World Stock Markets Poised for December 1, 2025 Open as Fed Ends QT and Rate‑Cut Bets Surge

As the final month of 2025 begins, global investors head into Monday’s open with equity indices near record levels, central banks pivoting toward easier policy, commodities sending mixed signals, and fresh data out of China and Europe challenging the bullish narrative.

Monday, December 1, 2025, won’t just mark the start of the last trading month of the year. It’s also the day the U.S. Federal Reserve formally ends its quantitative tightening (QT) program, a shift that could add liquidity to markets already buoyed by strong November gains and rising expectations of a December rate cut. ^[1]

Holiday Rally Sets the Stage for Monday’s Open

Global stocks ended last week on a firm footing. On Friday, the S&P 500 closed around 6,849, with the Dow up 0.61% and the Nasdaq gaining 0.65% in a shortened post‑Thanksgiving session. ^[2] MSCI’s broad gauge of world stocks also pushed higher, helped by U.S. and European strength. ^[3]

In Europe, the pan‑European STOXX 600 finished November with a 0.23% rise on Friday and locked in its longest monthly winning streak since March 2024, supported by optimism that the Fed will cut rates and that the global tightening cycle is nearing an end. ^[4] Banking shares have been standout gainers over the month, while basic resources stocks rallied on record copper prices. ^[5]

Asia’s picture has been more complicated. Regional indexes recovered into month‑end, but the performance gap between AI “winners” and “losers” has widened. Taiwanese and Korean chipmakers linked to the global AI boom have surged, while Indian and Southeast Asian names exposed to offshorable service jobs—like IT outsourcing and call centers—have lagged sharply. ^[6]

Even as indices climb, flows signal growing caution. U.S. equity funds just saw their first weekly outflow in six weeks, with about $4.56 billion pulled as investors took profits after a volatile month and questioned lofty tech valuations. ^[7] Global equity funds similarly snapped a nine‑week buying streak, suggesting that some investors prefer to de‑risk into strength. ^[8]

Fed in Focus: QT Ends, December Cut Odds Near 80–85%

The macro story dominating Monday’s open is the Fed.

At its October 29 meeting, the Federal Reserve cut the federal funds rate by 25 basis points to 3.75%–4.00% and announced it would halt balance‑sheet runoff on December 1. The Fed will stop allowing up to $5 billion in Treasuries to roll off monthly and instead reinvest maturing amounts, while letting mortgage‑backed securities continue to passively run off with proceeds funneled into Treasuries. ^[9]

Analysts estimate QT has already reduced Fed securities holdings by roughly $2.2 trillion from their 2022 peak, bringing the balance sheet down to around $6.6 trillion. ^[10] Short‑term funding markets have shown rising signs of stress, with heavier usage of the Fed’s Standing Repo Facility, which helped push policymakers to call time on QT. ^[11]

Markets are now firmly betting the Fed will follow up with another quarter‑point rate cut at the December 9–10 FOMC meeting. Fed funds futures put the probability north of 80%, up from roughly a coin flip just a week earlier. ^[12] JP Morgan and other major banks have shifted their forecasts to assume a December move, even as Fed Chair Jerome Powell stresses that another cut is “not a foregone conclusion.” ^[13]

For equity markets, the combination of ending QT and likely slowing rate hikes effectively amounts to a transition toward looser financial conditions—one key reason stocks have rallied into the year‑end window that traditionally favors risk assets.

Asia: China’s Weak Factory Data vs. AI‑Driven Bright Spots

Asian traders will be the first to react when markets open Monday, and they will have to reconcile two conflicting forces: renewed policy optimism and fresh evidence of China’s industrial slowdown.

New official data released Sunday showed China’s manufacturing PMI at 49.2 in November, its eighth straight month in contraction territory, albeit slightly above October’s 49.0 and in line with forecasts. ^[14] The persistent sub‑50 reading underscores weak domestic demand and keeps pressure on Beijing to roll out more targeted stimulus for industry and households.

