North America
Last week, U.S. stock markets finished mixed, reflecting a tug-of-war between early-week weakness and late-week optimism. Concerns over tech valuations, AI-related spending, and mixed jobs data initially pressured equities, while a cooler-than-expected inflation report and strong earnings from Micron Technology helped lift markets later in the week. Small-cap stocks and the Dow underperformed, while the Nasdaq posted modest gains, highlighting continued investor focus on growth-oriented sectors. Economic data sent mixed signals: job growth rebounded in November, but the unemployment rate rose to a four-year high, suggesting the labour market may be softening. Inflation slowed more than expected, with core prices rising at the slowest pace since early 2021, which boosted investor confidence. Meanwhile, business activity growth moderated to a six-month low, indicating that the recent economic momentum is losing strength, and firms are exercising caution in hiring and investment decisions. In fixed income markets, U.S. Treasuries generated positive returns as yields fell across most maturities, outperforming municipal and high-yield bonds, while trading activity remained relatively quiet, with investors largely reacting to key economic data and issuer-specific news rather than broad market trends. Overall, the week underscored cautious optimism as investors weighed signs of slowing growth against easing inflation pressures..

Europe & UK
Last week, European stock markets rose broadly, supported by signs of steady economic growth and expectations of looser monetary policy. The pan-European STOXX Europe 600 Index gained 1.60% in local currency terms, while major national indexes also advanced: Italy’s FTSE MIB climbed 2.86%, the UK’s FTSE 100 rose 2.57%, France’s CAC 40 added 1.03%, and Germany’s DAX increased 0.42%. In central bank developments, the European Central Bank (ECB) kept its deposit rate unchanged at 2.0% for the fourth consecutive meeting, citing a solid policy stance while remaining data-dependent, and raised its GDP growth estimates for 2025–2028. The Bank of England (BoE) cut its key policy rate by 0.25% to 3.75%, following slower-than-expected inflation and a weakening labor market, with unemployment rising to 5.1% and wage growth slowing. Meanwhile, Sweden’s Riksbank held its rate at 1.75%, signaling little likelihood of near-term changes, and Norway’s Norges Bank kept borrowing costs at 4.0%, maintaining a restrictive stance to control inflation. Overall, markets reacted positively to easing inflation pressures and central bank guidance, while economic growth remained steady across the region.

Japan
Last week, Japan’s stock markets declined, with the Nikkei 225 falling 2.61% and the broader TOPIX down 1.17%, as technology stocks mirrored U.S. losses amid concerns over high valuations and heavy AI-related spending. On the monetary policy front, the Bank of Japan (BoJ) delivered a widely expected 25-basis-point rate hike, raising its benchmark interest rate from 0.50% to 0.75%, the highest level since 1995, citing a more favourable economic outlook. Investors closely watched BoJ Governor Kazuo Ueda’s comments, who emphasized that future rate adjustments would depend on economic conditions, inflation, and wage growth, offering limited guidance on the timing of the next hike. Following the meeting, the 10-year Japanese government bond yield rose to 2.01% and the yen weakened to around JPY 157.3 against the U.S. dollar. Supporting the central bank’s cautious approach, Japan’s core CPI held steady at 3.0% year over year in November, while exports grew 6.1%, exceeding expectations, boosted by U.S. demand and a weaker yen. Overall, markets were influenced by the BoJ’s policy actions, inflation data, and global tech sector pressures.