As of 09:50 a.m. ET (14:50 UTC) on Thursday, Dec. 18, 2025, global stock markets are tilting higher in Europe and the U.S., rebounding from a tech-led wobble that weighed on Asia overnight. The immediate catalyst is a cooler-than-expected U.S. inflation reading, which revived expectations that the Federal Reserve could deliver earlier rate cuts in 2026—even as policymakers and strategists caution that disrupted data collection during the U.S. government shutdown could make the signal noisier than usual. [1]
At the same time, the day’s major central-bank decisions are reinforcing a familiar late-2025 narrative: policy divergence. The European Central Bank held rates and upgraded parts of its outlook, while the Bank of England cut rates but warned that further easing is not a straight line. Investors are also bracing for the Bank of Japan’s next move (decision due Friday, Dec. 19), which markets widely expect to be another step toward higher rates—an unusual stance compared with peers that have been easing. [2]
Market snapshot at 09:50 a.m. ET
United States (early trade): Wall Street opened higher after the inflation print, with the S&P 500 up about 0.4%, the Nasdaq up about 0.6%, and the Dow up about 0.1% in early moves. [3]
Europe (midday): The pan-European STOXX 600 rose about 0.5% to 582.86, with Germany’s DAX also up about 0.5%. [4]
Asia (overnight): Japan’s Nikkei fell roughly 1.0%, while China ended mixed—Shanghai marginally higher but CSI300 lower, with tech and property dragging as investors rotated into defensives. [5]
Rates and FX: Following the U.S. CPI report, Treasury yields slipped (the U.S. 10-year near 4.13% in the immediate reaction) and the dollar eased (dollar index around 98.25). [6]
Commodities:Oil prices remained firm, supported by supply-risk headlines, while silver hovered near record territory and gold stayed elevated by late-2025 standards. [7]
What’s moving global stock markets today
1) Softer U.S. inflation shifts the 2026 rate-cut debate
The key macro headline is the U.S. Consumer Price Index rising 2.7% year-on-year in November, below expectations of 3.1%, with core CPI at 2.6% (annual). Because October CPI data wasn’t published after the shutdown, investors are debating how much confidence to place in the disinflation signal—yet markets still responded in the classic way: lower yields, a softer dollar, and a bid in equity futures and risk assets. [8]
Before the U.S. open, equity index futures climbed. Around 08:31 a.m. ET, S&P 500 E-minis were up about 0.61% and Nasdaq 100 E-minis up about 1.09% as traders repriced the path for Fed cuts. [9]
Strategists’ takes span the spectrum—from those arguing the print arms the “Fed doves” for a January 2026 cut, to others warning the shutdown may have distorted the dataset and that policymakers could wait for clearer confirmation in the next release cycle. [10]
2) Central banks underscore divergence: ECB steady, BoE cuts—cautiously
In Europe, the day’s policy story is just as important as the equity tape.
ECB: The European Central Bank kept rates unchanged and raised some growth and inflation projections, a stance that investors read as further evidence the cutting phase is over for now. The ECB signaled it is not pre-committing to a rate path, while markets have increasingly treated additional cuts as unlikely and have even begun to look further out toward a potential hike cycle. [11]
Notably, the ECB’s projections showed inflation staying close to target: 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028, alongside an upgraded view of growth (including 1.4% for this year in the ECB statement reported by Reuters). [12]
BoE: The Bank of England cut its benchmark rate by 25 bps to 3.75% after a tight 5–4 vote, but paired the move with a message that further cuts could come more slowly. Markets and economists are now debating how much easing the UK can deliver in 2026 given sticky services inflation risks and weak growth. [13]
This combination—rate cut plus caution—helped lift sterling and pushed UK government bond yields higher immediately after the decision. [14]
3) Tech jitters still matter—and Asia felt them first
Even with inflation relief, the market is still sensitive to any hint that late-2025’s defining trade—AI and megacap tech—is overheated.
Overnight, Asia tracked the risk-off tone from the U.S. tech sector, with Japan’s Nikkei sliding about 1.03% and high-profile tech-linked names notably weaker in the session commentary followed by markets. [15]
In mainland China and Hong Kong, tech softness was visible in the close: the Shanghai Composite ended up about 0.2%, but the CSI300 fell about 0.6%; Hong Kong’s Hang Seng edged up 0.1% while the Hang Seng Tech Index fell about 0.7%. [16]
Investors rotated toward defensive sectors, including banks and energy, while AI-related and semiconductor baskets lagged. Regional tensions also contributed to defensiveness after the U.S. approved a large arms package for Taiwan, boosting defense-linked shares in China while adding to geopolitical unease. [17]
Europe: Stocks higher, led by cyclicals and oil-sensitive sectors
European equities strengthened after the inflation surprise and central-bank decisions. The STOXX 600 gained about 0.5%, supported by banks and industrials, while energy stocks rose with oil prices. [18]
Within sectors and single names:
- Banks turned higher (about +0.5%), while financial services gained more strongly (about +1.3%). [19]
- Retail was among the leaders, with H&M up about 3.2%, and large consumer names also firmer. [20]
- Energy stocks rose (about +1.1%) as crude prices stayed supported; BP was marginally higher after naming Meg O’Neill as CEO, according to Reuters. [21]
- A notable downside outlier: Aéroports de Paris fell sharply (about -11.7%) after a regulator rejected its 2026 tariff proposal. [22]
Wall Street: Early gains, with semis and rate-sensitive names in focus
In the U.S., the early tone is constructive: stocks opened higher as the CPI print renewed bets that the Fed may have more room to ease in 2026, especially if labor-market softening becomes more pronounced. [23]
Company-level headlines are still steering pockets of the market. One example: chipmaker Micron drew attention after a bullish forecast helped ease valuation anxiety that has been haunting parts of the AI supply chain following recent volatility in megacap tech. [24]
Asia: Mixed China close, Japan weaker, and “defensives” win the day
Asia’s session highlighted how quickly sentiment can shift when tech leadership looks shaky.