That weak manufacturing backdrop contrasts sharply with pockets of exuberance tied to AI and semiconductors across North Asia. Companies in Taiwan and South Korea involved in high‑end chips and memory have delivered strong returns this year, as global demand for AI infrastructure remains robust. ^[15]

By contrast, “AI loser” markets, especially India and the Philippines, have struggled. Indian IT services giants such as TCS and Infosys, alongside Philippine BPO and contact‑center plays, are viewed as structurally vulnerable to automation, discouraging foreign equity inflows. Net foreign outflows from Philippine stocks have already reached about $840 million this year, pushing its main equity index down more than 10%. ^[16]

Heading into Monday, Asia’s stock markets will likely trade off three main themes:

China’s slowdown: Another month of sub‑50 PMI reinforces concerns about external demand and domestic confidence. ^[17]
AI rotation: Investors may continue rotating from U.S. mega‑cap AI leaders into cheaper Asian beneficiaries—or into oversold “loser” markets if they see deep value. ^[18]
Dollar softness: A weaker dollar, as markets price in more Fed easing, tends to support Asian currencies and risk assets, though it also tightens conditions for export‑driven economies competing with U.S. producers. ^[19]

Europe: Five Months of Gains, but Data Risk Ahead

European equities enter December with momentum but not complacency.

The STOXX 600’s rise to about 576 at Friday’s close capped five consecutive months of gains—the longest winning streak since early 2024. German and French benchmarks also added around 0.25–0.3% on the day. ^[20] Bank stocks have climbed more than 4% this month, buoyed by a steeper yield curve and relief that the U.K. budget avoided new bank taxes, while basic resources names gained nearly 6% last week, helped by record copper prices. ^[21]

At the same time, hopes for progress toward a Russia‑Ukraine ceasefire have pressured European aerospace and defense shares, which are down more than 8% in November. ^[22]

This week’s European macro calendar is crucial for Monday sentiment:

Tuesday, Dec 2 – Eurozone CPI: Economists expect headline inflation around 2.1% and core around 2.4%, very close to the ECB’s target, reinforcing the case to leave rates unchanged in December. ^[23]
Dutch CPI (same day): A bellwether for broader Eurozone price trends. ^[24]

With euro‑area inflation now hovering near 2%, a downside surprise could increase speculation about ECB cuts in early 2026, while an upside surprise might revive concerns that the bank is easing too slowly. ^[25]

Wall Street: Futures Steady as AI and Earnings Take Center Stage

In U.S. markets, the tone heading into Monday’s open is cautiously optimistic.

After the late‑November rebound, the S&P 500 is up roughly 16% for 2025 and sits about 1% below its late‑October all‑time high, according to Reuters. ^[26] Historically, December is the index’s third‑best month, with an average gain of 1.43% since 1950, strengthening the case for a seasonal “Santa Claus rally” if macro conditions cooperate. ^[27]

Yet investors are watching for cracks in the AI‑led leadership that has driven much of this year’s returns. Big swings in Nvidia and Alphabet last week reflected changing expectations around who will profit most from the next wave of AI spending, including reports that Meta is exploring buying Google’s chips for some workloads. ^[28]

Key U.S. catalysts in the days ahead that will be on traders’ radar when cash markets open Monday:

Mon, Dec 1 – U.S. Manufacturing PMI (Nov): A read on industrial momentum amid cooling global demand and lingering supply‑chain shifts. ^[29]
Wed, Dec 3 – ADP Employment & Services PMI: Early signals on labor‑market cooling and the dominant services sector. ^[30]
Fri, Dec 5 – Core PCE: The Fed’s preferred inflation gauge, delayed by the recent 43‑day U.S. government shutdown and rescheduled to this Friday. ^[31]

On the corporate side, earnings from Salesforce, Kroger and Dollar Tree this week will offer fresh color on enterprise IT spending and U.S. consumer resilience after Black Friday and Cyber Monday sales. ^[32]

The bottom line: U.S. equity futures heading into Monday are likely to reflect the tension between supportive policy signals (end of QT, probable December rate cut) and lingering worries about AI valuations, delayed macro data and stretched indices.

