Most international markets outperformed the U.S. in 2025, Seema Mody explains why and what's in store for 2026.

In 2025, international markets such as China, Japan, Brazil, and broader Europe recorded gains of 20 to 40 percent, outpacing the U.S. S&P 500. This growth was attributed to economic and fiscal reforms, government stimulus packages, and a rebound in consumer spending, particularly in emerging markets.

Key factors included Japan's reforms under Prime Minister Sanae Takahashi, anticipated trade talks between the U.S. and China, and increased infrastructure spending in Germany. Political developments, such as elections in Brazil and Japan, and the impact of America First policies, also played significant roles in shaping market performance.

Global markets outperform U.S. in 2025

The U.S. markets have done well this year, but international markets, some of them have done even better. Sima Modi joins us now with a look at this global picture in 2025, which regions in particular? This is a fascinating story playing out, Contessa. Nearly every international market have outperformed the S&P 500 this year. You asked which ones. It's China, Japan, Brazil, broader Europe, seen gains of 20 to 40 percent in 2025. I made this special graphic for you, OK, with the flags, the countries. It just shows you how big of an outperformance we've seen in these countries. But the story could change next year, Contessa, if we zoom in on Japan specifically. It's benefited from a number of economic and fiscal reforms. Excitement around its new prime minister, Sanae Takahashi, her stimulus package. But experts at Tenio Intelligence, they lay out some of the challenges, including tariffs, tensions, recent tensions between China and Japan and how that could slow down the country's growth prospects next year. If we look at China, the big event both investors and foreign policy experts will be watching for is this potential upcoming summit being prepared in the spring between President Trump and President Xi in Beijing. That if that meeting happens, the expectation is that trade tensions will continue to be reduced, which would be positive for the broader country's growth story. In Europe, Bank of America strategists, they think Germany specifically is poised to outperform as its government continues to accelerate spending on infrastructure and defense equipment. Elections, Contessa, will also play a big role. And one specific one we are watching next year is in Japan. On the left, you have President Lula, who is seeking reelection. On the right, former President Bolsonaro. He's been ruled ineligible due to his prison sentence for plotting a coup, but his son recently announcing a run. And in the past, stocks in Brazil have been heavily linked to politics. And what we have seen is when there is a leader from the right who wins, Brazilian equities outperform. If it's the left, they tend to underperform. That's why we're watching that one. You're focused there a lot on government policies and central banks and the impact that they have. I have two questions. One, what's your sense of the way that Trump's tariff policy juiced what happened with trade in other parts of the world? So this is an interesting question. One of the big surprises in 2025, to get to your question, is the fact that so many international countries have done OK following the unleash of these America First policies. It really started when Vice President J.D. Vance made that powerful speech at the Munich Security Council earlier this year, where he highlighted a lot of these America First policies. The expectation then was some of the countries overseas that were reliant on the U.S. perhaps would face some challenges. But, in fact, the opposite has happened because it basically pushed them to invest in their own countries. You have seen huge stimulus packages across countries like Japan and Germany, and that's fueled their economic growth story. And the expectation is that that could potentially continue. And that's why so many economists that follow these countries, I was reading their notes these past couple of days, they're following the budgets of these countries so closely. I was talking to Barry Bannister about the consumer in the United States. When I was in China in October for the Macau and NBA China games, I was really stunned to see the health of the consumer on vacation for Golden Week in China. It does appear that there's sort of been a rebound with the Chinese consumers and the spending there. Macau's now on track to recover maybe what we saw before the pandemic. How much do you think you're looking at consumers, a growing middle class, whether it's in India or China or Brazil, fueling some of the outperformance in the markets? An interesting point you make, given the Macau and what you're seeing, that color is so crucial when trying to understand the health of the consumer overseas, because they tend to spend when they feel good about the economy, specifically on gaming and hotels and hospitality. And so that's the type of data that I think we're going to be watching in the coming months to see whether this consumer, specifically in the middle class and emerging markets, will continue to spend. A lot of times it's directly linked to whether they're getting the support from the government. Specifically in China, there's the subsidies, there's the different economic reforms that plays a role in whether they feel good about their pocketbook and whether they want to spend. And also whether they're choosing to spend on experiences versus, say, luxury goods, which is something that we've seen happen and unfold here in the United States. And my sense from covering travel is...

