The week that was

Global equity markets moved modestly lower last week, as weakness in technology-related names more than offset the benefit of the Fed cutting rates for the sixth time in 15 months. Disappointing results from Oracle and Broadcom contributed to the S&P 500 pulling back from record highs and ending marginally in the red for the week at -0.6%.

European equities were little changed, with the rate-sensitive Real Estate sector the biggest laggard following hawkish utterances from the Fed and ECB. Despite this, global bond markets remained broadly unchanged over the week.

It was a mixed week for commodities, with oil prices trending lower as traders continued to fret about a supply glut, while precious metals advanced amid still elevated geopolitical tensions.

Summary economic releases

The week ahead

Asian markets trended lower overnight following the release of underwhelming macro data. In Hong Kong, investors were disappointed by November retail sales data, which recorded its weakest reading since COVID and highlighted the challenges facing the Politburo in boosting domestic demand. Industrial production data was also underwhelming.

In Tokyo, activity across the manufacturing and services sectors was mixed during Q4, while the prospect of a rate hike by the BOJ later in the week is also weighing on sentiment.

Macro releases will be the dominant driver of sentiment in the last full trading week before the Christmas break. On Tuesday, PMI data should confirm that industrial activity in both the Eurozone and the UK continued to expand in December, while the delayed Non-Farm Payrolls report is expected to point to a slight firming in the US jobs market in November.

On Thursday, the BOE is expected to cut rates to their lowest level in three years against a backdrop of weakening macro conditions, while the ECB is expected to remain on hold. However, it could revise up growth expectations for the currency bloc. Thursday will also see the first US core inflation print in two months, which is expected to remain at 3% in November, well above the Fed’s target.

From a corporate perspective, the calendar is light, with investors looking for evidence that Nike is delivering on its turnaround milestones when it reports this week. Micron’s results will also be closely analysed, given market nervousness around memory demand and AI-related valuations.

Looking ahead to 2026

Looking to next year, the global economy is set to expand by close to 3.0%, with earnings expected to grow in the low double digits. With much of the key AI-related productivity benefits still to come, we remain constructive on the outlook for financial markets.

US equities should offer attractive returns in 2026, with market leadership likely to broaden beyond AI enablers to beneficiaries such as Healthcare and Industrials. Within Europe, Germany’s stimulus package should act as a tailwind for the Industrials sector, while Financials remain attractive on solid earnings prospects and compelling valuations.

High-quality fixed income should continue to offer investors an attractive alternative to low-yielding deposit accounts. Within alternatives, infrastructure should continue to provide some inflation protection while also offering exposure to the secular growth opportunities associated with digitalisation and decarbonisation.

This is an extract from the Weekly Markets Report by Cantor Fitzgerald Ireland. For more details on individual securities, or to discuss how we can support your investment needs, please get in touch.

Written by John Mullane, CIO, Cantor Fitzgerald Ireland