Choppy Year-End Trading Amid Macro Uncertainty

December 2025 saw global financial markets conclude the year with mixed but
resilient performance. U.S. equity benchmarks ended largely flat after early gains
faded into year-end holiday trading, while international markets outperformed their
U.S. peers for the first time in several years. Central bank policy shifts, particularly in
the U.S. and UK, remained focal points for markets, and investors balanced hopes
for future easing with concerns about economic growth and inflation persistence.

Equities Show Modest YearEnd Strength

Equities ended December 2025 on a resilient note, with the S&P 500 essentially flat
for the month (+0.05%) while still capping a strong year that saw the index rise
approximately 17 % in 2025 and close near 6,845, supported by optimism around
rate cuts and solid corporate earnings; the Nasdaq lagged modestly in December
(around 0.8%) but finished the year up over 21 %, and UK markets outperformed
regionally with the FTSE 100 gaining roughly 2.2 % in December and pushing above
10,000, driven by a seasonal “Santa rally.” Broad market participation was varied
with small caps and risksensitive sectors mixed amid elevated volatility, while
international and emerging equities showed relative strength as investors diversified
beyond the U.S. market

Fixed Income Sees Mixed Returns Amid Higher Yields

Market data for December shows that core U.S. bond benchmarks such as the
Bloomberg U.S. Aggregate Index were slightly positive over shorter intervals (e.g.,
roughly +0.5% over one month near midDecember), with high yield also
outperforming. Yields trended higher before yearend, and returns were mixed as a
result. This reflects modest positive returns in credit sectors but muted performance
in interestrate sensitive sovereign segments.

Commodities Reflect Defensive and Cyclical Divergence

Commodities exhibited divergent performance in December, with precious metals
outperforming cyclical commodities. Gold gained approximately +6% over the month
and silver surged roughly +30%, reflecting safehaven demand and constrained
supplies, while crude oil prices remained subdued and struggled to record
meaningful monthly gains amid continued global supply and demand imbalances.

Central Banks in Action

The US Federal Reserve (Fed) cut rates by 0.25 percentage points to between 3.5%
and 3.75%, while the European Central Bank (ECB) held rates at 2%. At its
December decision, the ECB upgraded its forecasts for growth and core inflation.

Out of step with other central banks, the Bank of Japan raised rates by a quarter of a
percentage point to 0.75%, their highest level in 30 years.

Labor Market Softens, Reinforcing Policy Considerations

U.S. labour market indicators in December pointed to continued softening in
employment conditions, with private payroll gains weaker than expected and data
showing slower job creation, heightening market expectations for accommodative
monetary policy. Reports noted sluggish job growth trends and elevated
unemployment risk, factors that influenced investor pricing of future Fed action and
shaped risk sentiment across markets as yearend readings arrived amid uncertainty
following a prolonged government shutdown that disrupted earlier employment data.

Regional Equity Performance – December 2025

Asia Pacific exJapan Outperforms on Strong Returns

Asia Pacific exJapan equities delivered solid performance in December 2025, with
the MSCI AC Asia Pacific ex Japan Index rising approximately 2.8 % in U.S. dollar
terms, driven by strength in Korea (+12.7 % monthly) and Taiwan (+5.8 % monthly).
While China lagged with a modest decline (1.2 %), investors responded positively to
broader regional growth prospects and select policy support expectations,
contributing to emerging market and Asiafocused gains.

Japan Shows Modest Gains

Japanese stocks recorded modest gains in December, with the TOPIX up around
+1.0 % and the Nikkei 225 rising approximately +0.5 %, reflecting cautious investor
response to the Bank of Japan’s policy stance and domestic economic data.

Europe and UK Equity Markets Deliver Broad Gains

European markets finished the month positively, with regionwide performance
supported by broad sector participation; countries such as Germany (+4.4 %
monthly) and Spain (+7.1 % monthly) led returns, while the UK’s FTSE 100 rose
about 3.8 %, extending the index’s strong yearend momentum.

United States Flat in December but Positive on the Year

U.S. equities were essentially flat for the month, with the MSCI USA index returning
~0.0 % in December, even as major U.S. indexes maintained strong annual
performance. This flat monthly result reflects latemonth volatility and profittaking after
large fullyear gains.

Emerging Markets End the Month Strong on Select Leaders

Emerging market equities broadly posted positive returns in December, with the
MSCI Emerging Markets Index up about +3.0 %, led by outsized gains in markets
such as South Africa (+9.1 %), Chile (+7.6 %), and Mexico (+3.4 %), while Brazil saw
a slight decline.