Trading the Financial Markets in the Final Quarter of 2025

Spirits tend to be high as the year comes to a close, leading to positive sentiment and market rallies. While Q4 trading offers more attractive opportunities, it comes with elevated risk. This is because trading becomes more volatile as volumes get thinner, with institutional investors rebalancing their portfolios and traders going on vacation. To help you make informed decisions, here’s a look at what to watch during holiday trading. 

Stock Indices Trading in Q4 2025

Did you know that the US stock indices have historically outperformed in the fourth quarter? A report by Jason Bodner, co-founder of quantitative equity research firm MoneyFlows, showed that US stock indices have outperformed the other three quarters combined almost every year over the past 35 years. 

What to Watch

• US reported 3.8% GDP growth in Q2, beating market expectations of 3.3%. This was the fastest growth rate since Q3 of 2023. The country’s GDP growth is projected to accelerate to 3.9% in Q3, according to the Atlanta Federal Reserve’s tracker. Remember that the economic and policy environment in the US remains very fluid, with widespread tariffs, government shutdown and strained relations with former allies. 
• Tech giants like Amazon, Nvidia, Microsoft, Alphabet (Google), and Meta Platforms (Facebook) have committed billions of dollars in AI. News related to the launch of new features and the availability of infrastructure (chips and datacenters) will impact market sentiment in Q4. 
• More than 80% of S&P 500 companies reported Q2 earnings higher than expected. Corporate earnings releases for Q3 will also determine the direction of stock indices.
• Markets will also respond to Black Friday and Cyber Monday sales.

European stocks underperformed in Q3, rising just 2% versus 6% for US stocks. Asian stocks outperformed, with Japan’s Nikkei 225 climbing around 20%, Asian Dow adding 15% and both China’s Shanghai and Hong Kong’s Hang Seng indices up 12%. This highlights the breadth of opportunities being considered by traders and investors, which is expected to continue in Q4. 

Gold Trading in Q4

Gold has surged almost 50% year to date, adding around 15% in Q3. Experts believe this strong run will continue through Q4. The yellow metal already breached a key psychological level of $4,000 per oz in Q4, due to political instability. 

What to Watch

• Interest rate cut announcements by the Federal Reserve will support gold, as lower rates boost the demand for non-yielding previous metals. 
• Weakness in the US dollar also lends support to gold, as it makes precious metals cheaper for foreign currency holders. 
• Actions of central banks and purchases by India during its festive and wedding season will also determine the direction of gold prices in Q4.
• Geopolitical tensions and sanctions tend to boost gold prices.

Crude Oil Trading in Q4

Both the oil benchmarks – Brent and WTI – lost around 17% in Q3. The Energy Information Administration (EIA) expects oil prices to continue their downtrend in Q4. The agency projects prices to hit around $50 per barrel by early 2026. 

What to Watch

• The EIA report on US stockpiles will remain in focus.
• OPEC+ members increasing production could exert pressure on oil prices.
• The Organisation for Economic Co-operation and Development (OECD) raised its global economic growth projection for 2025 to 3.2%, from the 2.9% predicted in June. Any change in the global GDP growth outlook will impact market sentiment for oil. 

Forex Trading in Q4

The US dollar exited Q3 in the red, with heightened policy uncertainty and fears of inflation. The euro and British pound also posted losses for the quarter. The Japanese yen and Australian dollar climbed in Q3.

What to Watch

• Rate cuts by central banks, especially the US Fed, will impact the forex market in Q4.
• Market sentiment will be impacted by tariffs coming into effect and talks around trade deals.
• Investors rotating funds into emerging market assets could also set the direction of major currencies. 
• Inflation data from the G20 countries will be important. 

What to Explore for Trading the Financial Markets in Q4 

• The retail and ecommerce sectors typically record their highest sales in the holiday season. Cyber Monday and Black Friday are the days of highest sales. In 2024, $41.1 billion was spent during the five days from Thanksgiving to Cyber Monday in the US.
• The Santa Claus rally is a period during which the stock market tends to perform well. It stretches across the last five trading days of December and the first two trading days of January.
• Several missile, aerospace, and modernisation deals have been signed through 2025. The defence sector could remain in focus. While any failure of defence contractors to meet their obligations may weigh on this sector, the resurgence of war in sensitive regions could support growth. 
• Stock indices provide diversified exposure to the ongoing AI boom. 
• Find out about tax-loss harvesting by market heavyweights, which creates opportunities for retail traders. 
• Exposure to emerging market assets can widen your portfolio.
• CFDs provide trading opportunities in both rising and falling markets. 

Keeping an eye on the news and following stringent risk management are essential for trading Q4 opportunities. Don’t forget to backtest your strategy due to the volatility characteristic of holiday trading. 

To Sum Up

• Q4 trading offers more attractive opportunities but these come with higher risks.  
• US stock indices have historically outperformed in the fourth quarter.
• Watch data on US GDP growth, AI related news and earnings releases. 
• Gold is projected to keep rising in Q4. Keep an eye on Fed rate cuts, US dollar weakness, geopolitical tensions, and actions of central banks.
• Oil could continue its downward trajectory in Q4. Watch news related to OPEC, EIA report and global GDP growth.
• USD, GBP and EUR remained under pressure in Q3, while JPY rose sharply. Tariffs and trade deals may impact market sentiment. 

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