01/12/25 Global Market Update: Staying the Course Amid Easing Inflation

As global markets transitioned into December 2025, investors witnessed a pivotal moment: inflation across Europe and Germany finally showed clear signs of steadying, lending new confidence to policymakers and market participants alike. With major central banks opting to hold rates steady, the focus shifted to underlying growth trends and ongoing pension reform debates in Germany. For expats in Germany and those investing globally, understanding how these macro shifts impact wealth strategies remains as crucial as ever. The following update delves into each region’s key developments, offering practical insights to help you stay informed and on course for long-term financial security.

United States: Cautious Fed, Mixed Economic Signals

The Federal Reserve delivered another 0.25% rate cut in October but adopted a more hawkish tone for the months ahead, with markets now expecting additional easing only if inflation continues to cool and job growth slows further. The US labour market is weakening, with unemployment edging up and wage gains moderating, while services and manufacturing activity have plateaued near trend. Investors remain alert to political risks and the ongoing government shutdown.

What this means for long-term investors: Fed caution provides time for careful portfolio rebalancing. Expats should focus on tax-efficient savings  and and avoid reacting to short-term macro headlines, supporting diversified global allocations as US policy evolves.

United Kingdom: Budget Outcomes and Rate Hold

The Bank of England kept interest rates on hold in November, judging that inflation is on a gradual path lower but remains too high to justify rapid policy easing. Against this backdrop, the UK Autumn Budget set out a mix of cost-of-living support and revenue-raising measures, including extended freezes to income tax and National Insurance thresholds, targeted increases in property-related taxes, and steps to strengthen the long-term sustainability of the State Pension and welfare system. While the budget aims to reassure markets by keeping borrowing and debt on a tighter leash, it also signals a period of continued pressure on household finances as “fiscal drag” quietly increases the overall tax burden.

What this means for long-term investors: Expats with UK assets should use this period to reassess retirement planning and overall tax efficiency, paying close attention to how frozen thresholds, property tax changes, and pension adjustments affect their long-term outlook. UK property can still play a role in diversified portfolios, but decisions should be made with the evolving tax landscape and personal residency status firmly in mind.

Eurozone and Germany: Inflation Steadies, Pensions in Focus

The ECB again held its policy rate at 2.0%, citing steady inflation close to its 2% target and muted risks of upward price surprises. Germany’s inflation rate stayed at 2.3% in November, holding firm for a second month, while core inflation (excluding food and energy) eased to 2.7%. Services inflation rose to 3.5%, but energy prices continued to decline. Pension reform remains front-page news, with the IMF urging Germany to index pensions to inflation instead of wages to manage future shortfalls amid demographic headwinds. Passage of the 2026 German budget resolved a standoff over pension funding, furthering fiscal planning stability.

What this means for long-term investors: Steady inflation and policy clarity bolster the case for staying invested in core Eurozone assets. Property and healthcare provide inflation-protected security, while regular review of pension options is essential given policy reforms and ageing risks.

China & APAC: Upward Growth Revision as Exports Recover

China’s GDP is forecast to grow 5% in 2025, with upgrades reflecting improved export prospects and sustained policy support. Nonetheless, growth is moderating from earlier highs due to property market stress and softer domestic demand. Manufacturing PMI remains just below 50, but exports rebounded thanks to reopening of key trade partners and fiscal stimulus. Regional neighbours, especially India and the ASEAN bloc, reported strong domestic-led growth while also benefiting from trade re-routing.

What this means for long-term investors: Selective exposure in Asia remains attractive, but demands careful monitoring of debt trends and trade volatility. Diversification across developed and emerging APAC markets can harness both resilience and growth potential.

Emerging Markets: Upbeat Returns, Risks Remain

Emerging markets outperformed in November, with the MSCI EM index returning 4.6% as Latin America and Southeast Asia were buoyed by favourable trade trends and easing monetary policy. However, local debt levels and policy risks require careful allocation. Brazil’s growth slowed to around 2.3%, while India and ASEAN sustained momentum on reforms and strong consumer demand.

What this means for long-term investors: Maintain selective, diversified EM allocations using flexible vehicles to balance risk and opportunity in a shifting landscape.

Asset News: Equities, Bonds, Property, Commodities 

Equities:

• US and European stock markets performed well, driven by solid earnings and steady central bank signals.

• Tech and financial sectors showed particular strength.

Bonds:

• Yields stabilised as investors digested the prospect of a gradual policy easing cycle. 

• Government and high-quality corporate bonds provided a stabilising anchor amid equity volatility. 

Property:

• German residential property markets remained resilient thanks to strong local demand. 

• Commercial property continues to face headwinds from high financing costs and evolving office needs. 

  
  

Commodities:

• Oil and gold prices stayed within recent ranges. 

• OPEC+ supply discipline and steady global demand helped keep key commodity markets balanced. 

What this means for long-term investors: Broad diversification across asset classes remains critical. Regular reviews and regular reviews can help safeguard portfolios against market swings.

Global Market Headlines: Central Bank Caution, Inflation Eases

Key news this month:

• Central banks in the US, UK, and Europe remain cautious, balancing inflation improvements with fragile economic recoveries.

• Germany approves the 2026 budget, ending disputes over pension funding and fiscal priorities.

• China’s GDP forecast upgraded on stronger exports and stimulus, signalling modest global growth upside.

• Patience and active professional monitoring remain critical for navigating opportunities and volatility across markets.

What this means for long-term investors: Maintaining focus on fundamental goals and diversified portfolios is essential. LeX-Wealth services offer steady support to expats in Germany across market conditions.

Looking Ahead with Confidence

Staying informed about world markets provides context for measured, long-term decisions. At LeX-Wealth, our proactive advice helps expats adapt their strategies in tune with economic shifts without losing sight of big-picture goals. With expert guidance and a disciplined approach, clients can face change with clarity, ensuring their financial security and growth plans remain firmly on course.

For personal guidance and adaptive financial planning, contact us for a free consultation or explore our services.

This commentary is intended for informational purposes only and does not constitute financial advice.