WSJ What’s News - Stock Markets Close Out a Record-Setting Year

Episode Date: December 31, 2025

Edition for Dec. 31. We recap a banner year for global markets, propelled in large part by the AI boom. Plus, OpenAI rewards its employees more than any major tech startup has in history. And Journal bureau chiefs preview the global flashpoints likely to dominate 2026. Luke Vargas hosts. Programming note: What’s News is off tomorrow and will publish one show on Friday. Sign up for the WSJ's free What's News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Published by Capital Client Group, Inc. Global markets begin turning the page on a record-setting year. Plus, the AI boom lifted more than stock markets this year, Exhibit A, Open AI, Employee Pay Packages. And we'll hear from Journal Bureau Chiefs from around the world about what to watch for in 26. For the coming year, we're going to see China's push for peer equality to the United States. They're actively working.

to re-engineer the global playing field. It's Wednesday, December 31st. I'm Luke Vargas for the Wall Street Journal, and this is What's News in your feed once a day over the holidays with the top headlines and business stories moving the world today. That is the last opening bell of the year in New York. The final trading session of 2025

finds U.S. stocks slightly lower, but still trading near record highs with the S&P 500 on pace for a roughly 17% annual gain. It's an outcome that journal reporter David Huberti said looked far from certain earlier this year. The big moment to bookend this year was the quote unquote liberation day tariffs announced in April by President Trump. It really sparked market chaos, just the idea of a new era of trade barriers, really reorienting the global economy away from increased globalization. Markets tanked, investors in Wall Street and elsewhere sold off risky assets. But since then, investors have come back to the market in a very big way. And that's in large part because of this AI boom. Investors have poured money into U.S. tech stocks and that has really

elevated markets to near record levels. Well, helping to drive that boom is OpenAI, the maker of ChatchipT. According to financial data shown to investors, it paid its employees this year more than any tech startup has in history. So what does that work out to for the company's roughly 4,000 employees, an average $1.5 million each in stock-based compensation. In Asia, Hong Kong's Hangseng has logged its best year since 2017. The Shanghai Composite rose 18%, its strongest performance since before the pandemic. But good luck topping Korea's Kaspi, which jumped more than 75%,

a gain not seen since 1999. In Europe, Germany's Dax finished up 23% in its best year since 2019, while the Futsi in the UK gained 22% its strongest performance since 2009. In other trading, gold and silver futures slip today but remain on course for the strongest gains since 1979. The U.S. dollar, meanwhile, is on pace to drop more than 6% on the year against a basket of other major currencies, which would be its steepest slide since 2017. President Trump is closing out 2025 with his pressure campaign against Venezuela at a fever pitch. According to several U.S. officials, the CIA was behind a strike on a Venezuelan dock earlier this month,

marking the agency's first known operation inside the country since Trump authorized covert activity there. He began to pull the lid off the operation last week. first mentioning it on a radio show and revealing more details in subsequent days. The CIA declined to comment. The Kremlin is doubling down on claims that Ukrainian drones targeted a residence of Vladimir Putin's and is using the allegation to justify a hardened stance in peace negotiations. Russia's Defense Ministry today published a video of what it said was a downed Ukrainian drone. The footage shot in a snowy forest at night couldn't be independently verified.

Ukraine has strongly denied the attack. And the Trump administration says it's stopping child care funding for Minnesota because of a fraud scandal in the state. Deputy Health Secretary Jim O'Neill announced the freeze on social media yesterday. We believe the state of Minnesota has allowed scammers and fake daycares to siphon millions of taxpayer dollars over the past decade. Federal prosecutors say dozens of people stole public funds through sham social services operations,

Charges were first filed in 2022 under the Biden administration, and Minnesota Governor Tim Walls, a Democrat, said the Trump administration was, quote, politicizing the issue to defund programs that help Minnesotans. The administration for children and families in HHS department sends about $185 million a year to Minnesota in child care funding. Coming up, it's crystal ball time as we ask Journal Bureau Chiefs about the developments they'll be keeping an eye out of. for next year. That's after the break. Every December, we ask journal Bureau Chiefs around the world a question, what's a story that emerged this year that could become the story next year? Their insights were fascinating as ever, starting with South America Bureau Chief Juan Ferrero's

prediction that after President Trump's campaign against, against Venezuela and his harsh words for other leftist leaders in the region, changing political tides, especially after pivotal Brazilian elections in October, could make 2026 a year of greater cooperation with Washington. What we've seen across Latin America is the pendulum has started to swing toward the right. In Chile, we had a recent election where Jose Antonio Cass easily won in a major landslide. And basically, he vowed to clamp down on crime. and illegal immigration. In Bolivia, a centrist was elected, and that was a really big deal

because Bolivia has been ruled mostly for the last 20 years by a far-left movement. Now you have Rodrigo Paz. He's a centrist, but he has already said that he's going to open up Bolivia to investors. Bolivia has the biggest deposits of lithium, which are crucial for electric vehicles and so forth. And Chile, too, is very rich in minerals, particularly. literally copper. So we're going to see a lot of interest by U.S. investors in those countries. And we could end up seeing conservatives win power in Peru and in Colombia in 2026. Across the Atlantic, meanwhile, Brussels Bureau Chief Dan Michael sees longstanding U.S. alliances facing new strain. Not only has the U.S. been vocal in its criticism of

