate a new Federal Reserve Chair in 2026, raising questions among market participants regarding the future approach to inflation management and monetary independence.
Europe: Optimism meets reality
European equity markets also delivered a strong performance in 2025, though gains were driven more by expectations than economic data. Political developments in Germany played a pivotal role, particularly the announcement of a €500 billion fiscal package spread over 12 years.
Mixed fortunes for Asia
China's economic growth continued to fall short of expectations despite significant fiscal and monetary stimulus. However, a notable shift towards greater openness to foreign direct investment combined with domestic AI breakthroughs sparked a long-awaited rally in Chinese equities.
India, meanwhile, stood out as a regional leader, achieving growth of just over 8%, even in the face of U.S. tariff pressures.
Signs of progress in the geopolitical scene
On the geopolitical front, meaningful progress was observed. President Trump played a role in achieving a ceasefire and initiating negotiations toward a peace plan in Gaza. Meanwhile, after three years of conflict, developments in the Russia–Ukraine war have shown tentative signs of improvement through U.S. mediation.
Bonds regain investor interest
Bond markets delivered solid performance in 2025, led by:
- Emerging market debt, supported by U.S. dollar depreciation
- High-yield bonds, particularly in the U.S.
Bond investors remained highly sensitive to interest rate expectations, with significant inflows in the final two months of the year as the market anticipated, and eventually received Federal Reserve rate cuts, despite stubborn inflation levels.
Local market overview
Within the local context, stock market performance was modest, delivering low mid-single digit returns, driven largely by large-cap stocks. Liquidity remained thin, and international markets continued to offer more compelling opportunities.
In contrast, the local bond market experienced strong primary issuance activity from both existing and new issuers, a trend expected to continue into 2026.
The dollar's depreciation
A key macro development in 2025 was the approximately 12% depreciation of the U.S. dollar against the euro, which negatively affected returns for euro-based investors holding U.S. assets. Concerns surrounding U.S. trade policy, Federal Reserve independence, and political rhetoric contributed to a reassessment of the dollar's safe-haven status.
Looking ahead to 2026, while further depreciation cannot be ruled out, recent stability suggests that a repeat of 2025's extreme currency volatility is unlikely.
Heading into 2026
Several uncertainties that clouded markets in 2025, particularly around tariffs, have become clearer. While there's a greater sense of macroeconomic clarity and cautious optimism, it's important to note that volatility is now a permanent feature of modern markets and no longer an exception.
Investors looking to optimise their investment strategy should remember that irrational reactions such as panic selling can be far more damaging over the long term, and it's the time in the market not the timing that truly matters.
Read more for in-depth insights of what happened in 2025, what to expect in 2026, and understand better the investment approach taken by Calamatta Cuschieri Moneybase.
Read the full CIO Insights report https://cc.com.mt/wp-content/uploads/2026/01/CCM-CIO-Insights-JAN26-1-1.pdf
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
