This article is written by Terence Hove, Senior Financial Markets Strategist at Exness
As 2025 draws to a close, the global financial markets display a blend of resilience and cautious optimism amid a complex backdrop of policy shifts, geopolitical tensions, and technological innovation.
Key themes include a strong AI sector, easing monetary policy, elevated gold prices, and stable yet vigilant currency and interest rate environments.
Global Economic and Market Trends
The global economy is characterised by subdued growth, with the IMF projecting a modest 3.3% expansion for both 2025 and 2026. Notably, equity markets have demonstrated steady gains through October and November, driven predominantly by buoyant technology earnings and reduced trade tensions. Conversely, bond markets are experiencing strain, particularly in China, amid fiscal and supply concerns, highlighting emerging vulnerabilities.
Interest rates globally are trending downward. Major central banks, including the Federal Reserve and others, are adopting a cautious stance, maintaining or modestly easing rates in response to easing inflation and subdued growth. For instance, the South African Reserve Bank has already decreased its repo rate to 7%, with forecasts indicating further cuts, potentially approaching as low as 10.25% in some regions.
The gold market has experienced remarkable strength, reaching all time highs of approximately $4,380 per ounce in 2025. Driven by policy uncertainties, geopolitical tensions, and inflation hedging, Goldman Sachs analysts have a bullish outlook for gold in 2026, with targets ranging from $4,300 and reaching $4,900.
Equities continue to outperform expectations, led by the technology sector, while bond markets face heightened volatility, especially among emerging markets. The US dollar remains relatively stable, contributing to overall market confidence.
Kenya’s Resilience and Opportunities
Against this global backdrop, Kenya’s financial markets remain resilient and moderately optimistic. The Nairobi Securities Exchange (NSE) has seen increased activity, with key sectors like banking and telecommunications exemplified by Safaricom posting record highs supported by robust fundamental indicators and stable consumer spending.
Kenya’s GDP is forecasted to grow between 4.5% and 5.3% in 2025, outpacing many global peers, buoyed by improvements in agriculture, rising private sector credit, and stable inflation levels around 4.8%-5.3%. This growth underscores Kenya’s resilient economic fabric despite lingering challenges such as unemployment and fiscal deficits.
Interest rates are expected to decline gradually, aligning with broader global trends, with the Central Bank of Kenya (CBK) easing monetary policy. Short-term T-Bill yields have dipped below 8%, and banking institutions like Equity Group and KCB are poised for continued profitability and asset growth, supported by risk based lending and regulatory reforms.
Risks and Strategic Considerations
While prospects are promising, vigilance is essential. Kenya faces high debt servicing costs, predominantly USD denominated liabilities, and a need for disciplined fiscal management to prevent debt vulnerabilities. External risks include commodity price volatility and external shocks, which could impact exports and remittances.
Global uncertainties such as geopolitical tensions, commodity market fluctuations, and potential shifts in monetary policy necessitate adaptive strategies to sustain growth and macroeconomic stability.
Conclusion
The late 2025 financial landscape presents a cautiously optimistic outlook. While global markets show signs of resilience, policymakers and investors must navigate ongoing geopolitical and fiscal risks. Kenya, with its steady growth, improving financial sector, and strategic opportunities in fintech and agriculture, remains well positioned but must continue prudent fiscal and monetary policies to sustain momentum.
In sum, the overarching theme underscores a world of opportunities tempered by the need for vigilance amid evolving geopolitical and economic challenges, with Kenya exemplifying a resilient emerging market poised for continued positive momentum.
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Source: TUKO.co.ke
