NEW YORK/LONDON/TOKYO — Friday, December 19, 2025 — Global stock markets were broadly higher as of 1:15 p.m. ET, with a tech-led rebound on Wall Street extending into the final stretch of the year, European shares closing at a fresh record, and Asian equities finishing in the green despite a landmark Bank of Japan (BOJ) rate hike that sent the yen sliding. [1]
The mood is best described as “risk-on, but watchful”: investors are embracing the year-end bid and the traditional “Santa rally” setup—while keeping one eye on unusually messy economic signals after the U.S. government shutdown disrupted data collection, and another on policy cross-currents from Tokyo to Frankfurt to Washington. [2]
Global market snapshot at 1:15 p.m. ET
A quick read of the major benchmarks shows how synchronized the day’s gains were—U.S. stocks higher mid-session, Europe firm into the close, and Asia already wrapped with solid advances. [3]
- United States: The S&P 500 was up about 0.9% near 6,835, the Nasdaq Composite up about 1.2% near 23,280, and the Dow up about 0.6% around 48,229. [4]
- Europe: The STOXX 600 was up roughly 0.4% at 587.50, after closing at a record high; London’s FTSE 100 finished up about 0.6% near 9,897, helped by miners and defense shares. [5]
- Asia: Japan’s Nikkei 225 closed up about 1% near 49,507 after the BOJ hike; China and Hong Kong also ended higher, with mainland and Hang Seng gains captured in the regional wrap. [6]
Under the surface, the cross-asset picture also leaned supportive for equities: oil prices were firmer, gold held near the week’s highs, and the dollar strengthened notably against the yen as traders questioned how aggressive Japan can really be after today’s hike. [7]
The big drivers today: rate cuts, rate hikes, and a data credibility problem
Today’s global equity bid is being powered by a mix of (1) easing expectations, (2) year-end positioning, and (3) relief that recent volatility has not turned into a deeper selloff.
1) U.S. inflation cooled — but investors are debating whether to trust it
Markets are still reacting to Thursday’s inflation surprise: U.S. CPI showed a cooling trend (headline inflation around 2.7% year-on-year; Reuters also flagged core CPI around 2.6% year-on-year). But the credibility of the print is in question because data collection was disrupted by the 43-day federal shutdown, leading economists to warn of distortions. [8]
That skepticism matters because it feeds directly into the rate path. Traders are still leaning toward additional Fed easing in 2026, and Reuters reported markets assigning a non-trivial probability of a cut as early as January—even as the Fed itself has tried to sound cautious. [9]
2) The Fed has already cut three straight meetings — now the market wants clarity
Investors are trying to reconcile:
- the Fed’s recent three consecutive rate cuts, [10]
with - shutdown-clouded data that makes it harder to judge whether inflation is truly returning to target and whether the labor market is cooling in a clean, measurable way. [11]
That uncertainty is why next week’s U.S. calendar—GDP, durable goods, consumer confidence—has become a major “tell” for the first weeks of 2026. [12]
3) Japan moved in the opposite direction — and the yen fell anyway
While Wall Street trades the “cuts” narrative, Tokyo delivered a “hike” headline: the BOJ raised its policy rate to 0.75% from 0.5%, the highest level in three decades, and signaled it could raise rates again if forecasts are met. [13]
But the yen weakened sharply after Governor Kazuo Ueda offered few specifics on the pace and extent of future hikes—reviving the carry trade logic and reigniting talk of where Japan’s “line in the sand” might be for intervention risk. [14]
Wall Street at midday: tech is back in charge, while consumer brands wobble
U.S. stocks were higher into early afternoon, and once again the market’s steering wheel sat firmly with megacap tech and semiconductors. [15]
Semiconductors and AI-linked megacaps led the rebound
The tech rebound gained momentum after Micron’s upbeat outlook reignited optimism around AI demand and chip spending, helping lift Nvidia and the broader semiconductor complex. [16]
That tech dominance is crucial for headline indexes: the same concentration that turbocharged 2025’s gains can also amplify pullbacks when the market starts questioning whether AI infrastructure spending will translate into profits on the timeline investors have priced in. [17]
Nike’s China stumble shows the consumer picture is still uneven
Not every part of the tape joined the celebration. Nike fell sharply after pointing to weakness tied to China and margin pressure—an earnings reminder that global growth is not moving in a straight line even as indexes hover near highs. [18]
TikTok/Oracle deal headlines added fuel to the tech trade
Oracle surged on news tied to a restructuring of TikTok’s U.S. operations, which AP reported as a new U.S. joint venture involving Oracle and other investors. Reuters also reported binding agreements handing control of U.S. operations to an investor group including Oracle. [19]
“Triple witching” threatened to add volatility
Traders also braced for higher volatility due to “triple witching,” the quarterly expiration of stock options, stock index futures, and stock index options—an event that can exaggerate intraday moves even when the underlying narrative is steady. [20]
Europe closes at a record: defense and banks keep carrying the banner
European stocks ended the day at a new high, with investors leaning into sectors that have defined Europe’s late-2025 strength: defense, insurance, and banks. [21]
STOXX 600 hits record close as investors rotate away from premium U.S. tech
Reuters reported the pan-European STOXX 600 rose to 587.50 and closed at a record, with the index ending the week up about 1.7% and on track for its best annual performance since 2021. Part of the support, Reuters noted, has come from global investors diversifying away from “premium-valued” U.S. technology stocks. [22]
Banks and defense: still the “winners” trade in Europe
Banks and defense firms have been standout performers: Reuters cited the European banking index up about 65% year-to-date and defense up nearly 60%, with portfolio managers arguing banks remain cheap relative to history despite a supportive backdrop. [23]
That story also echoed in London. The FTSE 100 posted its strongest weekly gain in nearly two months, helped by mining and defense shares, while homebuilders lagged. [24]
Asia’s finish: BOJ delivers the hike, the Nikkei rallies, and the yen slides
Asia ended the session higher overall, but the day’s most important global macro signal arguably came from Japan.
