As the last full trading week of 2025 begins, European stocks edged higher on Monday, while U.S. index futures saw modest gains in pre-market trading, with gold prices nearing record highs. This week, markets await key central bank decisions, including an expected 25-basis-point rate hike by the Bank of Japan, alongside the delayed release of U.S. November nonfarm payrolls and inflation data.
As of writing, Dow futures rose 0.47%, S&P 500 futures gained 0.50%, and Nasdaq futures advanced 0.50%.
European equities climbed 0.3%, with most sectors and major exchanges in positive territory. The UK's FTSE 100 rose 0.43% shortly after opening, Germany's DAX added 0.44%, France's CAC 40 increased 0.30%, and Italy's FTSE MIB gained 0.63%.
Earlier in Asia, markets broadly weakened, following Wall Street's Friday decline. The MSCI Asia Pacific ex-Japan index fell 1.2%, with South Korean stocks plunging as much as 2.7%, dragging down regional performance. South Korea had been one of this year's top-performing global markets.
Marc Velan, CIO at Lucerne Asset Management in Singapore, noted: "The risk-off sentiment in Asia reflects spillover from Friday's selloff in U.S. momentum and tech stocks rather than local catalysts. The pullback in AI capital expenditure trades has dampened global risk appetite, and with year-end liquidity thinning, such volatility tends to spread quickly across regions."
S&P 500 futures rose 0.5% after the index dropped over 1% in the previous session. U.S. markets tumbled sharply on Friday amid bubble concerns in AI-related stocks and persistent inflation pressures in the world's largest economy.
**Multiple Risks Loom This Week** Global risk appetite has cooled as markets question whether tech stocks—which have driven record highs—still justify their lofty valuations amid aggressive AI spending. This week, U.S. nonfarm payrolls and inflation data will offer clues on economic health, while major central banks, including the Bank of England and Bank of Japan, deliver their final policy decisions of the year.
Kyle Rodda, senior analyst at Capital.com, said: "There's enough event risk to keep investors on high alert—potentially sparking a 'Santa rally' or deeper selling." He referred to the typical year-end stock market uptick.
**Delayed U.S. Jobs and Inflation Data Arrives** This week's U.S. economic releases will partly fill data gaps caused by the government shutdown, including postponed monthly employment and inflation figures, along with key January jobs reports. These will help answer whether the Fed, after three consecutive rate cuts, is nearing the end of its easing cycle or needs more aggressive action.
Ben Bennett, L&G's Asia investment strategist, cautioned: "Given data collection issues and shutdown impacts, this week's figures require careful interpretation. A clearer U.S. economic picture may only emerge in 2026."
Sim Moh Siong, FX strategist at Bank of Singapore, added: "The delayed data carries inherent noise. Policymakers will likely interpret results more cautiously, focusing on labor market trends."
Last week, the Fed cut rates amid internal dissent, but Chair Jerome Powell signaled limited near-term further cuts as policymakers await clearer economic signals.
Former President Trump recently expressed preference for ex-Fed Governor Kevin Warsh or NEC Director Kevin Hassett as next Fed chair.
**Tech Pullback in Focus** Traders are watching whether last week's tech-led retreat continues. Skepticism is growing—from Nvidia's recent slump to Oracle's post-AI-spending-drop plunge and weakening sentiment around OpenAI-linked firms.
Ed Yardeni of Yardeni Research views recent investor anxiety as a "digestion phase in a major tech adoption cycle, not the end." He recently downgraded the "Magnificent Seven" tech giants to underweight.
Bloomberg's Garfield Reynolds warned global stocks face correction risks as tighter monetary policy removes support and AI hype fades. Year-end profit-taking is rising as 2025 peaks may already be in.
Elsewhere, U.S. 10-year Treasury yields dipped 3 bps to 4.1645% ahead of data and central bank decisions. The dollar index was flat.
**Central Bank Decisions Ahead** The Bank of Japan is expected to hike 25 bps to 0.75%, while the Bank of England may cut by the same margin to 3.75%. The ECB is likely on hold, alongside Sweden and Norway's central banks.
Markets have nearly priced in a Friday BOJ hike, favoring the yen over the dollar, which faces 2026 rate-cut expectations. Yen-funded carry trades may lose appeal.
MUFG's Lee Hardman noted: "Sustained yen strength depends on BOJ guidance and external conditions. Deeper U.S. tech selling could support the yen by undermining carry trades."
**Gold Nears Record High** Gold rose for a fifth straight session to ~$4,339, just $40 below its all-time high—marking its longest rally since October 2024's record run.
OANDA's Kelvin Wong said: "Gold remains well-supported pre-NFP. Weak jobs data could push prices toward $4,380–$4,440 after rebounding from $4,243 support."
**Copper Surges Toward $12,000 on AI Demand** Copper prices approached $12,000/ton amid AI data-center demand forecasts, tight supply, and U.S. stockpiling. Prices are up 35% YTD, heading for their best year since 2009. Macquarie analysts noted: "Bullish sentiment is supply-driven and macro-supported."
**BofA: Bull-Bear Indicator Nears "Sell" Signal** BofA's Michael Hartnett reported the revised Bull & Bear Indicator hit 7.8, nearing "extreme bullish" territory. October's 8.9 reading historically signaled market tops. Small-cap rotation and surging risk appetite suggest overheated 2026 expectations.
**Notable Movers** - Silver miners: Hecla Mining (+4.6%), Coeur Mining (+3.3%) - Gold stocks: Kinross (+2.1%), Gold Fields (+2.7%), Barrick (+1.9%) - Space stocks: EchoStar (+4%), Rocket Lab (+2%) - Stellantis (+2%) on potential EU reversal of 2035 ICE ban - Rivian (+1%) after AI chip launch and Goldman target hike - Sanofi (-4%) on tolebrutinib review delay - iRobot (-80%) post-bankruptcy filing - Rocket Lab (+2.4%) secured JAXA launch contract - ServiceNow (-2%) near Armis acquisition - Planet Labs (+2%) on strong guidance - Destiny Tech100 (+5%), up 44% in 5 sessions - iQIYI (+1.5%) after UAE partnership
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