2025's Big Three: Trump, AI, and the Fed — And What's Next in 2026
2025 delivered another rollercoaster for global markets.
From tariff shocks and AI disruptions to trillion-dollar milestones and a historic policy pivot, investors faced one catalyst after another — each one reshaping sentiment, volatility, and opportunity.
Here's a look back at the key moments that moved the markets this year.
Taken together, these events tell a dramatic story — but the real insight emerges when we connect them. Beneath the headlines, five powerful themes drove nearly every surge, selloff, and sentiment shift in 2025. Here's what truly defined the year.
The 3 Big Themes That Defined Markets in 2025
1. Protectionism Strikes Back
With Donald Trump returning to the White House on January 20, 2025 opened under a forceful “America First” doctrine. Tariffs, trade pressure, and industrial reshoring quickly became the dominant macro drivers — moving markets faster than any earnings cycle.
~The first shock came on April 2, when Liberation Day tariffs triggered a violent selloff across global equities, particularly trade-sensitive sectors.
~Just a week later on April 9, a Tariff Pause ignited a swift V-shaped rebound, sending the S&P 500 up nearly 10% as investors unwound defensive positioning.
~Through the spring, tensions with China remained elevated until a May truce offered temporary relief.
~In late September, political gridlock pushed the U.S. into its longest government shutdown in history, beginning September 30 and freezing key federal data releases.
~On October 7, that uncertainty spilled into commodities — $XAU/USD (XAUUSD.CFD)$ surged past $4,000/oz, reflecting investor demand for safety amid muddied economic visibility.
~The shutdown stretched across earnings season, depriving markets of critical data and forcing traders to react to policy headlines rather than fundamentals.
Trade, politics, and Washington gridlock weren't background noise in 2025 — they dictated nearly every major swing in risk assets.
2. The Global AI Arms Race Accelerates
If 2023–2024 were when AI went mainstream, 2025 was when markets began trading AI like a geopolitical asset — with OpenAI, $NVIDIA(NVDA)$
Deepseek Sparks the First Shock
~On January 27, China's Deepseek launched unexpectedly, triggering a sharp tech sell-off as investors questioned U.S. AI leadership.
OpenAI Dominates AI-Capex Flows
Throughout the year, OpenAI sat at the center of infrastructure demand:
~Its scaling plans repeatedly lifted $NVIDIA (NVDA.US)$, $Broadcom (AVGO.US)$, $Oracle (ORCL.US)$, and $CoreWeave (CRWV.US)$.
~The narrative intensified on September 10, when the massive OpenAI– $Oracle (ORCL.US)$ cloud deal stirred industry debate and pushed cloud/infrastructure names sharply higher.
Nvidia Hits $5T and Reshapes the Chip Trade
~On October 29, $NVIDIA (NVDA.US)$ became the first $5 trillion company — a milestone confirming the strength of the AI-compute supercycle.
~Weeks later, its surprise strategic investment in Intel fueled expectations of even deeper hardware demand.
Google Forces a Three-Way Battle
By mid-year, $Alphabet-C (GOOG.US)$ re-entered the spotlight:
~TPU v7 “Ironwood” and the launch of Gemini 3 put Google back into the core of the AI conversation.
~Interest from $Apple (AAPL.US)$ and $Meta Platforms (META.US)$ in TPU-based workloads strengthened Google's positioning and shifted investor sentiment.
This created rapid rotations:
~GPU-heavy trades rallied on OpenAI/Nvidia news.
~TPU-aligned sentiment jumped on $Alphabet-C (GOOG.US)$, $Apple (AAPL.US)$, or $Meta Platforms (META.US)$ updates.
The Race Remains Wide Open
By year-end, AI leadership had become a three-way fight between OpenAI, $NVIDIA (NVDA.US)$, and $Alphabet-C (GOOG.US)$— and Polymarket data confirms the race is far from settled.
AI wasn't a sector in 2025 — it was the most aggressively traded geopolitical battleground in markets.
3. The Fed Flips the Script
Through 2024 and early 2025, markets braced for policy to stay restrictive. Inflation progress was uneven, growth remained firm, and rate-cut probabilities swung after every major data release. That changed at Jackson Hole, when the Fed finally cracked the door open.
Jackson Hole Sparks a Pivot
~On August 22, Jerome Powell delivered a noticeably dovish message, signaling openness to easing if disinflation held.
~The $S&P 500 Index (.SPX.US)$ jumped 1.5%, and traders quickly pulled forward expectations for the first cut.
The First Cut Arrives
~At the September FOMC meeting, the Fed delivered its first 25bps cut of 2025, triggering a broad risk-on move across semiconductors, growth stocks, and crypto.
Shutdown + Hawkish Tone = October Stress
~On September 30, the government shutdown began, freezing economic data and limiting visibility for both policymakers and markets.
~Through October and early November, firmer data and more cautious Fed remarks pushed cut odds lower, unsettling investors.
~High-valuation tech took the brunt, and once the $S&P 500 Index (.SPX.US)$ hit its 50-day moving average, algorithmic flows accelerated the decline into one of the year's sharpest corrections.
QT Ends — Liquidity Turns
~At the October 29 FOMC meeting, the Fed delivered another 25bps adjustment and confirmed that QT would end on December 1, effectively concluding a 3.5-year tightening cycle.
~Liquidity expectations improved, stabilizing markets after the November turmoil.
~On December 10, alongside the third rate cut of the year, Powell announced the launch of $40 billion in RMP, reinforcing a liquidity floor heading into 2026.
By December, the Fed had clearly shifted from tightening toward early easing — and 2025 showed just how violently markets can react to every shift in the expected rate path.
By December, the macro backdrop was clearer: the Fed had begun easing, QT was set to end, and policy was no longer tightening. Yet the year's swings made one thing obvious — risk assets remained extremely sensitive to every shift in the expected rate path.
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