Markets rally on tech strength as commodities hit records

Asian markets surge on technology leadership

​Asian equity markets rose sharply on Monday, led by gains in technology and artificial intelligence (AI)-linked stocks after positive US market momentum at the close of last week.

​The rally demonstrates continued investor appetite for technology exposure, particularly in companies benefiting from AI infrastructure spending.

​Japanese, South Korean, and Taiwanese markets showed particular strength, with semiconductor and electronics manufacturers leading the advance.

​This performance suggests that despite recent volatility, conviction remains strong in the technology sector's growth prospects.

​Yen weakness supports Japanese exporters

​Last week the Bank of Japan (BoJ) lifted interest rates to a 30-year high, but the yen weakened to near annual lows, boosting export-oriented equities.

​This counter-intuitive currency response reflects market expectations that Japanese monetary policy will remain accommodative relative to other major economies.

​The weaker Japanese yen provides a significant tailwind for Japan's export-heavy corporate sector, inflating overseas earnings when converted back to yen.

​Major exporters in automotive, electronics, and industrial equipment sectors benefit particularly from this currency dynamic, driving the Nikkei 225 higher.

​UK assets supported by easing expectations

​After recent UK interest rate cuts and softer inflation, market positioning continues to price in further monetary easing in 2026.

​This creates a supportive backdrop for UK equities and government bonds as investors anticipate continued Bank of England (BoE) accommodation.

​UK companies have seen strong interest from overseas acquirers, lifting overall deal values to multiyear highs despite lower domestic deal volumes.

​This foreign M&A activity demonstrates international investor interest in UK assets at current valuations and supports sentiment into 2026.

​UK current account deficit smallest since Q3 2024

​The UK’s current account deficit narrowed sharply to £12.1bn, or 1.6% of gross domestic product (GDP), in third quarter (Q3) 2025, down from a downwardly revised £21.2bn in second quarter (Q2) and well below market expectations for a £21.3bn shortfall. This was the smallest deficit since Q3 2024, reflecting a marked improvement in the primary income balance.

​The primary income deficit shrank to £1.9bn from £8.4bn, as income receipts increased by £5.5bn while payments to overseas investors fell by £1.1bn. The goods trade deficit also improved, narrowing to £58.9bn from £60.0bn.

​At the same time, the services surplus widened to £52.8bn from £51.3bn, with service exports rising more than imports. Exports of services increased by £2.2bn to £137.9bn, led by gains in transport and intellectual property services.

​By contrast, the secondary income deficit widened marginally, increasing by £0.1bn to £4.1bn, equivalent to 0.5% of GDP, from £4.0bn or 0.5% of GDP in Q2.

​US markets positioned for continued strength

​US stock futures were higher ahead of a holiday-shortened week, indicating continued optimism among equity investors about near-term market direction.

​The positive futures positioning suggests that recent gains have not exhausted buyer appetite, with investors maintaining constructive views.

​Holiday-shortened weeks often see reduced liquidity, which can amplify moves in either direction depending on sentiment.

​Current positioning suggests investors are leaning toward risk-on positioning heading into the year-end period.

​Precious metals reach new milestones

​Commodities rally: Oil prices edged up and precious metals rallied - with both gold and silver prices hitting new records.

​The precious metals strength reflects continued safe-haven demand and monetary policy expectations supporting non-yielding assets.

​Oil's over one percentage point gain suggests stabilising energy markets, with supply-demand dynamics finding equilibrium after the past couple of weeks’ downward momentum.

​The oil price is building on gains from the end of last week as rising geopolitical tensions heightened concerns over potential supply disruptions. In the Americas, frictions between the US and Venezuela intensified after reports that US authorities are pursuing another vessel near Venezuelan waters, reinforcing President Trump’s blockade of the country. Washington has already seized two oil tankers this month, including one over the weekend.

​Geopolitical risks also increased in Eastern Europe. Ukraine carried out its first strike on a Russian oil tanker in the Mediterranean, following earlier attacks on Lukoil assets in the Caspian Sea. These developments come against the backdrop of continued diplomatic efforts aimed at bringing the conflict between the two countries to an end.

​The commodity strength across both precious and energy segments demonstrates broad-based investor appetite for real assets.

​Investment opportunities across asset classes

​For investors looking to capitalise on current market momentum across multiple asset classes, several approaches merit consideration.

1. ​Research the factors driving strength in technology, precious metals, and UK assets to understand current market dynamics.
2. ​Consider how monetary policy expectations and currency movements might continue to influence different markets.
3. ​Open an account with IG by visiting our website and completing the application process.
4. ​Access global equity markets, commodities, and currency pairs through our platform.
5. ​Implement appropriate diversification and risk management across different asset classes.

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