The United Arab Emirates says it's withdrawing its remaining forces from Yemen. The move comes after Saudi Arabia bombed a port in Yemen, saying it targeted an arms shipment intended for a UAE-backed separatist force.

Al Mukalla

Saudi Arabia bombs port in Yemen

Eurostar suspended train services in Europe on December 30 after a power supply issue in the Channel tunnel, sparking travel chaos for passengers during the very busy New Year period. Its services to and from London “are suspended until further notice" and the company advised its passengers to rebook their journeys for other days.

Paris

Eurostar cancels all services after power issue

In an overnight strike, the Saudi military hit a Yemeni port saying they were neutralising a weapons shipments arriving from UAE. The UAE has denied the shipment contained weapons and claimed the vehicles were not intended for any groups. Both countries have supported the fighting sides in the over-decade long war in Yemen, but this strike has turned this rivalry into an open dispute.

The UAE denies shipping weapons to Yemen after overnight Saudi strike

The Kremlin said Tuesday it would toughen its negotiating position in talks on ending the war in Ukraine after accusing Kyiv of attacking a Russian presidential residence — an allegation that Kyiv said was baseless and intended to prolong the conflict.

Moscow

Russia will toughen negotiating stance on war in Ukraine

China fired rockets into waters off northern and southern Taiwan on Tuesday (December 30) and deployed new amphibious assault ships alongside bomber aircraft and destroyers on the second day of its most extensive war games.

Taipei City

China fires rockets towards Taiwan in war games simulating blockade

President Donald Trump on Monday confirmed an alleged drug-related site was targeted during a recent strike, saying, "they load the boats up with drugs, so we hit all the boats and now we hit the area." Trump did not say when the strike happened or exactly where.

Caracas

U.S. strike hits Venezuelan port facility

The search for Malaysia Airlines flight 370 that went missing in 2014 with 239 people on board is expected to resume Tuesday (December 30). The Malaysian government and a private marine robotics company say they will use advances in technology to aid in the search.

Kuala Lumpur

Search resumes for Malaysia Airlines flight that disappeared in 2014

The two countries have agreed to hold fire, freeze troop movements and allow civilians to return home under a new agreement.

Krong Poi Pet

Thailand-Cambodia ceasefire holds as 72-hour observation period ends

Head of Yemen's presidential council, which is supported by Saudi Arabia, says UAE-backed forces in the country should leave within 24 hours.

Yemen’s presidential council cancels UAE defence deal

U.S. President Donald Trump said the United States could support another major strike on Iran were it to resume rebuilding its ballistic missile or nuclear weapons programs and warned Hamas of severe consequences if it does not disarm.

Florida

Middle East Conflict

Trump warns Iran of possible strike, urges Hamas to disarm

U.S. hit an area in Venezuela where boats are loaded with drugs, Trump says, as Pentagon carries out another deadly strike in the Pacific. This claim follows a series of U.S. strikes on boats in the Eastern Pacific, raising the total number of known strikes to 31 and resulting in over 100 deaths.

Trump claims attack on a dock in Venezuela, strikes kill two in Pacific

The Taiwanese government says it has placed its forces on alert as China intensifies its military presence in the Indo-Pacific Ocean and launches air, navy and rocket drills around the island.

Taiwan's forces on alert as China launches military drills

Ukrainian President Volodymyr Zelenskyy is denying Russian Foreign Minister Sergei Lavrov’s claim that Ukraine tried to attack President Vladimir Putin's residence in northern Russia.

Kyiv

Ukraine Invasion

Zelenskyy denies Russian claim that Ukraine targeted Putin’s residence

President Trump said after a meeting with Israeli Prime Minister Benjamin Netanyahu that Hamas must disarm soon or "there will be hell to pay." He said the next phase of the Gaza peace plan could move forward quickly if Hamas disarms.

Washington

Trump warns "hell to pay" if Hamas doesn't disarm

CBC’s Kris Reyes highlights the biggest AI advancements in 2025 along with the continued calls to establish clear boundaries in an effort to prevent misuse.

