The Federal Reserve (Fed) held its final monetary policy meeting of the year last week, with the US central bank cutting interest rates by a quarter of a percentage point, as widely expected. The target range for its key lending rate was lowered to 3.50–3.75%, its lowest level since 2022 (1). However, the decision was far from unanimous, with three Fed members dissenting, while several others expressed reservations given ongoing caution around the future path of inflation. In his post-meeting press conference, Fed Chair Jerome Powell delivered mixed messages, highlighting concerns about the state of the labour market while also noting that the Fed is now well positioned to wait and assess how economic conditions evolve (2). Although US equity markets initially moved higher ahead of the meeting, those gains were reversed by the end of the week, with the S&P 500 finishing Friday down -0.6% for the week (in dollars).

Equity markets in Europe were little changed overall. German and Italian indices posted modest gains, while French equities declined. In aggregate, the MSCI Europe ex-UK index recorded a small weekly gain of +0.1% (in euros). In the UK, weaker GDP data may have weighed on sentiment, with the FTSE 100 and FTSE 250 retreating by -0.2% and -0.9% respectively. In Asia, Japanese equities advanced over the week, with the Nikkei 225 rising by +0.7% (in yen), despite a notable downward revision to third-quarter GDP. Meanwhile, Chinese equities moved lower, with the Shanghai Composite declining by -0.4% (in renminbi) as investors took profits following a period of stronger momentum. 

Turning to commodities, oil prices came under notable selling pressure, with Brent crude falling by -4.1% to $61.16 per barrel. Oversupply concerns continue to dominate market sentiment, with 2026 expected to see a meaningful supply surplus amid an increasingly uncertain demand outlook. By contrast, gold prices rose by approximately +1.9% to $4,286 per ounce, supported by the Fed’s decision to cut interest rates.

(Source 1: Federal Reserve – Summary of Economic Projections, 10/12/2025)

(Source 2: T. Rowe Price – Global Markets Weekly Update, 12/12/2025)

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