Group 1 - The U.S. dollar has risen to a four-week high against a basket of currencies, driven by lower-than-expected increases in U.S. jobless claims and anticipation of key labor market data [1] - Solid jobs data is expected to reinforce the belief that interest rates will likely remain on hold for the time being [1] Group 2 - Investors are closely monitoring a potential U.S. Supreme Court ruling regarding President Donald Trump's use of emergency powers to impose tariffs [2] - If the court rules against Trump, it is anticipated that the administration will quickly seek to rebuild the tariff wall using alternative authorities [2]

Oil Market - Brent crude increased by 2% to $61.16 per barrel, while West Texas Intermediate (WTI) rose by 1.8% to $57.01 per barrel, following a decline in US crude oil stockpiles by 3.8 million barrels to 419.1 million barrels, contrary to analysts' expectations of a rise [1][7]. Retail Sector - Tesco's shares fell by 6.5% despite achieving a 10-year high in market share in the UK, while Associated British Foods, owner of Primark, saw a 13% decline in shares due to weaker-than-expected sales [2][3]. Defence Sector - BAE Systems' shares surged by up to 7% after President Trump announced plans to increase the US defence budget from $1 trillion to $1.5 trillion, adding over £4 billion to its market value [6][40]. - UK defence stocks, including Babcock and Rolls Royce, saw significant gains, with nearly £7 billion invested in early trading following Trump's military spending pledge [53][41]. - European defence stocks also rose, with notable increases in companies like Rheinmetall and Airbus, reflecting investor confidence in increased government spending on defence [40][55]. Economic Indicators - A major credit rating agency predicts the US Federal Reserve will lower interest rates two more times this year due to a slowdown in the jobs market, with expectations of a decrease from the current range of 3.75% to 3% [19]. - The US trade deficit fell to its lowest level since 2009, dropping 39% to $29.4 billion in October, attributed to a $11 billion decrease in imports [24][25].

Market Overview - U.S. stock futures declined on Thursday after a mixed close on Tuesday, with only the Nasdaq 100 index ending in positive territory [1] - The Dow Jones futures fell by 0.29%, S&P 500 by 0.23%, Nasdaq 100 by 0.30%, and Russell 2000 by 0.45% [2] - The 10-year Treasury bond yielded 4.15%, while the two-year bond was at 3.47% [2] - The CME Group's FedWatch tool indicates an 88.4% likelihood of the Federal Reserve maintaining current interest rates in January [2] Stocks in Focus - AZZ Inc. (NYSE:AZZ) shares rose by 2.8% in premarket trading after reporting strong third-quarter earnings [6] - Immuneering Corp. (NASDAQ:IMRX) shares fell by 22.93% following the announcement of updated survival and safety data from its Phase 2a trial for pancreatic cancer [6] - Northrop Grumman Corp. (NYSE:NOC) shares increased by 6.84% after President Trump proposed raising the 2027 military budget from $1 trillion to $1.5 trillion [6] - Phathom Pharmaceuticals Inc. (NASDAQ:PHAT) shares dropped by 14.22% after announcing a $130 million public offering [14] - Constellation Brands Inc. (NYSE:STZ) shares rose by 2.32% after reporting better-than-expected third-quarter earnings [14] Economic Insights - Economist Paul Krugman warns that the Trump administration's economic policies may pose risks to the broader economy and stock market, suggesting that the market is pricing in unrealistic revenue streams [10][11] - Krugman highlights the potential disconnect between market exuberance and economic fundamentals, predicting a painful correction as the "oil fantasy" dissipates [12]

