Market navigator:
week of 22 December 2025

What happened last week

• Conditions emerge for accelerated monetary easing: US non-farm payrolls expanded by 64,000 in November after October's 105,000 contraction, reflecting government shutdown disruptions. Unemployment advanced to 4.6%—the highest since September 2021—whilst the consumer price index (CPI) rose 2.7% year-on-year (YoY), below forecasts. This labour market softening and inflation moderation strengthened Federal Reserve (Fed) easing expectations for 2026, though the low inflation reading may prove temporary as shutdown-related data collection disruptions likely suppressed the figure, which could normalise higher once data gathering processes resume.
• BoE's hawkish cut: The Bank of England (BoE) reduced rates 25 basis points (bps) to 3.75% in a 5-4 vote following headline inflation's decline from 3.6% to 3.2%. Despite projecting inflation's return to 2% range in 2026 and acknowledging labour market weakness, the BoE signalled moderating the pace of future cuts. GBP/USD appreciated 0.6%.
• ECB stays put: The European Central Bank (ECB) kept its deposit rate at 2.0% whilst upgrading 2026 forecasts—growth from 1.0% to 1.2%, inflation from 1.7% to 1.9%. While the ECB said their next steps will be based on incoming data, the improved outlook reinforced market expectations for stable rates throughout 2026.
• Japan rates rise to highest in 30 years: The Bank of Japan (BoJ) raised rates 25 bps to 0.75%, the highest in three decades. The 10-year Japanese Government Bond yield exceeded 2%, whilst the yen depreciated 1.4% to 157.75 against the dollar due to unclear future tightening guidance.

Markets in focus

US indices remain range-bound as holiday season commences

The second half of December historically exhibits the strongest positive half-month return probability for the S&P 500 based on data since 1928, yet the anticipated 'Santa Claus rally' has not yet materialised this year. Major US equity indices registered minimal movement last week, hovering near all-time highs. The S&P 500 advanced 0.1%, whilst the Dow Jones declined 0.7% and the Nasdaq 100 gained 0.6%.

Technology sector performance diverged significantly on company-specific developments. Oracle's share price decline, initially triggered by disappointing quarterly earnings, intensified following reports that its long-standing partner Blue Owl Capital would not finance a $10 billion data centre development in Michigan. Despite Oracle's assurances that the project would proceed without Blue Owl's participation, investor concerns regarding the company's financial position persisted. Its share price reached $177.1, representing a 49% decline from September's peak, before stabilising. Conversely, Micron's shares surged over 18% following exceptionally robust memory chip demand, enabling the company to project earnings per share (EPS) of $8.22 to $8.62 for the current quarter—75% above analysts' consensus estimates.

Last week's decisive breach below 25,000 reveals underlying technical weakness within the US Tech 100 index. Consequently, we have revised our trading range projection downward from 25,200–26,253 to 24,600–25,830, as the index encounters resistance at its 20-day moving average (MA). A breakthrough above the upper boundary would signal renewed near-term bullish momentum towards 26,253, whilst failure to maintain support above the lower threshold could prompt testing of the next support zone near 24,000.

Figure 1: US Tech 100 index (daily) price chart

Yen hits one-month low despite monetary tightening

USD/JPY appreciated over 1.4% following the BoJ's decision to raise policy rates to their highest level since 1995, as traders sold the yen in response to a rate increase that had been largely anticipated by markets. Disappointment also stemmed from the central bank's lack of clarity regarding its monetary policy trajectory. Governor Ueda indicated that the current policy rate remains below the neutral range but emphasised that future adjustments would be contingent upon economic conditions, price developments, and policy outcomes. This approach aligns with our expectation that Japan's monetary normalisation will proceed gradually to avoid disrupting the fragile domestic economic recovery.

The yen's sharp depreciation has attracted attention from Finance Minister Satsuki Katayama, reigniting speculation that exchange rates are approaching levels that could trigger government intervention. During the most recent intervention episode in summer 2024, Japanese authorities acted when USD/JPY approached 160.

