Global investors have needed a strong stomach to weather the financial storms of 2025’s first half, as the chaos of the Iran war collided head-on with a seemingly unstoppable artificial intelligence investment frenzy.
When all was said and done, global stocks finished the first six months of the year up $7 trillion compared to the end of 2025 — a remarkable result given that the war sent markets plunging by $9 trillion back in March, when crude oil spiked to $120 per barrel and hopes for interest rate cuts quickly evaporated.
Among the standout stories: South Korea’s stock market doubled in value, and Elon Musk’s SpaceX — now valued at $2 trillion — made its debut on the Nasdaq. Meanwhile, the group of tech heavyweights known as the “Magnificent Seven” have collectively underperformed, and gold, once a go-to safe haven, has lost much of its luster.
Charlie Robertson, chief economic adviser at Equity Bank, called the period remarkable — not for what went wrong, but for what didn’t. “We have had one of the greatest geopolitical shocks that it has been possible to imagine and it has still not undermined global markets,” he said.
The MSCI All-Country World index climbed nearly 10%, adding roughly $7 trillion in market value during the first half of the year. The second quarter was the strongest since 2020, though it still fell short of South Korea’s record-breaking performance.
In currency markets, Japan’s yen has been the center of attention for all the wrong reasons. The currency has sunk to a 40-year low, even after Tokyo spent 11.7 trillion yen — about $72.25 billion — in an effort to stabilize it.
Japan’s Nikkei stock index surged nearly 40%, but Michael Metcalfe, head of global macro strategy at State Street, flagged the yen’s weakness as a growing danger for global markets. “It is all about what happens to Japanese fixed-income demand if you have a crisis in the yen,” he said, pointing to the risk that rising Japanese interest rates could pull money back into Japan and trigger selloffs in other markets.
Metcalfe also noted that the U.S. dollar’s 3% gain suggests recent predictions of its decline may have been premature, though analysts at BofA describe the dollar as a “rent, not an own” for now.
The year’s turbulence began almost immediately. The United States captured Venezuela’s president, and President Donald Trump pushed to take control of Greenland while threatening tariffs against countries across the globe.
Gold had a dramatic January, posting its biggest monthly gain since the later stages of the global financial crisis. But the metal has since reversed course sharply — falling more than 12% in June alone, putting it on pace for its worst monthly performance since October 2008 and its steepest quarterly decline since 2013. That said, gold had already doubled in value since the beginning of last year.
Venezuelan bonds, on which the country has made no payments in nine years, skyrocketed 55% following the U.S. capture of President Nicolas Maduro, making them the top-performing bonds in the world.
Major bond markets wrapped up the first half with more measured moves. U.S. and UK 10-year yields rose about 24 basis points each, Germany’s held roughly flat, and Japan’s climbed around 50 basis points. Still, there were dramatic moments along the way: British borrowing costs hit multi-decade highs, U.S. 30-year yields reached their loftiest levels since 2007, and Japan’s 10-year yields set new records.
The lion’s share of second-quarter stock gains came from a blazing rally in AI-related investments, especially across Asian markets. The S&P 500 gained 14% for the half, while the Nasdaq — which added SpaceX to its listings just weeks ago — rose 20%.
Still, not everything is rosy. Each of the “Magnificent Seven” tech companies has trailed the broader MSCI world index, and the Bank for International Settlements recently cautioned that disappointing returns from AI investments could spark serious turbulence in global markets.
Looking ahead, the second half of the year appears equally eventful. British markets are anxiously watching for a new prime minister, the yen remains vulnerable, newly installed Federal Reserve chief Kevin Warsh has been striking a hawkish tone, and Trump is gearing up for November’s U.S. midterm elections.
Robertson at Equity Bank expressed concern that a wave of upcoming initial public offerings could signal “peak AI” before year’s end. Patrick Dupont-Liot, managing director of debt capital markets at Standard Chartered, said he senses an “undertone of risk” heading into the second half.
“None of us has a crystal ball, we don’t know what’s going to really happen, but we do know that Trump has not ceased to surprise us since he has come into office,” Dupont-Liot said.
