MARKET WRAPS
Stocks:
European indexes were mixed and tech stocks fell, as results from Oracle revived concerns about an AI bubble.
The results erased optimism Wednesday, driven by the Federal Reserve's decision to cut interest rates and signal further cuts, IG said, contributing to a broader risk-off move.
ADSS said that heading into the year-end, AI-linked valuations continue to be a major concern for investors and shape broader market sentiment.
It added that markets will now quickly turn to next week's delayed payrolls release--pushed back due to the U.S. government shutdown--which stands as the next major catalyst.
Fed Chair Jerome Powell pointed on Wednesday to a job-market risk that economists have been worried about for months: Official U.S. statistics could be drastically overstating recent hiring.
The country could be losing 20,000 jobs a month, Powell said, a concern that was part of the decision to cut interest rates, and investor attention will be fixed on the fresh jobs numbers for October and November, as well as possible revisions for previous months due next week.
Economic Insight
Mexico's tariffs flag the risk posed by protectionist measures against Chinese exports from countries other than the U.S., Maybank said.
What helped save China's economy from a sharper slowdown in 2025--namely, the diversion of exports to non-U.S. markets--could come back to bite it in 2026.
China's trade surplus with Mexico more than doubled in 2019-24.
It's not just Mexico, over 2019-24, the EU's trade deficit with China rose 63%.
Rebalancing away from exports and toward domestic demand matters not just for China's economy, but increasingly, to its ties with trading partners , it added.
Stocks to Watch
Delivery Hero is likely to face increasing competitive pressure in the Middle East and North Africa region, Citi said as it downgraded its stock recommendation to sell from neutral.
Rheinmetall has managed to quadruple sales in six years and is in a league of its own, Bernstein said as it lifted its rating on the stock to outperform from market-perform, and raised its price target.
The shares are currently pricing in an overly pessimistic scenario, and the stock should outperform when the European defense sector recovers from its recent falls.
U.S. Markets:
U.S. stocks were set to open in the red on Thursday and bitcoin fell.
The tech-heavy Nasdaq was leading losses with AI stocks falling in sympathy with Oracle.
Oracle shares fell as much as 11% in after-hours trading on Wednesday.
"As with most of the big tech names, capex continues to ramp up and exceed the Street's expectations, weighing heavily," Direxion said.
Forex:
The euro was near a two-month high against the dollar, and ING said it could rise to $1.1800 by year-end, adding that this would require weak U.S. jobs data next week or positive ECB growth forecast revisions.
The dollar remained under pressure after hitting a seven-week low after the Fed's rate-cut decision.
Commerzbank said Powell's statement seemed to suggest the risks of higher inflation were less dramatic than those of a weaker labor market.
"This could pave the way for further interest-rate cuts in the coming year, following a pause in January."
Bonds:
Eurozone government bonds yields declined , following the direction of Treasurys, but the drops were less pronounced.
The falls have been largely driven by the market's takeaway from Powell's comments after the Fed's rate cut, with more focus on labor market weakness than on inflation.
"Powell stressed greater importance on the weakness in the labor market while inflation was 'somewhat' elevated," Jefferies said.
BNP Paribas took profit on a short 10-year Treasury trade after the rate cut.
"We see the Federal Reserve's imbalanced reaction function weighing on the rates markets ahead of the next payrolls data."
Danske Bank is still forecasting two final Fed rate cuts in March and June next year, adding that Powell's avoidance of strong forward guidance led to a decline in Treasury yields during his press conference.
Madison Investments expects a slower pace of additional Fed easing from here, anticipating that the Fed will be on hold until the second quarter of 2026.
JGBs extended price gains in afternoon Tokyo trade, following solid demand for 20-year sovereign securities.
Energy:
Oil prices fell as investors monitored progress to end the war in Ukraine and rising tensions between the U.S. and Venezuela.
After settling higher in the previous session when the U.S. seized an oil tanker off the coast of Venezuela.
The incident adds to geopolitical risks, even as fundamentals remain bearish, with global supply from OPEC+ and the Americas expected to outpace demand growth.
Meanwhile, Trump dialed up pressure on Ukraine to quickly accept a U.S.-drafted peace plan--a development that could lead to the lifting of sanctions on Russia and bring additional barrels back onto the market.
