Global Markets End Year on Cautious Optimism Amid Fed Rate-Cut Expectations and Geopolitical Developments
Global markets began the final week of the year with cautious optimism, supported by expectations that the US Federal Reserve may continue cutting interest rates next year and by some positive geopolitical signals. Throughout the year, market sentiment has been weighed down by uncertainties surrounding US President Donald Trump’s protectionist trade policies, while increasingly dovish expectations for the Fed’s monetary stance have helped underpin risk appetite. Trading activity remained subdued last week due to the Christmas holiday, and a calm data flow is expected to continue ahead of the New Year.
Stronger-than-expected US growth data eased some concerns over elevated valuations in artificial intelligence and technology stocks, contributing to improved sentiment. Investors are now closely watching signals from the Fed’s latest meeting for clues about the future policy path, with low trading volumes likely to persist. Recent easing in inflation has fueled expectations that central banks could begin loosening monetary policy in 2026. On the geopolitical front, talks between Trump and Ukrainian President Volodymyr Zelenskyy at Mar-a-Lago added to cautious hopes of progress toward peace.
In markets, the US 10-year Treasury yield slipped to 4.14%, while the US Dollar Index hovered around 98, remaining under pressure amid rate-cut expectations and speculation about a more dovish Fed leadership. Gold fell 0.4% to $4,515 per ounce, while Brent crude oil rose 0.7% to $60.8 on expectations of stronger Chinese demand next year. Silver surged to a record $84 per ounce, driven by strong industrial demand, central bank buying, and ETF inflows. US equities ended last week slightly lower, while Asian markets were mostly higher on Monday, with gains in South Korea, China, and Hong Kong offset by a decline in Japan, as investors weighed Chinese economic data, regional trade tensions, and evolving monetary policy signals from the Bank of Japan.
