European Midday Briefing: Shares Fall on Final Day of the Year
AdamSummary:
European shares slipped in thin year-end trading as Fed caution weighed on sentiment, while gold capped a record year, oil eased on oversupply fears, and U.S. stocks held near highs.
MARKET WRAPS
Stocks:
European shares fell on Wednesday with most markets either open for a half-day of trading or closed as 2025 wraps up.
Investors are still digesting the Federal Reserve's December meeting minutes released on Tuesday , which showed that some officials were reluctant to support more interest-rate cuts in the near future.
Rates are still expected to fall in 2026, especially as Trump is set to appoint a replacement to Fed Chair Jerome Powell who favors reducing rates. U.S. money markets price a 17% chance of a January rate cut and a 53% chance of a March reduction, but still price two 25 basis-point cuts over 2026, LSEG data shows.
Elsewhere, China's economy was on track to reach its 2025 growth target as its PMIs beat expectations in the final month of 2025, Citi said.
Metals prices dropped early Wednesday, but gold remained poised to record its largest net gain in a single year, rising by around 65% over the past 12 months. Silver fell nearly 8% after reaching its largest single-day gain on record Tuesday.
U.S. stock and bond markets will wrap up the year today, then close on Thursday in observance of New Year's Day.
U.S. Markets:
Stock futures were down but remained close to end the year at record highs. The three main gauges have edged lower for the last three sessions, and look poised to do so again on Wednesday.
Forex:
The dollar rose to its highest in over a week against a basket of currencies. The greenback was set to record its worst annual performance since 2017 and faces further weakness next year, MUFG Bank said.
Sterling fell to a nine-day low versus a stronger dollar but traded steady against the euro in the absence of U.K.-specific catalysts.
Bonds:
Treasurys edged lower, even after Fed minutes showed some policymakers were cautious about further near-term interest-rate cuts.
Energy:
Oil nudged down as traders end a year in which oversupply fears pushed the commodity lower, despite ongoing geopolitical tensions.
Metals:
Gold fell as the precious metal limped over the line of a record-breaking year.
The precious metal has gained around 65% this year. The rally "not only reflected deep macroeconomic concerns but also pushed gold into a high valuation zone , making the market more sensitive to short-term corrective factors," said XS.
Silver
Silver futures fell after exchange operator CME Group increased margin requirements for the second time in a week.
Iron
Iron ore fell. Seasonal shipments at the year-end have resulted in accumulating port inventories, putting downside pressure on prices , Nanhua Futures said.
EMEA HEADLINES
Ukraine Now Has Europe's Biggest Military. What Happens to It When the War Ends?
When the war with Russia eventually ends, Ukraine will be left with a military larger and with more recent experience than any of its European backers'.
Whether it can outlast Russia's long-term designs in the event of any peace deal is a question for the entire continent, which now sees Ukraine as a bulwark against Moscow's ambitions.
Russia Doubles Down on Allegations Ukraine Targeted Putin Residence
It is known as Dolgiye Borody, or Long Beards, and it is one of Russian President Vladimir Putin's favored official residences, built on a lake shore in the country's northwest. In the past, it was used by Soviet leaders Joseph Stalin and Nikita Khrushchev.
The Kremlin has alleged that Ukrainian drones targeted the well-protected site in Novgorod and is using its claim to justify a hardening of its stance in peace negotiations. The Kremlin on Tuesday declined to provide any evidence to back up its assertions.
Oil Tanker Pursued by the U.S. Appears to Claim Russian Protection
The pursuit of the Bella 1, an aging oil tanker that has been evading the U.S. Coast Guard for nearly two weeks, was complicated after a Russian flag was sloppily painted on the side of the vessel in an apparent attempt to claim protection from Moscow, according to senior U.S. officials.
Coast Guard vessels have been tracking the very large crude carrier through the Atlantic Ocean, staying about a half-mile behind, according to the officials. They said that they are in a position to seize the tanker should the White House give the green light to proceed, more than 10 days into a pursuit that began around Venezuelan waters.
Gulf Rivals Saudi Arabia, U.A.E. Come to Blows in Yemen
Tensions between U.S. allies Saudi Arabia and the United Arab Emirates flared Tuesday, when the kingdom warned its Gulf rival against endangering its security and said it would take all necessary measures to counter the threat.
