How Does the Stock Market Work in 2025? Key Principles and Market Insights

The stock market plays a central role in the global economy, allowing investors and companies to trade ownership and raise capital. This article explains how the stock market works, what drives prices, and how investors can participate responsibly.

In the German Bundestag, Friedrich Merz appealed to the EU to integrate the fragmented European capital market more deeply and reduce bureaucratic hurdles. His vision for the next step: a kind of Wall Street for Europe.German Chancellor Friedrich Merz used his government statement on Thursday to take a strategic look at what he called the “fragmented and over-bureaucratized” European stock and capital market landscape. His stated goal: the completion of the Capital Markets Union.“We need a kind of European Stock Exchange, so that successful companies like BionTech from Germany don’t have to go to the New York Stock Exchange,” Merz said. “Our companies need a sufficiently broad and deep capital market to fund themselves faster and more efficiently.”

Keeping Value Creation in Europe

The Chancellor linked this call to a strong appeal to the European Commission for consistent de-bureaucratization of the fragmented European capital market. Only in this way, he stressed, will the value created from German and European research truly remain in Europe. Only then can societal wealth grow via the capital market, Merz argued.The debate is fueled by the growing trend of European innovative companies raising capital on U.S. exchanges. Recent examples include Linde, Birkenstock Holding, and BioNTech – firms that chose Wall Street listings over domestic options.

This discussion fits into a broader financial context: the integration of European financial and capital markets. A far-reaching harmonization of financial hubs and access to capital would not be a mistake. Currently, there are around 15 securities exchanges in the Eurozone. The two largest operators – Euronext N.V. and Deutsche Börse AG – together handle about 80 percent of the annual €8 trillion equity trading volume.

Ending Capital Flight

Merz’ initiative stands not only for institutional reform but also as an attempt to free Europe’s financial markets from self-imposed regulatory constraints.The Chancellor emphasized the importance of better financing for innovative startups in high-tech future industries. Experience shows, however, that these companies tend to rely on venture capital – and they have no difficulty listing on international exchanges like Frankfurt or London.

The real question for Brussels and Berlin is whether focusing on a new financial hub alone is enough to prevent visible capital flows from Europe to the United States.Germany alone lost around €64.5 billion last year due to capital flight – a symptom of deeper issues: an overbearing regulatory framework from Brussels and EU capitals, excessive fiscal burdens, and an escalating energy cost crisis.

The Real Target

These are fundamental economic imbalances that cannot be resolved simply by creating a European mega-exchange. They are homegrown design flaws – at the heart of today’s economic crisis.In reality, the debate over the Capital Markets Union is about something else entirely: the European Commission’s strategic goal to consolidate member state debt under its roof. This would give Brussels greater financial clout through regular EU bond issuances. More centralization in Brussels, less national oversight – the dream of the Brussels power center.

The EU is gradually moving toward a paradigm shift in debt financing. Originally, the Commission was strictly prohibited from financing itself via market issuances. That red line has long been crossed.The COVID lockdowns provided a lever to launch NextGenerationEU, an unprecedented €800 billion debt program. This money largely financed national deficits, with the Commission acting as a market borrower, backed by the European Central Bank.

Brussels Is Already Active in the Market

It is no secret that Brussels wants to expand this model. The Ukraine conflict serves as a convenient pretext to issue new joint debt under the media-amplified threat of Russian aggression. Chancellor Merz has already indicated this spring that EU-wide borrowing for defense purposes is not off the table – but only for “absolute exceptional cases.”

Merz deliberately avoided the term “Eurobonds,” just like Ursula von der Leyen, who in her State of the Union speech on September 10 circumnavigated the term, instead proposing a common European budget for “European goods.”The signal is clear: we are in a transitional phase where old debt rules are being gradually loosened, and the centralization of debt issuance in Brussels is systematically advanced.