Core Viewpoint - The 60/40 portfolio strategy, traditionally a staple in investment, is regaining relevance as market conditions improve, according to BlackRock's chief investment strategist Gargi Pal Chaudhuri [1][8]. Group 1: Historical Context - The 60/40 portfolio strategy faced significant challenges in 2022 due to soaring inflation and rising interest rates, which negatively impacted both stocks and bonds simultaneously [2]. - A similar scenario occurred in early 2025, marked by a trade war initiated by President Donald Trump, leading to increased bond yields and declining stock values, making it the worst period for the 60/40 strategy in 150 years [3]. Group 2: Current Market Outlook - Chaudhuri expresses optimism for the equity market in 2026, suggesting that bonds can once again serve as a hedge against stock market downturns [8]. - Interest rates are starting the year at higher levels compared to 2022, providing potential for rates to decrease, which has led to a negative correlation between stocks and long-end bonds [9]. Group 3: Investment Recommendations - For bond investments, Chaudhuri recommends focusing on the middle of the yield curve, specifically the five to ten-year segments, to achieve attractive yields while minimizing duration risk [9][10]. - In the stock market, the value factor is highlighted as attractive, with an expected earnings growth of approximately 12% in the value sector [11].

Market Overview - The ASX 200 is expected to see a slight dip of -3.5 points at the open of the first Monday of 2026, indicating a flat market start [2] - Wall Street's leading indexes finished flat on the previous Friday, with the S&P 500 up +0.2% and the Nasdaq down -0.1% [4] Oil and Commodities - Major oil companies such as Woodside (ASX:WDS), Beach Energy (ASX:BPT), and Santos (ASX:STO) are under observation as oil prices are affected by geopolitical events, with Brent crude dropping to around $60 per barrel [6][4] - Iron Ore has started the year strong at $105.40 per tonne in Singapore, while Brent Crude is fairly flat at $60.75 per barrel, and Gold is priced at $4,348 per ounce [9] Company News - Vulcan Energy (ASX:VSL) is undergoing a leadership change with Gavin Street replacing Rhys Jones as CEO, while Rhys will remain on the board [7] - New Frontier (ASX:NFM) is closer to obtaining a mining lease in Queensland after state regulators approved the review of its Big One copper deposit [7] - Australian Agricultural (ASX:AAC) reported that flooding in north-western Queensland has impacted three of its properties, with a focus on the welfare of its people and animals [8]

Core Viewpoint - The British pound is expected to face significant challenges in 2026 due to various domestic factors that will limit its purchasing power abroad, particularly for holidaymakers [1][2]. Economic Outlook - The UK economy is predicted to have little or no momentum heading into 2026, primarily due to a £26 billion tax increase imposed by Chancellor Rachel Reeves, which is expected to hinder economic growth [4][5]. - The unemployment rate has risen to 5.1%, the highest in four years, and private sector pay growth has decreased to 3.9%, the weakest since 2020, indicating a weakening labor market [6]. Bank of England's Position - The Bank of England may need to lower interest rates further to support the economy and protect jobs, which could negatively impact the pound's purchasing power [7]. - Recent actions by the Bank included a reduction in interest rates from 4% to 3.75%, down from a peak of 5.25% in August 2024, which may lead to a shift of foreign investment away from UK assets [7]. Market Expectations - Money markets are anticipating another interest rate cut by the Bank of England by June, with a 50-50 chance of an additional cut by November, reflecting expectations of further declines in borrowing costs [8].

Group 1: Tariffs and Market Reactions - Trump's announcement of sweeping tariffs in April led to a significant market downturn, with the S&P 500 dropping nearly 5% on April 3 and an additional 6% the following day due to fears of a trade war with China [1][2] - The tariffs caused a decline in the value of the U.S. dollar and affected the U.S. Treasury market, prompting Trump to pause the tariffs on April 9 after observing market reactions [2] - Despite initial turmoil, Wall Street experienced a strong summer driven by enthusiasm for artificial intelligence technology and positive corporate earnings, alongside three interest rate cuts by the Federal Reserve [3] Group 2: Federal Reserve and Interest Rates - Trump actively lobbied the Federal Reserve to lower interest rates, challenging the traditional independence of the Fed in making monetary policy decisions [4] - The Fed maintained steady interest rates through August as inflation remained above the 2% target, which frustrated Trump despite his own trade policies contributing to inflation concerns [5] - Tensions between Trump and Fed Chair Jerome Powell escalated, with Trump publicly criticizing Powell's management, raising concerns about the Fed's independence [6][7] Group 3: Global Market Performance - U.S. stocks achieved double-digit gains, but many foreign markets outperformed, with South Korea's KOSPI experiencing its largest gain in over two decades due to technology investments [8] - Japan's Nikkei 225 also saw significant gains, supported by a focus on AI and a $135 billion stimulus package following national elections [9] - European markets performed well, with Germany's DAX benefiting from increased government spending on infrastructure and defense, while the European Central Bank's interest rate cuts provided additional support [9][10]