Japan: A roughly 1% Nikkei decline reflected lingering concern about the durability of AI-linked capex and risk appetite, even as global rates expectations improved after U.S. inflation. [25]
China & Hong Kong: Mainland and Hong Kong markets finished mixed, with tech and property under pressure. Onshore, the CSI 300 real estate gauge fell notably amid continued concerns around a major developer’s debt situation, while bank shares and energy gained as investors sought shelter in higher-dividend, policy-resilient segments. [26]
Commodities and macro headlines: Oil firm, metals elevated, China policy signals watched
Oil remained supported by supply risk narratives, with crude prices rising on the day in market coverage tracked by Reuters. [27]
Precious metals stayed a major late-2025 talking point as well. Silver has been trading near record territory, and gold has remained elevated—reflecting a blend of real-rate expectations, central bank policy uncertainty, and year-end positioning. [28]
Meanwhile, global investors are also monitoring China policy and trade signals that can quickly ripple into miners, EV supply chains, and industrial exporters. Beijing said it has granted new “general licenses” for rare earth exports designed to speed shipments—an update closely watched by industries sensitive to materials bottlenecks. [29]
Separately, China launched a major free-trade experiment on Hainan, aiming to boost investment and signal openness in the context of shifting global trade dynamics. [30]
Forecasts and analysis: What strategists are watching into year-end and 2026
Europe’s “MEGA” trade depends on delivery, not slogans
One of the most interesting 2025 cross-currents has been the periodic revival of “MEGA” (“Make Europe Great Again”) positioning—investors rotating into Europe on the view that the region could finally narrow its long-standing valuation and performance gap with the U.S.
But the latest institutional analysis is clear: follow-through matters. Reuters reporting highlighted that 2025 inflows into European equities have slowed sharply in the second half, and that many major banks still expect Europe to lag the U.S. next year, partly because U.S. indices carry more exposure to the AI boom. [31]
At the same time, the setup is tempting for contrarians: European stocks have traded at a large discount to U.S. peers on forward earnings metrics, and investors say stronger German execution on infrastructure and defense spending could become a real catalyst rather than a headline. [32]
UK: Cuts are happening, but not necessarily fast
The BoE decision is a reminder that a rate-cut cycle can be both real and restrained. UK policymakers split closely, and economists cited by Reuters debated whether the UK sees just a couple more cuts in 2026—or more, depending on growth and inflation dynamics. [33]
Japan: A hawkish outlier—and the yen is still under pressure
Japan remains the rare major economy tightening into 2026 expectations. Reuters analysis has emphasized that even with a move toward 0.75% policy rates, the yen has struggled to escape levels associated with “danger zone” intervention risk, constrained by fiscal and bond-market sensitivity even as inflation remains above target. [34]
Risk appetite indicators: IPOs and M&A are flashing “open for business”
Beyond daily index moves, two longer-horizon indicators are feeding into the risk backdrop:
- Nasdaq’s listings outlook: Nasdaq executives said they expect more $1B-plus IPOs next year, with 2025 U.S. IPO fundraising also notably higher than last year, according to Reuters. [35]
- Global M&A: Dealmakers are pointing to a near-record year for M&A value and a late-year burst of mega-deals, with banks forecasting continued momentum in 2026 if financing remains supportive and boardrooms stay confident. [36]
What to watch next (the next 24 hours)
With year-end liquidity approaching, the market’s “next move” may depend on whether volatility stays contained:
- Bank of Japan decision (Friday, Dec. 19): Any surprise on pace or guidance could move global rates, the yen, and Japanese equities. [37]
- Follow-through after CPI: Markets will weigh whether November inflation softness translates into sustained disinflation—or gets challenged by the next data cycle. [38]
- AI trade stability: Investors will keep pressure-testing whether the AI value chain can reassert leadership without fresh signs of capex fatigue. [39]
- Energy sensitivity: If oil extends gains on supply-risk headlines, energy-heavy indices may continue to outperform in pockets. [40]
References
1. www.reuters.com, 2. www.reuters.com, 3. www.reuters.com, 4. www.reuters.com, 5. www.marketpulse.com, 6. www.reuters.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.investing.com, 10. www.reuters.com, 11. www.reuters.com, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.marketpulse.com, 16. www.tradingview.com, 17. www.tradingview.com, 18. www.reuters.com, 19. www.reuters.com, 20. www.reuters.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.marketpulse.com, 26. www.tradingview.com, 27. www.reuters.com, 28. www.marketpulse.com, 29. www.reuters.com, 30. www.reuters.com, 31. www.reuters.com, 32. www.reuters.com, 33. www.reuters.com, 34. www.reuters.com, 35. www.reuters.com, 36. www.reuters.com, 37. www.reuters.com, 38. www.reuters.com, 39. www.tradingview.com, 40. www.reuters.com
