European stocks hit all-time highs on the final day of 2025, wrapping up their best year since 2021.
The region’s main index, the STOXX 50 rose by 0.5% today, securing annual gains of between 17% and 19%. This strong performance was led by the banking sector, which surged a remarkable 67% this year, while mining companies also rallied due to high metal prices.
Utility companies contributed to the gains as well, driven by increasing electricity demand from data centers. Trading was limited due to the holidays; markets in Germany, Switzerland, and Italy were closed, while exchanges in London and Paris opened for only half the day.
Meanwhile, notes from the US Federal Reserve revealed that officials debated economic risks before agreeing to cut interest rates earlier this month.
On the FX front, the British pound fell slightly against the US dollar on Wednesday, but it is still finishing the year with a strong 7.5% gain, its best result since 2017.
However, compared to its neighbors, the pound struggled; it dropped more than 5% against the Euro, making it the worst-performing major currency in Europe this year.
Other European currencies, such as the Swiss franc and Swedish crown, performed much better, rising between 13% and 19%.
Meanwhile, the US dollar held steady today but is set to record a 9.5% loss for 2025, its biggest drop in eight years. This weakness in the dollar paved the way for the Euro and the pound to post their strongest annual gains since 2017.
Currency Power Balance