Metals:
Gold rose and silver futures climbed 2.2% to $62.39 an ounce after hitting a record high of $63.25 earlier.
"Both gold and silver are heading for their strongest annual performance since 1979, with gold up more than 60% and silver more than doubling, driven by heavy central-bank demand, rising ETF inflows, and investor shifts away from sovereign bonds and currencies," MUFG said.
Traders now await next week's delayed U.S. data, with NFP jobs and CPI inflation figures in focus.
Copper
Copper rose after the rate decision and traders remain concerned over signs of tightness in the physical market.
Meanwhile, the market was shrugging off China's weaker economic data and focusing instead on copper's long-term demand from renewables, EVs and data centers, ANZ said.
These rosy demand prospects clash with growing supply concerns amid a series of mine disruptions worldwide, keeping prices elevated.
EMEA HEADLINES
ECB Unlikely to Follow Fed For Now, But Currency Moves May Yet Prove Decisive
Europe's leading central bank will not necessarily follow the Federal Reserve in lowering its key interest rate, but policymakers may face growing pressure to do so if the pace of easing significantly weakens the U.S. dollar.
The Fed Wednesday lowered its key rate for the third time since the European Central bank last cut in June. Its key rate now sits in a range between 3.5% and 3.75%, having been 4.25% to 4.5% when the ECB lowered its equivalent to 2%. However, Chair Jerome Powell gave little indication that further cuts were imminent.
Naturgy Shares Drop After BlackRock Offloads Part of Stake
Shares in Spanish energy group Naturgy sank after major investor BlackRock sold off part of its stake in the company.
BlackRock's Global Infrastructure Partners sold a 1.7 billion-euro ($1.99 billion) stake in Naturgy, according to a regulatory filing. The fund is one of the largest shareholders in Naturgy, according to FactSet data.
Swiss National Bank Holds Key Interest Rate at 0%
Switzerland's central bank left its key interest rate unchanged for a second straight meeting, but signaled it is open to a further cut that would take borrowing costs below zero if a sustained period of falling prices threatens.
The Swiss National Bank held its policy rate as expected at 0% on Thursday, having stood pat at its last meeting in September after six consecutive quarterly cuts. However, it said further cuts remain an option.
GLOBAL NEWS
IEA Forecasts Smaller Oil Surplus as OPEC+ Output Declines
The oil market's projected surplus has narrowed due to lower OPEC+ production, but a large supply overhang continues to cloud the outlook, the International Energy Agency said in its closely watched monthly report.
The Paris-based organization, which represents major oil-consuming nations, lowered its forecast for global oil supply growth to 3 million barrels a day this year and 2.4 million the next, from earlier projections of 3.1 million and 2.5 million barrels a day.
U.S. Flies Bombers in High-Profile Show of Support for Japan
TOKYO-Two U.S. B-52 bombers flew in formation with Japanese fighters over the Sea of Japan, a conspicuous display of U.S. support for Tokyo as it battles Chinese anger over remarks Prime Minister Sanae Takaichi made about Taiwan.
The exercise came a day after Russian and Chinese warplanes conducted their own joint patrol in the seas around Japan's southern islands, which Tokyo said were intended as a show of force directed at a U.S. security ally in Asia.
Crumbling Peace Deals Show Limits of Trump's Approach to Ending Wars
A new round of border clashes between Thailand and Cambodia and resurgent fighting in eastern Congo, two conflicts President Trump claimed to have resolved, have shown the constraints of his high-speed pursuit of peace.
Since the start of his second term, Trump has leveraged the economic and military might of the U.S. to get warring parties in several deep-rooted international conflicts to the negotiating table and extract hasty peace deals.
U.S. Blueprint to Rewire Economies of Russia, Ukraine Sets Off Clash With Europe
The Trump administration in recent weeks has handed its European counterparts a series of documents, each a single page, laying out its vision for the reconstruction of Ukraine and the return of Russia to the global economy.
The proposals have sparked an intense battle at the negotiating table between America and its traditional allies in Europe. The outcome stands to profoundly alter the economic map of the continent.
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12-11-25 0533ET