Market Performance - The S&P 500 closed 16.4% higher for the year, marking its third consecutive double-digit annual gain, while the Nasdaq gained 20.4% and the Dow finished 13% higher [2] - Despite a recent downbeat finish, major U.S. stock indexes ended the year with strong gains, with the S&P 500 experiencing a 0.7% decline on the last trading day of the year [1][2] Influencing Factors - Wall Street's gains in 2025 were driven by optimism surrounding artificial intelligence (AI) and its potential to boost profits across various sectors [3][6] - The market faced turbulence due to President Trump's fluctuating tariffs on imports and uncertainty regarding interest rate trajectories [3][4] Profitability Concerns - There are concerns that AI technology may not generate sufficient profits and productivity to justify the investments, which could impact stocks like Nvidia and Broadcom that contributed significantly to market gains [7] - Overall market stocks are perceived as expensive, having risen faster than their underlying profits [8]

Market Overview - The S&P 500 Index is down -0.10%, the Dow Jones Industrials Index is down -0.15%, and the Nasdaq 100 Index is down -0.17% [1] - Stock indexes are slightly lower as the market struggles for direction in thin year-end trading, with higher bond yields negatively impacting stocks [2] Economic Indicators - The October S&P Case-Shiller composite-20 home price index rose +0.3% month-over-month and +1.3% year-over-year, exceeding expectations [3] - The December MNI Chicago PMI increased by +9.2 to 43.5, also stronger than expected [3] Seasonal Trends - Historical data indicates that the S&P 500 has risen 75% of the time in the last two weeks of December, with an average increase of 1.3% [4] Upcoming Economic Data - The minutes from the December 9-10 FOMC meeting will be released, and initial weekly unemployment claims are expected to rise by 1,000 to 215,000 [5] - The December S&P manufacturing PMI is anticipated to remain unchanged at 51.8 [5] - The markets are pricing in a 16% chance of a -25 basis point rate cut at the next FOMC meeting on January 27-28 [5] International Markets - The Euro Stoxx 50 reached a 1.5-month high, up by +0.76%, while Japan's Nikkei Stock 225 fell to a 1-week low, down -0.37% [6]

Market Overview - US stock futures experienced a decline early Monday, with the tech-heavy Nasdaq futures dropping by 0.4%, influenced by a fall in shares of major companies like Nvidia and Tesla, both down over 1% [1] - The S&P 500 futures decreased by 0.2%, while Dow Jones Industrial Average futures remained near flat [1] Precious Metals - The precious metals market saw increased volatility following a significant rally to all-time highs, with silver retreating after surpassing $80 and gold futures falling over 1% [2] Index Performance - All three major indexes are projected to conclude a tumultuous 2025 with substantial gains, with the S&P 500 up over 17%, the Dow gaining over 14%, and the Nasdaq Composite leading with an increase of over 22% [3] Upcoming Economic Indicators - Investors are anticipating a relatively quiet week ahead, with pending home sales data scheduled for release on Monday, and the Federal Reserve's meeting minutes expected on Wednesday [4] Federal Reserve Insights - The upcoming minutes from the Federal Reserve's recent meeting may provide valuable insights into the central bank's future actions, with approximately 80% of market participants expecting the Fed to maintain current interest rates in January, although opinions are divided regarding March [5]