Euroclear as an Anchor

This aligns seamlessly with thinking about a shared European exchange – potentially hosted by Euroclear in Brussels, the central player in the safekeeping and settlement of Eurozone securities. A serious move would also consider relocating the European Central Bank to Brussels for fast debt issuance.The EU’s response to the looming debt crisis is obvious: a much higher degree of centralization. Activating capital that can be leveraged to expand debt becomes strategic; the exchange consolidation is just a secondary concern.

This also ties into the debate over using frozen Russian assets at Euroclear. The goal: collateralize a portfolio worth around €200 billion, largely expired European sovereign bonds, to finance reparations loans to Ukraine. Brussels is searching for credit collateral, regardless of origin.

Source: Zero Hedge

Why Did the Stock Market Drop? Analyzing the Causes and Investor Reactions in 2025

In 2025, global markets experienced a notable decline that raised concerns among investors. This article explores the main reasons behind the stock market drop—from economic pressures to investor sentiment shifts—and examines what these developments could mean for the future.

The USDCAD pair starts the week with a recovery attempt after last week’s decline, currently trading at 1.4023. Find more details in our analysis for 20 October 2025.

USDCAD forecast: key trading points

• President Donald Trump expressed confidence in the further development of trade relations with China
• Foreign investors increased their holdings of Canadian securities
• Growth was primarily driven by investments in Canadian debt instruments
• USDCAD forecast for 20 October 2025: 1.4115

Fundamental analysis

The USDCAD rate is strengthening after Friday’s sharp drop. The US dollar is attempting to rise thanks to investors’ positive reaction to comments from President Donald Trump, which eased fears of a possible escalation in the US-China trade conflict. Trump voiced confidence in the continued development of trade relations between the two countries, emphasising the need for a fair and mutually beneficial agreement.

Meanwhile, foreign investors invested 25.9 billion CAD in Canadian securities in August 2025, compared to 26.7 billion CAD a month earlier. The main driver of this inflow was investment in Canadian debt instruments, which rose to 32.6 billion CAD, the highest level since April 2024.

USDCAD technical analysis

The USDCAD pair continues to move within an ascending channel despite sellers’ attempts to trigger a correction.

After a short-term decline, the price is testing the lower boundary of the channel, indicating that buying interest remains intact. The Stochastic Oscillator shows a rebound from oversold territory, with a potential upward crossover forming, confirming the market’s readiness to resume growth.

Today’s USDCAD forecast expects bullish movement to continue, with a near-term target at 1.4115. A firm consolidation above 1.4045 would confirm a breakout above the upper boundary of the corrective downtrend channel and signal further upside potential.

Summary

With the US dollar strengthening and steady investor interest in Canadian assets, the short-term USDCAD outlook remains bullish. Technical analysis suggests that the pair retains upward momentum, with the next upside target near 1.4115.

Source: RoboForex

Diverging Growth Masks China’s Underlying Economic Fragility

Booming Exports Buffer Domestic Weakness

Trouble at Home: Consumption and Investment Slump

Policy Response: Fiscal Stimulus Over Monetary Easing

Political Context: Fourth Plenum and Global Watchfulness

Slower Growth, Sharper Contrasts

Source: Bloomberg

UBS has maintained its EUR/CHF forecast at 0.94 for the period spanning the fourth quarter of 2025 through the third quarter of 2026, despite recent downward pressure on the currency pair.

The EURCHF exchange rate has experienced sustained downward pressure recently due to global political events and the ongoing rally in gold prices, which has bolstered the Swiss franc’s position as a safe-haven currency, according to UBS.

Safe-haven demand for the Swiss franc currently remains elevated, but UBS expects this to change in the medium term as U.S. political and trade uncertainties resolve, potentially making the CHF less attractive and allowing the EUR/CHF to gradually rise toward the 0.94 target.

With Swiss interest rates at zero, UBS analysts believe the euro offers better total returns than the Swiss franc, supporting their maintained forecast for the currency pair.

The bank’s outlook suggests a stabilization of the EUR/CHF exchange rate in the coming quarters, despite current market pressures that have strengthened the Swiss currency against the euro.

Source: Investing