Commodities, Currencies and Crypto: Mixed Signals Beneath the Surface

Gold and Silver: Classic Hedges Back in Vogue

Gold is trading around $4,200 an ounce after logging a roughly 5% gain in November, its fourth consecutive monthly advance. ^[33] Silver has surged even more dramatically, touching record levels near $56–57 per ounce. ^[34]

The rally reflects a combination of:

Falling real yields as markets price in more Fed easing and the end of QT. ^[35]
Persistent geopolitical risks from Ukraine to the Middle East. ^[36]
Growing investor appetite for hard‑asset hedges after a year of outsized gains in growth stocks. ^[37]

Gold’s strength is an important backdrop for Monday’s open: it signals that, despite the equity rally, a meaningful cohort of investors is still buying insurance.

Oil and OPEC+: Supply Glut vs. Geopolitics

Crude oil prices remain under pressure. WTI ended last week near $59 a barrel and Brent around $63, leaving both benchmarks on track for a solid decline in 2025 despite repeated geopolitical shocks. ^[38]

OPEC+ ministers meeting over the weekend are widely expected to keep their output policy for the first quarter of 2026 broadly unchanged, moderating earlier talk of more aggressive production hikes as fears of a supply glut grow. ^[39] Oil markets have also been digesting easing Middle East risk premia after a Gaza ceasefire and a view that the Iran‑Israel conflict is unlikely to significantly disrupt supply in the near term. ^[40]

For equities, cheaper oil is a double‑edged sword: it supports margins for transport and consumer‑facing companies but weighs on energy stocks and can be read as a signal of softer global demand.

Crypto: Bitcoin’s Volatile Role as Risk Proxy

Bitcoin has staged a partial recovery from its mid‑November plunge below $90,000, recently trading above $91,000 on renewed Fed easing bets. ^[41] Nevertheless, options markets now assign roughly a 50% chance that Bitcoin ends the year below $90,000 and only about a 30% chance it finishes above $100,000, highlighting how fragile sentiment remains. ^[42]

Strategists increasingly view Bitcoin as a barometer of broader risk appetite. Its sharp drop from October’s peak above $125,000 has already coincided with wobbling AI and tech valuations, and many equity managers say they will be watching crypto price action closely as the Fed’s December meeting approaches. ^[43]

Key Macro Dates This Week (Dec 1–5, 2025)

According to Yelza’s macro calendar and other economic diaries, the following events will be in sharp focus as trading begins Monday: ^[44]

Monday, Dec 1 – U.S. Manufacturing PMI (Nov)
Tuesday, Dec 2 – Eurozone CPI & Dutch CPI (Nov)
Wednesday, Dec 3 – U.S. ADP Employment & Services PMI
Friday, Dec 5 – U.S. Core PCE Price Index (rescheduled)

Each release has the potential to shift rate‑cut probabilities, drive bond yields and reprice equity sectors that are sensitive to growth, inflation and policy.

What It All Means Before Monday’s Opening Bell

Heading into the December 1 open, the world stock market is balanced delicately between optimism and fatigue:

Supportive forces:
- The Fed’s end to QT and high odds of another rate cut. ^[45]
- Five straight months of gains in European stocks and resilient global indices. ^[46]
- Easing inflation in major economies and a weaker dollar. ^[47]
Headwinds and risks:
- China’s ongoing manufacturing contraction and uneven global growth. ^[48]
- Concentrated leadership and valuation concerns around AI and mega‑cap tech. ^[49]
- Signs of risk aversion in fund flows and continued demand for gold. ^[50]

For investors, Monday’s session is likely to be less about a dramatic directional move and more about positioning: reallocating between regions and sectors, deciding whether to lean into the “Santa rally” narrative, and preparing portfolios for a month that could confirm—or upend—the story of 2025 as the year equities survived higher‑for‑longer rates and embraced the next AI and liquidity cycle.