Tech Pullback Caps 2025 as China, Iran Risks Rise

U.S. equities headed into the final trading day of 2025 on softer footing after a tech-led pullback. In thin year-end liquidity, the third straight losing session left the S&P 500 down 0.14% and the Nasdaq off 0.24% on Tuesday, while Dow futures later hovered near flat at about +10 points.

That wobble matters because the “Santa Claus” window often lifts risk assets, and a stall can amplify nerves about 2026 volatility. Traders also weighed Fed minutes that signaled inflation must cool for further cuts, with markets tilting toward a hold at the next meeting, at 84% odds.

Commodities were the other big story. After a brutal drop, silver bounced hard, while gold stabilized, underscoring how positioning and margin rules can overpower fundamentals in the short run. The whipsaw followed CME margin increases that helped trigger silver’s -8.7% one-day slide, later met by a sharp rebound. Meanwhile, Reuters flagged that spot gold had fallen 4.47% on Dec. 29 amid profit-taking and shifting geopolitics, with 10-year yields around 4.106%.

What happens next likely hinges on whether 2026 broadens beyond mega-cap tech or snaps back into an AI-only trade. For portfolios, treat the late-December chop as a stress test. Make sure risk sizing and liquidity assumptions still hold when markets thin out.

China’s leadership is projecting confidence on growth even as structural headwinds persist. President Xi Jinping said China is set to meet its about 5% growth goal for 2025, a message aimed at stabilizing expectations at home and signaling resilience abroad.

The “who” driving outcomes remains the state. Beijing has leaned on industrial policy and export competitiveness while trying to keep financial risks contained. But the “what” holding back a cleaner rebound is still property and weak consumer demand. Foreign Policy described 2025 as a year of patience marked by a prolonged real-estate slump that has cratered sales and pressured local-government finances, a key channel because land sales historically plugged budget gaps.

Looking into 2026, the global context may add friction. Deutsche Welle cited OECD estimates that world growth slows from 3.2% in 2025 to 2.9% in 2026, while a U.S. tariff regime lifted average duties to 17.9%, up from 2.5%, which has already raised uncertainty for trade and supply chains in Asia. Even with a temporary easing, DW described the U.S.-China truce as a 12-month ceasefire rather than a durable settlement.

Likely next steps are more targeted support for consumption and incremental property stabilization, but investors should expect policy to prioritize supply-side strength and strategic industries. Position for a China story that can still deliver headline growth near 5%, yet remains vulnerable to property deleveraging and trade shocks. Watch how quickly domestic demand improves, not just exports.

Iran entered a new phase of economic and political strain after street protests spread across multiple cities in late December. Demonstrations flared on Dec. 28 and 29 as merchants and shopkeepers shut stores in Tehran and marched in key areas, chanting anti-government slogans.

The catalyst was the currency’s slide and the inflation shock hitting daily life. Firstpost reported the unofficial exchange rate hit roughly 1.42 million rials per U.S. dollar on Sunday, versus about 820,000 a year ago, with inflation at 42.2% in December and food prices up 72% year over year. The “how” is straightforward: a collapsing rial drives import costs, squeezes inventories, and forces merchants to stop trading to avoid losses, which then spills into broader unrest.

Political pressure mounted quickly. The same report said Iran’s central bank chief resigned Monday, and parliament rejected the proposed budget, underscoring how hard it is for policymakers to promise relief without credible funding. CNN added that the protests were the largest since 2022 and described Supreme Leader Ali Khamenei as pursuing a cautious waiting game amid overlapping crises including drought and sanctions pressure.

Next steps likely include tougher enforcement against currency hoarding, attempted banking reforms, and further budget revisions, but those are unlikely to stabilize sentiment without a clear path on sanctions and external security risks. If you have exposure to the region, treat this as a volatility event. Monitor whether protests widen beyond merchant networks and whether policy responses restore basic market functioning.

• Track Fed expectations after December minutes. Markets are pricing about 84% odds of a hold at the next meeting.
• Watch precious-metals volatility after CME margin increases. Forced deleveraging can spill into broader risk assets in thin liquidity.
• Follow U.S. tariff/legal risk into 2026. DW flagged the average U.S. tariff rate at 17.9% and an expected Supreme Court decision on emergency tariff authority.
• In China, focus on demand indicators versus supply strength. Xi’s ~5% growth claim is supportive, but property stabilization remains the key swing factor.
• In Iran, monitor protest scope and policy response after the rial hit ~1.42 million per dollar and inflation reached 42.2%, per late-December reports.