DeepSeek and the biggest AI advancements in 2025

Russia accused Ukraine on Monday (December 29) of trying to attack President Vladimir Putin's residence in northern Russia, although it provided no evidence to back up an assertion that Kyiv dismissed as baseless and designed to undermine peace negotiations.

Russia claims Ukraine tried to attack Putin residence

Two helicopters collided above Hammonton, New Jersey, and one person has died, officials say. CBS News' Elaine Quijano reports.

Hammonton

Helicopters collide in New Jersey

U.S. President Donald Trump is meeting with Israeli Prime Minister Benjamin Netanyahu in Florida on Monday (December 29) as questions linger about the future of the U.S.-backed ceasefire in Gaza.

Palm Beach

Trump and Netanyahu meet in Florida to discuss Gaza ceasefire

British-Nigerian boxer Anthony Joshua was involved in a road accident on Monday in Makun, Ogun State, south-west Nigeria.

Makun

British boxer Anthony Joshua survives car crash that killed two others

In a new show of force, China has mobilized its navy, air force, and ground troops to simulate a blockade of the self-ruled island's key ports. The military drill comes on the heels of an $11bn US arms sale to Taipei.

China stages new military exercises around Taiwan

U.S. President Donald Trump said he believes both Ukrainian President Volodymyr Zelenskyy and Russian President Vladimir Putin truly want peace as he and Zelenskyy met in Florida. Some experts say Trump is 'delusional' if he truly thinks Putin wants peace.

Trump-Zelenskyy meeting ends with optimism but no deal

Although the U.S. security guarantees for Ukraine have been "100% agreed," they have a short expiration date, the Ukrainian president explained after revealing more details following his meeting with Trump on Sunday.

U.S. security guarantees for Ukraine set for 15 years, Zelenskyy says

China's military moved army, naval, air force and artillery units around Taiwan on December 29 for its "Justice Mission 2025" drills, as the island vowed to defend democracy and mobilized troops to rehearse repelling a potential Chinese attack.

China launches 'Justice Mission 2025' war games around Taiwan

President Trump spoke with Russian President Vladimir Putin by phone before meeting with Ukrainian President Volodymyr Zelenskyy in Florida on Sunday. Trump said he thinks both men are ready for peace.

Trump meets with Zelenskyy, insists Putin is ready for peace

Far-right politics have pushed further into the mainstream across much of Europe. Populist parties, even in opposition, are shaping national debates on migration and the economy. The trend reflects growing voter frustration over living costs, borders and political trust.

Berlin

Far-right politics gaining influence across Europe

Ukrainian President Zelenskyy is set to discuss a new peace plan draft with U.S. President Trump in Florida on Sunday (December 28). However, fresh Russian attacks on Kyiv have left a third of the city without power, undermining local confidence.

Kyiv residents fear escalation amid Zelenskyy-Trump peace talks

A report has sought to catalogue some of the most significant extreme weather events of the year. UK charity Christian Aid found that heatwaves are pushing the limits of human adaptation, hurricanes and typhoons are breaking records, and droughts are devastating lives across the globe. It's all coming at a heavy financial cost.

Top 10 natural disasters cost over $120 billion in 2025, report says

Russia attacked Kyiv and other parts of Ukraine with hundreds of missiles and drones on Saturday, ahead of what President Volodymyr Zelenskiy said would be a crucial meeting with U.S. President Donald Trump to work out a plan to end nearly four years of war.

Russian drones, missiles pound Kyiv ahead of Zelenskiy-Trump meeting

French actor Brigitte Bardot has died aged 91, her foundation said on Sunday (December 28). She shot to international fame dancing the mambo barefoot in "And God Created Woman," her tousled hair and fierce energy radiating a sexual magnetism rarely before seen in mainstream cinema.

Saint-Tropez

Brigitte Bardot, France's 'legend of the century', has died

A ceasefire is now in place between Cambodia and Thailand after weeks of cross-border fighting. But with nearly a million civilians displaced and trust in short supply, the focus now is on whether the guns will stay silent.

Breakdown