From AI and sticky inflation, to US tariffs and gold – global markets this year have been full of opportunity and risk. Milford Portfolio Manager Frances Sweetman looks back over 2025 with Ryan Bridge, highlighting the major trends that influenced markets, and outlining what analysts are watching to stay ahead in 2026.

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Bridge talks Business: 25 November 2025
Episode Transcript

Ryan Bridge
Kia ora, and welcome to episode 58 of Bridge talks Business with Milford. This is our final episode for 2025. Can you believe we’re here already? Don’t worry, I’ll be back for 2026 with more insights and analysis from the markets and business for what should be our year of growth and recovery. Fingers crossed. Our final guest for the year is Frances Sweetman, so we’re going out with a bang today. First, here’s your top five business bits.

1. US data is starting to be released. September jobs report – relatively strong, but given the period covered is more than two months old, investors largely discounted the news.
2. The newly elected Japanese prime minister announced a large stimulus package. More than 3% of GDP. This government-sponsored support echoes packages in the US and Germany, meaning global economic growth will be supported going into 2026, which is good news.
3. Number three, equity markets took a wobble after a strong Nvidia result was overshadowed by Google’s release of its AI product, dubbed Gemini. This was created without the use of expensive Nvidia chips and accordingly, investors bought Google shares and sold other tech companies, as Google leapfrogged to the front of the AI race.
4. UK data was softer this week, including weak retail sales. Elsewhere, business surveys for Europe and the US continued to show resilience led by the services sector.
5. We have the long awaited UK autumn budget, as well as the Reserve Bank’s rate decision here. We were expecting a quarter of a per cent cut.

Well, it is time for our final episode for 2025. Can I just say I have very much enjoyed bringing you some of the awesome insights and the information that we get from our guests here at Milford, and I look forward to doing it again in 2026. For our final episode, we’re talking to Frances Sweetman. Just a reminder this segment is informational only and should not be considered financial advice. Frances, welcome back.

Frances Sweetman
Thank you.

Ryan Bridge
Now, it was my decision to get you here for the final episode. Because as I’ve said to everybody a thousand times, you’re my favourite.

Frances Sweetman
I don’t believe it.

Ryan Bridge
So let’s go out with a bang today.

Frances Sweetman
Okay.

Ryan Bridge
Alright, so we’ve got a lot to get through. First of all, this year. I mean, wow. Game of two halves. We had tariffs. I remember we started talking about those earlier in the year. We’ve had the AI bubble. Well, is it? We’ve had interest rates. You know we’ve had sticky inflation which has meant those interest rates have had to stay high which is affecting growth. So much has gone down, and yet we’re finishing now double digit growth for stock markets. I mean how did we get here.

Frances Sweetman
I mean it’s remarkable, isn’t it? And the MSCI World Index is 30% above its lows in April. What a remarkable turnaround from where we were at the start of this year. But I think that reflects that ultimately, just conditions for investing in companies have stayed quite good. Economic growth has stayed really solid. And those tariffs have ended up being less severe than everyone expected. And that’s been a really important driver, because it’s meant consumer spending could stay okay in the US. It’s helped manufacturing firms elsewhere in the world. We have had some weakness in jobs growth, but ultimately unemployment has stayed relatively low. But that bit of weakness in employment markets has allowed central banks, particularly the US Federal Reserve, to cut rates. And that’s incredibly supportive for equity markets and bond markets. And, of course, the AI CapEx spending – that boom – has continued, which is a turnaround from where we thought we might be with the Deepseek moment at the start of the year. And that has been a big driver of market performance. So it’s been a bit of a Goldilocks scenario, really.

Ryan Bridge
It has. Because remember we were talking earlier in the year – the tariffs came on. Well first of all, no one was really expecting them to be as big and bad as what they were. Then once they happened, everyone freaked out. But then we almost got used to the narrative coming from the White House. And we had pullbacks – it was kind of back and forth, wasn’t it. It’s been topsy turvy.

Frances Sweetman
It has been. We have had a reasonable amount of volatility. And actually, equity market returns haven’t been that broad based. We’ve had the big AI boom, which has driven all those AI stocks. And we’ve seen things like Google and Microsoft and Meta, and all those stocks, be incredibly strong. Nvidia, the semis complex. There have been some parts of the market that haven’t been as strong as that.
It has really been a very narrow equity market performance. The UK market and the European market, they’ve both delivered sort of 20% from their lows because they were cheaper. And that economic growth outlook has been better than feared. The healthcare sector, in fact, has bounced back quite strongly because that policy outlook has improved. But outside of that, sectors like consumer and industrials have been quite weak.