The fast-escalating dispute was spurred by fighting in the two-thirds of Yemen controlled by forces opposed to the Iran-backed Houthi militia, which rules over the rest. U.A.E.-backed forces there have outmaneuvered rivals backed by Saudi Arabia to take control of energy-rich territory along the kingdom's border.
GLOBAL NEWS
U.S. Stocks Defy 'Sell America' Warnings and Are Ending 2025 Near Record Highs
The U.S. stock market is closing out 2025 near a record high, with the S&P 500's 17% gain vaulting the index toward its seventh-best three-year run on record.
The yearslong rally appeared to end abruptly in the spring with the rollout of President Trump's "Liberation Day" tariffs and the emergence of "Sell America" trades that bet on the U.S.'s retreat from the world stage, only to roar back to life within weeks.
Hong Kong Stocks Log Best Year Since 2017 as AI Boom Fuels Tech Rally
Hong Kong stocks ended 2025 with a second consecutive annual gain, posting their best performance since 2017 in percentage terms, thanks to a tech rally fueled by artificial intelligence.
The city's benchmark Hang Seng Index finished the year up 28%, making it one of Asia's best performing markets.
China's Factory Activity Gauges Signal Return to Growth
China's factory activity signaled a return to growth in December, according to both official and private surveys, an improvement likely to help Beijing achieve its growth target for the year.
The official manufacturing purchasing managers index rose to 50.1 for December from 49.2 in November. The reading topped the 49.4 forecast from economists surveyed by The Wall Street Journal and ended an eight-month run below the 50 mark that separates expansion and contraction.
China's 'Invisible' Stimulus Is Here. Why It's Easy to Miss.
For much of the past year, global investors have been waiting for China to do something dramatic: a massive fiscal package, a sweeping consumer giveaway, a decisive interest-rate cut signaling Beijing is serious about reviving growth.
None has arrived. And that absence has helped cement a prevailing narrative: China isn't stimulating, and without a big push, its economy will continue to drift.
Oil Tanker Pursued by the U.S. Appears to Claim Russian Protection
The pursuit of the Bella 1, an aging oil tanker that has been evading the U.S. Coast Guard for nearly two weeks, was complicated after a Russian flag was sloppily painted on the side of the vessel in an apparent attempt to claim protection from Moscow, according to senior U.S. officials.
Coast Guard vessels have been tracking the very large crude carrier through the Atlantic Ocean, staying about a half-mile behind, according to the officials. They said that they are in a position to seize the tanker should the White House give the green light to proceed, more than 10 days into a pursuit that began around Venezuelan waters.
Russia Doubles Down on Allegations Ukraine Targeted Putin Residence
It is known as Dolgiye Borody, or Long Beards, and it is one of Russian President Vladimir Putin's favored official residences, built on a lake shore in the country's northwest. In the past, it was used by Soviet leaders Joseph Stalin and Nikita Khrushchev.
The Kremlin has alleged that Ukrainian drones targeted the well-protected site in Novgorod and is using its claim to justify a hardening of its stance in peace negotiations. The Kremlin on Tuesday declined to provide any evidence to back up its assertions.
Trump Administration Freezes Child Care Funding to Minnesota Amid Fraud Probes
The Trump administration said Tuesday it is freezing federal child-care funding to Minnesota following allegations of yearslong fraud schemes involving the state's social-services system.
"We have turned off the money spigot," Jim O'Neill, the deputy secretary at the Department of Health and Human Services, posted in a statement on X with an accompanying video.
Gulf Rivals Saudi Arabia, U.A.E. Come to Blows in Yemen
Tensions between U.S. allies Saudi Arabia and the United Arab Emirates flared Tuesday, when the kingdom warned its Gulf rival against endangering its security and said it would take all necessary measures to counter the threat.
The fast-escalating dispute was spurred by fighting in the two-thirds of Yemen controlled by forces opposed to the Iran-backed Houthi militia, which rules over the rest. U.A.E.-backed forces there have outmaneuvered rivals backed by Saudi Arabia to take control of energy-rich territory along the kingdom's border.
Source: morningstar
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