Global markets optimistic but cautious in last week of 2025

- Low trading volumes across stock exchanges persist over Christmas, New Year

ISTANBUL

Global markets started the year’s last week with cautious optimism due to estimates that the Fed may continue cutting rates next year, as well as some positive geopolitical developments.

Throughout the year, concerns in the markets were riddled by uncertainties over US President Donald Trump’s protectionist trade, while the dovish expectations for the Fed’s monetary policy supported the positive sentiment.

Global markets were mixed last week due to Christmas, and the data flow is expected to be calm this week.

The US’ better-than-expected growth eased some concerns over high valuations of artificial intelligence (AI) and tech firms, contributing to risk appetite last week.

Investors will focus on the Fed’s latest meeting to seek out clues from the bank’s future policy this week.

Low trading volume is expected to continue ahead of the New Year holiday.

Lower inflation in recent weeks could mean central banks may start easing their monetary policy in 2026.

As for geopolitical developments, Trump and Ukrainian President Volodymyr Zelenskyy met for peace talks at Mar-a-Lago.

Following these changes, the US 10-Year bond reached 4.14% and the US Dollar Index is hovering at 98 on a horizontal course on Monday.

The possibility of the Fed cutting interest rates next year keeps the dollar under pressure, while the prospect of a new Fed chairman pursuing a dovish policy is also causing the dollar index to stay below the 100 level.

Gold is down 0.4% at $4,515 per ounce on Monday, while Brent crude oil is trading at $60.8, up 0.7%, due to expectations that the Chinese demand will rise next year.

Silver hit a record high at $84 per ounce on Monday, led by industrial demand from solar panels, electric vehicles (EVs), AI data centers, and electronic product manufacturing, as well as central bank demand and inflows into exchange-traded funds (ETFs).

Gold and silver rose last week on tensions in Venezuela, where the US blockaded oil tankers, and on the US airstrike on ISIS (Daesh) presence in Nigeria.

Meanwhile, trading on the New York Stock Exchange remained low and flat since last week. Chipmaker Nvidia shares gained 1% after it announced a licensing deal with chip startup Groq.

The Dow Jones lost 0.04%, the S&P 500 0.03%, and the Nasdaq 0.09% on Friday last week, while American futures started Monday mixed.

In Asia, stocks were mostly up on Monday except for Japan.

At the same time, industrial profits in China fell 13.1% year-on-year in November, data showed.

The US-China trade tensions further exacerbated the uncertainties riddling the market, while reciprocal tariffs, as well as weakening domestic demand, impacted company profits throughout the year.

Beijing signaled that it may pursue fiscal expansion, contributing to the Chinese stock market on Monday, while reports that China launched military drills around Taiwan caused defense industry shares in the region to rise.

Meanwhile, the latest minutes of the Bank of Japan’s December meeting showed some members said the real interest rates were at low levels and that further rate increases may be possible.

Last week, the Tokyo Consumer Price Index (CPI) came in below estimates, and if inflation continues to slow, the bank may find justification in raising interest rates.

Following these changes, the Nikkei 225 fell 0.2%, the Kospi Index climbed 1.9%, the Shanghai Composite Index 0.4%, and the Hang Seng Index 0.3% near the close.