The 20-day MA on the USD/JPY daily chart failed to provide resistance during Friday's sharp upward movement. The currency pair is currently testing resistance at the recent 20 November high; a sustained break above 158.9 would establish a path towards 161.9 in the absence of government intervention. Alternatively, should current resistance successfully halt further yen weakness, USD/JPY is likely to consolidate within a range, with support levels around 153.7–154.5.

Figure 2: USD/JPY (daily) price chart

Oil prices fluctuate amid geopolitical uncertainty

Crude oil experienced substantial volatility throughout the week, with WTI crude oil front-month futures declining below $55 per barrel—the lowest level since 2021—before recovering more than 2% to approach $57. The market confronts competing dynamics, as geopolitical developments provide temporary price support against a backdrop of overwhelmingly bearish fundamental conditions. Progress towards a Russia-Ukraine peace agreement in Berlin, where US officials indicated that 90% of outstanding issues have been resolved, raised prospects for easing restrictions on Russian oil flows at a time when markets already anticipate oversupply. Simultaneously, President Trump ordered a 'total and complete' blockade of sanctioned Venezuelan oil tankers alongside the seizure of two Venezuelan vessels in recent weeks, whilst the US Treasury sanctioned six shipping companies operating within Venezuela's oil sector.

However, these supply disruption risks may be insufficient to reverse the broader downward trajectory driven by structural oversupply concerns. The International Energy Agency's (IEA) December report projects a substantial market surplus of 3.8 million barrels per day in 2026, representing nearly 4% of global demand, as supply growth continues to outpace consumption. OPEC+'s gradual unwinding of production cuts, combined with robust non-OPEC supply growth projections, have intensified downward pressure on oil prices. WTI crude oil futures have declined 21% year-to-date in 2025, tracking towards their worst annual performance in seven years.

The technical analysis outlook reflects a sustained bearish trend, with US crude oil prices establishing lower highs and lower lows since the conclusion of the Israel-Iran conflict in June. Recent sanctions on Venezuelan oil have provided impetus for prices to recover from the support zone near $55.0–$56.0. However, as long as prices remain below the downward trend line, a trend reversal appears unlikely. Even if prices close above the trend line, they would likely encounter resistance around $61.0–$62.0.

Figure 3: US crude oil (daily) price chart

The week ahead

The forthcoming week presents a relatively light economic calendar as markets wind down for the Christmas holiday period, though several key data releases warrant attention.

The Reserve Bank of Australia (RBA) has adopted a more hawkish stance recently amid persistent inflation pressures. Markets will scrutinise its December meeting minutes for signals regarding potential rate increases in 2026.

US economic data assumes prominence mid-week, with durable goods orders and the initial estimate of third-quarter gross domestic product (GDP) growth both scheduled for Tuesday evening. The GDP growth, currently forecast at 3.2% quarter-on-quarter (QoQ) annualised, represents a deceleration from Q2's 3.8% reading but remains above the average growth rate of the previous four quarters. Any material deviation from consensus could reshape expectations for the Fed's policy trajectory, particularly as policymakers assess the economy's resilience heading into 2026. Durable goods orders will offer additional perspective on business investment appetite and manufacturing sector health.

The BoJ's monetary policy meeting minutes will be released on Wednesday, providing context for the central bank's approach to policy normalisation amid improving economic conditions. Japanese retail sales data on Friday will conclude the week, offering a final assessment of consumer spending momentum as the year draws to a close.

With reduced market liquidity during the holiday period, any significant surprises in these data releases could generate exaggerated price movements across asset classes.

Key macro events this week

Tuesday 23 December 2025

• 8.30am (HK time) – Australia RBA Meeting Minutes
• 9.30pm (HK time) – US Durable Goods Orders MoM (October): previous 0.5%, consensus 0.4%
• 9.30pm (HK time) – US GDP Growth Rate QoQ annualised initial estimate (Q3): previous 3.8%, consensus 3.2%

Wednesday 24 December 2025

• 7.50am (HK time) – Japan BoJ Monetary Policy Meeting Minutes
• 9.30pm (HK time) – US Initial Jobless Claims (December): previous 224,000, consensus 225,000

Friday 26 December 2025

• 7.50am (HK time) – Japan Retail Sales YoY (November): previous 1.7%, consensus 0.9%

_{Source: Trading Economics, Nasdaq, LSEG (as of 21 December 2025)}