Weekly Recap: 1st - 5th
Global Market Overview:
Global markets experienced a cautious but constructive tone this week as investors positioned ahead of a heavy run of delayed U.S. economic data and key central bank decisions. Risk appetite fluctuated across regions, driven by shifting expectations for a December Fed rate cut, rising conviction in a Bank of Japan hike, and ongoing volatility in cryptocurrencies and high-valuation tech sectors.
The MSCI All Country World Index approached a fresh record high by Friday, supported by stabilising tech sentiment in the U.S. and a broad recovery across Asia.
Japan
Japan was at the centre of the week’s market action as expectations for a BOJ rate hike surged.
- Early in the week, Asian equities slid sharply after Governor Ueda delivered the clearest signal yet that the BOJ may lift rates at its December meeting. Japanese yields jumped to their highest level since 2008, and USD/JPY strengthened to 155.5.
- By midweek, demand at a strong 10-year and later 30-year JGB auction eased yield pressure, helping the Nikkei and Topix rebound.
- Toward Friday, reports indicated BOJ officials are prepared to raise rates this month barring a market shock, leading the yen to strengthen again while Japanese equities remained supported by dip-buyers.
Japan’s markets traded with heightened sensitivity to BOJ communications as traders positioned for the first potential hike since 2007.
U.S. & China
U.S. sentiment was dominated by anticipation of delayed economic data—including CPI, PCE and payrolls—that will guide the Fed’s final decisions for 2025.
- Early in the week, U.S. equity futures fell sharply, with S&P 500 futures down 0.8% and Nasdaq futures down 1%, as investors braced for a heavy data calendar.
- Fed officials maintained a cautious tone, with markets still pricing a December cut—helped by recent comments from NY Fed President John Williams—while others urged patience amid limited fresh data.
- The White House adviser Kevin Hassett suggested potential leadership changes at the Fed, adding another layer of uncertainty.
China-related sentiment was mixed:
- Chinese factory activity remained in contraction, though equities started December firmer on a rally in metal stocks.
- By Thursday, softer U.S. labour data boosted global risk appetite and strengthened expectations for Fed easing.
- On Friday, all attention turned to the long-delayed PCE inflation report, expected to reinforce the case for a 25 bps cut next week.
Crypto markets remained volatile throughout the week, with Bitcoin plunging below 86,000 on Monday before rebounding near 92,000 by Friday.
Europe
European equities were steady but cautious, mirroring global uncertainty ahead of major U.S. data.
- Manufacturing PMIs from major economies were released early in the week, while central bank commentary continued to emphasise vigilance on inflation.
- The Bank of England held rates at 4% as expected, balancing persistent price pressures with signs of softening growth.
- Norway’s central bank also kept rates unchanged, while Canada and the U.S. prepared to release significant data later in the week.
- Into Friday, the euro area remained stable as investors awaited confirmation of the U.S. rate path and monitored geopolitical developments.
Crypto
- Bitcoin dropped nearly 6% on Monday but rebounded across the week, trading near 92,000 by Friday.
- Crypto volatility continued to spill over into broader risk sentiment.
Commodities
- Gold oscillated but remained firm, holding above $4,200/oz by week’s end.
- Silver retreated from record highs, while copper advanced on strong demand expectations.
- Oil remained rangebound, with WTI fluctuating around $59–60/bbl. OPEC+ confirmed a pause in production hikes for Q1 2026.
Data & Earnings
This week marked the resumption of delayed U.S. data releases following the government shutdown, with several key indicators in focus:
- Manufacturing PMIs across Europe and North America kicked off the week.
- Eurozone CPI was a key data point on Tuesday.
- ADP employment, import prices, and industrial production arrived Wednesday.
- PCE inflation, the Fed’s preferred gauge, was released Friday after long delays—expected at 0.2% MoM and just below 3% YoY.
- Globally, bond markets reacted to shifting central bank expectations, with U.S. yields pulling back midweek before stabilising.
Investors now turn to next week’s Fed and BOJ decisions, both of which carry meaningful implications for year-end positioning.
