United States
US markets marked time overnight as investors digested the minutes from the Federal Reserve’s December meeting, which largely reinforced expectations for interest rate cuts next year without offering fresh catalysts. The S&P 500 was little changed, the Nasdaq 100 finished flat, and the Dow Jones Industrial Average edged 0.1% lower in subdued trading. With the year-end period dampening volumes and news flow, price action remained narrow across most asset classes.
Treasury yields pushed modestly higher, with the US 10-year yield hovering around 4.13%, reflecting a market still weighing the pace and scale of future easing. The minutes showed most Fed officials remain open to lowering rates further if inflation continues to cool, though they also highlighted divisions within the committee and how finely balanced the last decision had been. Traders have since pared expectations to two rate cuts next year, down from three earlier in December.
The US dollar firmed slightly, with the Bloomberg Dollar Spot Index up 0.1%. Housing data added a small point of interest, showing home price growth ticking higher in October. In corporate news, Tesla published its own sales estimates, flagging the potential for weaker-than-expected vehicle deliveries, while Warner Bros. Discovery signalled it is again set to reject a revised takeover approach from Paramount Skydance. Elsewhere, Nvidia was reported to be in advanced talks to acquire Israel-based AI21 Labs, underscoring ongoing deal activity in the artificial intelligence space.
Europe
European equities finished the year on a stronger note, with markets buoyed by a rally in commodity prices that lifted mining stocks. The Stoxx Europe 600 Index rose 0.6%, marking its sixth consecutive monthly gain and setting up its strongest annual performance since 2021. Germany’s DAX added 0.6% in a shortened final session, while Italy’s FTSE MIB outperformed with a 1.1% gain, capping off a standout year with total returns of more than 30%.
The Euro Stoxx 50 climbed 0.8% to close at a fresh record, supported by strength in banks, technology and miners. Copper prices extended their longest winning streak since 2017, helping drive the mining sector 1.7% higher. Fresnillo was among the standout performers, surging after a broker upgrade reflected higher silver and gold prices.
Bond markets were softer, with Germany’s 10-year yield up three basis points to 2.85% and UK gilts also edging higher. Political and geopolitical developments remained in focus, with defence stocks rising amid renewed attention on the conflict in Ukraine. Overall, European markets continued to display resilience heading into year-end, supported by optimism around fiscal spending and a steady global growth backdrop.
Australia
Australian shares were volatile in the final sessions of the year, with the S&P/ASX 200 slipping 0.1% on Tuesday to close at 8709.5. The market has now fallen for three consecutive sessions, though it remains on track for a third straight annual gain. Early optimism faded as weakness in mining stocks offset gains in energy and financials, with thin holiday liquidity amplifying intraday swings.
Energy stocks led the market higher, supported by a rebound in oil prices earlier in the week. Santos, Woodside and Beach Energy all posted solid gains, while the major banks also finished firmer. Commonwealth Bank, NAB and Westpac all closed modestly higher, providing some stability to the index.
Materials were the main drag as precious metals prices swung sharply. Silver continued its wild ride after retreating from record highs, while gold also remained volatile. Despite spot prices recovering by the close, local gold and silver miners largely failed to follow, with several heavyweights posting declines. Elsewhere, property stocks weighed on the index amid a busy ex-dividend day.
Looking ahead, ASX 200 futures pointed to a flat start, up four points, with the local market set to close early before the New Year break. The Australian dollar was little changed near US66.96¢.
Commodities and currencies
Commodities were a key focus overnight as precious metals rebounded sharply following recent sell-offs. Spot gold rose around 0.7% to US4354 an ounce, while silver surged more than 8% at one point in New York trade as buyers stepped back in after profit taking earlier in the week. Copper extended its rally, heading for its longest winning streak since 2017 amid concerns about supply chain stress, while nickel climbed to its highest level since March.
Oil prices were steadier, with Brent crude near US61.92 a barrel and WTI slightly lower, as traders balanced geopolitical risks against concerns of a potential global supply glut. Iron ore eased marginally to around US105.70 a tonne.
In currency markets, the US dollar edged higher, while the euro and pound softened. The Japanese yen weakened slightly to around 156 per US dollar. A notable development in Asia saw China’s onshore yuan strengthen past the key 7-per-dollar level for the first time since 2023. Bitcoin rose around 1% to near US88,000, maintaining its recent upward momentum into year-end.
Economic Calendar
No major data
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