Ryan Bridge
What about other – I mean outside of equity markets – gold, for example, was up 50% for the year – or more than 50% for the year? Have we missed the boat on gold?

Frances Sweetman
Well, I mean, gold was an incredible winner. And that has just been in response to some of this policy uncertainty, geopolitical risk, and also the risk of fiscal spend blowing out, and what that means for interest rates over the long term and government budgets. The share prices of gold companies have been incredibly strong alongside it. But yeah, the gold price certainly looks heavy up here. But even low risk investments like bond markets, they’ve delivered high single digit returns, which is an incredibly strong return for quite a low risk asset class. And so that has benefited some of Milford’s multi-asset funds, who’ve been able to participate in that kind of broader financial market gains or good performance.

Ryan Bridge
So, for investors, we spoke a little bit about the growth hasn’t quite been – especially here – what we wanted it to be. But on the whole, a great year for investors. And looking ahead to 2026, does the ball stop rolling? Does the ball continue rolling? What are you expecting?

Frances Sweetman
I mean I’d say we’re nervous. We’re always nervous though. So that’s probably not very reflective.

Ryan Bridge
That’s just your in-built mode.

Frances Sweetman
Yeah that’s right. But there are reasons to be nervous. To your point, we’ve had a great year. Valuations are now quite stretched. And investors typically have low levels of cash at the moment. So that isn’t an easy set up. We have seen some volatility recently. You know you’ve seen some signs of exhaustion in this AI tech rally. And those share prices sell off. We think there is a bit more risk of that. But then when we roll forward to next year, we’ve got interest rate cuts – supportive for economic growth, supportive for financial markets as we’ve talked about. And we’ve also got fiscal spending coming in big economies like the US and Germany. So for the fundamentals of companies being able to grow profits and grow earnings and therefore grow share prices, that’s actually okay. So there are things to be optimistic about into next year. And we’re certainly not bearish.

Ryan Bridge
What are you watching. Like if there’s one sort of indicator that you look at, or piece of data that you’re looking to for 2026, what’s on your mind?

Frances Sweetman
So, we’ll keep laser focused on that AI spend and that AI narrative, because it has been a huge driver of markets, and if that does turn around it will drag markets lower. So we’re looking at CapEx spend. And then also really if companies can generate revenues from AI models, that will be really important next year, we think. So, we’re very laser focused on that still. But we’re also looking for signs of this broadening out of share market performance. So, we’re looking at labour markets – so important at this point in the cycle. And that will be a real driver of consumer spend and also economic growth more broadly. And we’re looking at things like manufacturing outputs.
That manufacturing sector has been in the doldrums for a really long time, and rate cuts could help that turn around and that type of bounce could really help that broadening out of share market performance and lead to parts of the market that are offering cheaper valuations to start to deliver good returns as well. So, we’re probably focused on really the maintaining of earnings growth for those parts of the market that are expensive and have been driving the share market rally so far. So they need to continue to keep moving higher and then also a bit of a turnaround in those parts of the market that are cheaper. And that will be really helpful for a broader market performance next year.

Ryan Bridge
Frances, just tell me everything’s going to be okay next year.

Frances Sweetman
I can’t! If I had a crystal ball, I wouldn’t be here. I’d be at home with my big share market gains. But it’s not easy, but there are also good reasons to be optimistic. So, we’re going to be fine, right.

Ryan Bridge
Now, most importantly, I hope you’re going to get some time off this summer and take a little break. Do you have any plans? What are you going to do with your family?

Frances Sweetman
We’re going to the Hawke’s Bay to visit family, and then we’re going up north to Russell to catch some of the sun in that beautiful Northland countryside.

Ryan Bridge
Lovely. It’s a beautiful part of New Zealand. Thank you very much for being part of the podcast this year. Always enjoy your company and I’m very much looking forward to seeing you again in 2026.

Frances Sweetman
Thanks, Ryan.

Ryan Bridge
That was Frances Sweetman. Have a fantastic summer everybody. This is our final episode for the year. We’ll be back next year. Tuesday the 20th of January 2026. I will see you right back here. Don’t forget you can like, follow and subscribe wherever you like to listen to your podcasts. Have a fantastic Christmas! I hope you get to spend some quality time with your family and your friends over the Christmas/New Year period. We’ll see you next year. Until then, invest in yourselves.

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