country's internal affairs with the White House strategy document calling out their loss of, quote, civilizational self-confidence and Western identity, but a stark policy gap is opening up over the war in Ukraine. The recent U.S. national security strategy made clear that the U.S. wants to end the war quickly, and Europe is not in a hurry to end the war if that means striking a deal that's bad for Ukraine and strengthens Russia. because European leaders feel that a bad deal for Ukraine is also a bad deal for Europe and puts Europe at a greater security risk. Because Russia would come out of it feeling emboldened.

And Europeans fear that if Russia is not focused on Ukraine, that it will start focusing on Europe. The feeling is, among many leaders, it's better to fight Russia in Ukraine than in Europe. but European leaders and the U.S. now seem to be at odds over this idea. A diplomatic question mark is also hanging over the Middle East, according to our Deputy Bureau Chief, Shandy Race. The big question for 2026 is will Trump, in fact, bring peace to the Middle East, as he has boldly claimed that he will, or perhaps already has, for the most part, the war is over. And that has also quieted other fronts for Israel. But there's still a

huge question for what comes next. Right now, Gaza is split in two between Israel controlling about 50% of the territory and Hamas controlling about 50%. Unless Hamas disarms and gives up control, there really aren't any clear pathways that I can see that makes things go smoothly. And if Hamas hasn't disarmed after two years of really, really brutal war, it's hard to see how there's some pressure that the Arab governments are going to magically be able to make or that anyone's going to be able to do to pressure Hamas. And as Shandy pointed out, Gaza is just one corner of the region worth watching alongside the fragile situation in post-Assad, Syria, Yemen's continuing civil war, and Iran's next moves. President Trump's decision to allow B2 bombers to drop these

massive bombs on Iranian nuclear facilities has contributed to Iran's weakens position in the region. But Iran certainly hasn't given up on the idea of continuing to try to arm these allies that they have in Yemen, in Lebanon. Hezbollah, as we know, is not agreeing to disarm. And the Middle East Today is certainly a more peaceful place than it was a year ago, but it is by no means a place where there is peace. So the question for 2026 will be, can it stay on the road towards getting more and more and more peaceful? Or will it retreat back into the horrible violence that has gripped it for the last two years? And we can't wrap things up without mentioning China. Our chief China correspondent Lingling Wei and our Asia editor, Deborah Ball, told us that 2026 will see Beijing dial up its economic and military ambitions, testing the strength of America's security guarantees and trade relationships, but in the process, potentially

sowing the seeds of pushback against its growing stature. Under Xi Jinping, China now genuinely sees itself as equal to the United States. a true peer with the right to help define the global rules. So for the coming year, we're going to see China's push for peer equality to the United States. They're actively working to re-engineer the global playing field. And one big part of China's new offensive strategy and how they have changed their mindset lies with how China leverages its industrial mind. For years, the U.S. has talked about the need to reduce its reliance on China's factory floor, right? Well, China's counter-move is to now dominate the next factory floor.

I'm talking about green technologies, critical minerals, and the AI components that future economic growth relies on. So here's the problem. When the U.S. tries to sanction or restrict, China's offensive response will be to use its own industrial might as direct leverage against the global supply chain. And Deborah Ball. The power of China's industrial machine is so great that it's very, very difficult to push back on. I think we've seen that with the U.S., those tariffs have not brought manufacturing back to the U.S., so I think it's very difficult to substitute what China has to offer. in terms of the range of products that it does.

I think there will be more friction. There will be more tariffs. I think places like certainly in Europe, but also Southeast Asia, we'll have to consider whether they do want to try to block out some of the Chinese goods as the U.S. is trying to do increasingly. And Deb said the pressure on governments to tighten the trade screws on China could mount when Chinese digital goods begin flooding markets alongside physical ones. The sharpest point on that is around AI, clearly.

I think the Chinese models are going to be very, very competitive in a lot, a lot of countries. There'll be cheaper models. Open source model is easier for a lot of countries to access than the kind of the Ferraris of the U.S. models. And what is embedded in those models, we don't know yet. There are more products that the Chinese are selling about, you know, animated toys or study products or, you know, whole range of AI-assisted consumer products that will raise some serious questions about privacy and data concerns and some basic security concerns as well. From Latin America to the Middle East and from the front lines of kinetic wars to trade battles,

if any of those predictions come to pass in the new year, you'll hear about them here. And that's what's news for 2025. Today's show was produced by Pierre Bienname, Julie Chang, Daniel Bach, and Hattie Moyer, with supervising producers Tali R. Bell and Sandra Kilhoff. I'm Luke Vargas for the Wall Street Journal. A heads up that we're off tomorrow for New Year's Day. But we will be back with a brand new show on Friday afternoon. Until then, thanks for listening and happy New Year.