BOJ to 0.75%: a headline hike with a “not hawkish enough” market reaction
The BOJ’s move was widely expected, but the market reaction was telling: the yen weakened as traders judged the guidance and press conference as too vague to imply a fast hiking cycle. Reuters described investors adding to bets against the yen and staying comfortable with carry positions. [25]
Japan’s finance minister warned about responding to “excessive” FX moves, and Reuters noted market participants speculating about intervention thresholds (with 160 per dollar repeatedly referenced as a psychological danger zone). [26]
Why this matters globally: carry trades and cross-border flows
A weaker yen can be a tailwind for Japanese exporters and, through the carry trade, can also support global risk assets—because cheap yen funding can flow into higher-yielding assets abroad. But it can also become a political and inflation problem domestically by pushing up import costs, which is why intervention chatter never stays far away when the yen slides quickly. [27]
Commodities, currencies, and bonds: the cross-asset signals equities are watching
Even on an equity-led day, the “tells” for sentiment often come from currencies and rates.
Dollar vs yen was the standout move
The dollar strengthened sharply against the yen after the BOJ decision, with Reuters describing a broad yen selloff and renewed focus on whether authorities will step in if moves become disorderly. [28]
Oil rose amid Venezuela and geopolitics — but the supply story looms
Oil prices firmed as traders weighed geopolitical risks, including Venezuela-related headlines and broader Russia/Ukraine uncertainty. Reuters’ global markets report cited President Donald Trump’s comments about Venezuela, while Reuters’ weekly “Take Five” noted that beyond geopolitics, a projected spike in global crude supplies may be the more “prosaic” driver in coming months. [29]
Bonds: yields nudged higher in the wake of BOJ
U.S. Treasury yields edged up alongside global yields after Japan’s move, reflecting the global nature of rates repricing when a major holdout like Japan tightens policy. [30]
Forecasts and outlook: Santa rally hopes meet AI jitters and a still-foggy data calendar
With just a handful of trading days left in 2025, forecasters and strategists are increasingly framing markets around a short list of themes:
1) “Santa rally” is in play — but the setup is different this year
Historically, U.S. stocks often rise in the final five trading days of the year and the first two of January. Reuters cited the Stock Trader’s Almanac showing an average 1.3% gain for that window since 1950, and noted this year’s Santa-rally window runs from Wednesday through Jan. 5. [31]
But Reuters also stressed a more nuanced reality: December’s advantage has faded in recent decades, and the S&P 500 had been choppy in December even with strong full-year gains. [32]
2) The AI trade remains the market’s biggest accelerant—and its biggest fault line
Strategists highlighted two forces behind recent U.S. equity swings:
- scrutiny of massive AI buildout spending, and
- shifting expectations for the Fed’s next moves. [33]
This is why headlines tied to major capex plans (and doubts about payback timing) can still move the whole market, not just the tech sector. [34]
3) Next week’s “real” data could reset the narrative
Because shutdown disruptions forced changes in methodology and timing across key U.S. reports, investors are watching next week’s releases—GDP, durable goods, and consumer confidence—for cleaner confirmation of whether growth is stabilizing or slipping. [35]
4) Central banks are signaling an “endgame” phase for the rate-cut cycle
Reuters’ global central bank roundup pointed to a world where policymakers are increasingly emphasizing optionality and caution: the ECB held at 2% while avoiding firm guidance; the Bank of England cut but in a closer-run vote than expected; and the BOJ continued its slow exit from ultra-easy policy. [36]
What to watch next week
Here are the events most likely to shape the next leg in global stock markets as 2025 turns into 2026:
- U.S. macro data: third-quarter GDP, durable goods, consumer confidence—key because investors want clarity after shutdown-related distortions. [37]
- Japan: BOJ October meeting minutes (Dec. 24), Ueda speaking to Keidanren (Dec. 25), and Tokyo CPI (Dec. 26). [38]
- Europe: follow-through from the ECB’s “maximum optionality” messaging as policymakers resist locking out future moves in either direction. [39]
- Geopolitics and energy: Venezuela-related developments and any movement on Russia/Ukraine discussions, both with potential spillovers into oil and risk sentiment. [40]
As of 1:15 p.m. ET, the bottom line for investors was simple: global equities are trying to finish 2025 on a high note, but the rally’s durability will depend on whether next week’s data validates the “soft landing + gradual easing” story—or forces markets to reprice once again. [41]
References
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