Stay up to date with the latest market trends, economic shifts and key financial developments across the UK, US and Asia – giving you clear insights to support client conversations.
This week's headlines
- Fed delivers expected rate cut - the US Federal Reserve (Fed) cut interest rates by 0.25%, taking it to 3.50–3.75% - the lowest in three years. Three members broke ranks as they wrestled with a slowing labour market and stubborn inflation. It’s only the ninth time since 1990 that the committee has seen this level of dissent. The backdrop isn’t helping. The longest government shutdown on record means the Fed is operating without fresh employment data until next week. New projections point to just one quarter-point cut in 2026.
- UK growth continues to stumble - UK GDP dipped 0.1% in October, with services and construction both weaker. The economy hasn’t grown since June, and the latest jobs data shows employers slowing hiring ahead of November’s Budget. Grocery inflation remains stuck at 4.7%, keeping pressure on households as the festive season approaches. Consumer spending is reflecting that strain: Barclays reported the sharpest monthly fall in card transactions since early 2021, when Covid restrictions were still in force.
- China’s trade surplus breaks records - China posted a trade surplus above $1 trillion for 2025. Renewed tariff announcements from President Trump have fuelled a surge in exports to markets outside the US. The scale of the surplus is testing nerves among major trading partners. With China expected to contribute around 40% of global growth next year, governments are weighing additional trade barriers to protect domestic industries and encourage Beijing to change course.
- Oracle offers an AI reality check - Oracle missed revenue and profit expectations for the quarter and signalled that capital expenditure would come in $15 billion above the $35 billion previously estimated. The update rattled investors. There's a worry that AI-related spending isn’t converting into earnings as quickly as hoped. Oracle shares tumbled 13%, dragging other AI names with them.
What this means for financial advisers and clients
Although the US Fed is something of an outlier, the fastest rate-cutting cycle outside a recession in decades could be nearing its end.
Of the G10 central banks, only those in the US, UK, and Norway are expected to cut rates next year. Australian and ECB policymakers have this week indicated, in time, there could be hikes.
Stubbornly above-target inflation remains the common thread in many developed economies, and central banks are walking a tightrope making sure rapid easing without a recession doesn’t over-stimulate economic activity.
The global interest rate landscape is becoming less kind. Uncertainty regarding future interest rates could lead to higher volatility in risk markets as we go into 2026.
Chart of the week - can historically high global stock valuations be maintained?
Source: Reuters, 10th December 2025
Why this matters
Can the AI-fuelled market momentum continue in 2026? The technology boom has cushioned stock markets from some spiky macroeconomic events this year. Global stocks are heading for a 20% gain in 2025 – close to their best year since before the COVID-19 pandemic.
Market valuations are already expensive just about everywhere relative to their 15-year averages. Global growth is forecast to top 3% next year and earnings growth estimates in the US, Europe, and Asia are a punchy 12-15%. But that rosy picture may already be priced into this year’s gains.
That leaves the AI story and the US megacaps carrying a heavy load. US stocks account for 65% of the MSCI’s all-country index, and Information Technology represents over 27% of the benchmark. The reaction to Oracle’s results this week underlines the importance of the AI theme.
The Markets
US stocks boosted by Fed move
Traders were caught in the Fed’s headlights in the run-up to Wednesday’s interest rate decision, but the S&P 500 closed inches from a new record after the announcement, cheered by Fed Chair Jerome Powell ruling out a rate hike. Both the S&P 500 and Dow Jones reached new heights on Thursday as Oracle’s disappointing results prompted a switch from high-flying tech stocks into a broader group of names.
UK waits on Bank of England decision
Weaker-than-expected GDP figures for October appear to make an interest rate cut nailed on when the Bank of England meets next week. London stocks rose on the news in early trade on Friday, after a late boost from industrial sectors on Thursday saw the FTSE 100 hit its highest close in a week.
Asian outflows
Asian stocks followed Wall Street’s lead to end the week positively, but concerns about stretched valuations for technology stocks prompted the largest monthly foreign outflow in nearly six years in November. However, sentiment has improved slightly in December.
Precious metals shine
Gold prices added to their gains after the Fed’s rate cut, with their 60% surge this year set to be the biggest since 1979. Silver also hit an all-time peak, pushing prices up 113% this year on rising industrial demand and its designation as a critical mineral by the US. The central bank body, the Bank of International Settlements, flagged that the combination of gold and share prices soaring in unison is something not seen for at least 50 years, raising questions about a potential ‘double bubble’ and whether the metal’s traditional role as a safe-haven asset has changed.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | 0.38% | 22.85% |
| FTSE 250 | -0.89% | 9.82% |
| S&P 500 | -0.24% | 10.31% |
| NASDAQ | -0.76% | 14.60% |
| FTSE Developed Europe Ex-UK | 0.79% | 25.10% |
| FTSE Emerging Markets | -1.36% | 15.87% |
| FTSE Japan | -0.73% | 16.19% |
| Brent Crude | -3.68% | -23.42% |
| Gold Spot | 1.23% | 53.16% |
| UK 10yr Gilt yield | No change | -9bps |
| US 10yr Treasury yield | No change | -43bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 11th December 2025.
Don't miss out on 2026 insights
Sign up now for our CPD-accredited Let's Talk Markets webinar series and stay ahead with the latest market updates.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
