Market Report.
🏦 The Bank of England (BoE) is expected to cut interest rates by 0.25 percentage points at its December 18, 2025 meeting, from 4% to around 3.75%. This would be the fourth rate cut of 2025 and would take the BoE’s main policy rate, Bank Rate, to its lowest level in nearly three years, though still well above the European Central Bank’s policy rate.
📊 Investors are pricing in around a 90% probability of this rate cut, and economists expect a narrow 5-4 vote on the Monetary Policy Committee in favor of the reduction. The rate cut is expected due to a sharp slowdown in UK inflation, which has fallen to a bit above 3%, as well as weakening economic growth, with the economy projected to stagnate or contract slightly in the three months to October.
🇪🇺 The ECB is expected to keep rates on hold, but investors will be watching for any commentary on the apparent tensions within the governing council over the future policy path.
🇯🇵 Meanwhile, the Bank of Japan is set to raise interest rates on Friday to a three-decade high of 0.75%, up from the current 0.5% rate. This would be another landmark step in Governor Kazuo Ueda’s efforts to normalize monetary policy in Japan, which has long been accustomed to unconventional easing and near-zero rates.
⚠️ The BOJ faces pressure to tread cautiously as it pushes rates closer to the estimated neutral range of 1% to 2.5%, to avoid triggering a fresh bout of yen declines that could push up import costs and broader inflation. The high food costs keep inflation above its 2% target for nearly four years.
🤝 The Finance Minister has signaled the government’s tolerance for the rate hike to 0.75%, indicating alignment between the BOJ and the administration.
💵 And with regard to the Fed, it seems that there will be no problems with Wall Street. U.S. President Donald Trump said Wednesday that the next Federal Reserve chair will be someone who supports much lower interest rates. In a national address, he added that he will announce Jerome Powell’s successor soon.
🇩🇪 The Ifo business climate index for Germany fell to 87.6 in December, down from 88.0 in November, disappointing analysts who had expected a slight increase. Ifo’s head of surveys, Klaus Wohlrabe, said “This year there are no presents for the German economy,” indicating a continued struggle for growth.
📉 The drop in the Ifo index aligns with a decline in the composite PMI, suggesting a long-awaited economic recovery has still not materialized in Germany. Chancellor Friedrich Merz had promised an autumn of economic reforms to revive the German economy, but Commerzbank’s chief economist said “broad-based economic policy reforms did not materialize” as announced.
🌱 More details about the change of course in green policies in Europe, another aspect that seems to be copied from the much criticized Trump administration in the US.
🚗 The European Union has effectively abandoned a proposed combustion-engine ban for 2035 and beyond, which was seen as too ambitious, too costly, and favoring Chinese electric vehicle (EV) rivals. This decision was driven by a choice between climate leadership and protecting European automotive jobs, with the EU opting to prioritize the latter.
⚔️ While the combustion-engine ban failed to spark a true European EV boom, completely abandoning it is not enough to secure the European auto industry’s future. It does not solve the challenge posed by Chinese competition, which has already gained a 7% share of the European auto market through subsidies and an early EV lead.
💻 New fears are growing around the US technology sector, highly leveraged in AI projects.
🏢 Oracle’s largest data center partner, Blue Owl Capital, will not back a $10 billion deal for Oracle’s next data center facility in Saline Township, Michigan. The agreement fell through after negotiations stalled, leaving the financing of the 1 gigawatt data center in doubt as Oracle has not yet signed a deal with a new backer. Blackstone has held talks to step in as a financial partner, but has not yet signed a deal to invest in the project.
📉 The breakdown of the Blue Owl deal points to increasing strains in Oracle’s AI infrastructure strategy, as the company has been aggressively tapping debt markets to build its data center capacity. Lenders pushed for stricter leasing and debt terms amid concerns over Oracle’s rising debt levels and AI spending, making the deal less attractive financially for Blue Owl.
🐻 Michael Burry returns with his bearish arguments. Burry pointed to a graphic from Wells Fargo showing that U.S. households now hold a larger share of their net worth in equities than in real estate. This condition has only occurred twice before – in the late 1960s and late 1990s.
📈 However, Wells Fargo argued that the same chart explains why policymakers are unlikely to tolerate a deep bear market. A “K-shaped economy” led by the wealth effect means a bear market would likely trigger an economic downturn, which neither the Federal Reserve nor the government can afford, especially heading into midterm elections.
Geopolitics.
🎖️ President Donald Trump announced plans to award a special $1,776 “Warrior Dividend” payment to 1.45 million U.S. military service members. This payment is intended to help reassure Americans concerned about the rising cost of living and persistent economic anxieties during Trump’s first year of his second term. In his prime-time address from the White House, Trump also said he would be rolling out new housing reforms in the new year as part of his efforts to address economic challenges.
⛽ According to the New York Times, Venezuela has deployed navy escorts to protect tankers leaving its ports after President Trump announced he would seize every Venezuelan oil tanker as part of a “total and complete blockade.”
⚓ U.S. officials are aware of the escorts and are weighing their options, though Washington has not indicated what actions might follow. Maduro has insisted that oil exports will continue at all cost, despite the heightened risk of confrontation.
🪖 The German government, with an economy in decline for the third consecutive year, with the closure of the VW factory in Dresden, and with ever lower levels of approval by its citizens, announces possible forced mobilizations for war. German Chancellor Metz announces forced mobilization if Germany fails to gather volunteers for the military to counter Russia.
🇭🇺 Hungarian Prime Minister Viktor Orban has strongly condemned any move by the EU to seize frozen Russian assets without Budapest’s consent, calling it unlawful and a “declaration of war.”
⚖️ Orban accused the European Commission and its president Ursula von der Leyen of trying to bypass Hungary and “rape European law” in order to use the $246 billion in frozen Russian central bank assets to back a “reparations loan” to Ukraine.
🚫 Hungary “will not play along” in what he called a “twisted” scheme led by “three Germans” – Merz, Weber, and von der Leyen, said Orban.
🇸🇰 Separately, Slovak Prime Minister Robert Fico also criticized the EU’s handling of aid to Ukraine, calling it a “black hole” of corruption that has swallowed billions of euros without accountability.
🛫 According to Bloomberg, Erdogan is reportedly prepared to return the Russian S‑400 system to help repair relations with the U.S. and rejoin the F‑35 program.
Market View.
📉 A broad loss of support levels across major equity indices has triggered fresh declines and renewed anxiety on Wall Street. Once again, the technology sector is at the centre of the concerns — as detailed in the news section. S&P 500 futures fell below 6,800 points, a level they are now attempting to recover. Nasdaq 100 futures dropped through the 25,000‑point mark and are likewise trying to reclaim it.
💲 The US Dollar Index (DXY) moved above 98.50 yesterday but then faced a setback, now trading near 98.45 with fresh upward attempts. EUR/USD has fallen below 1.1750 and currently trades around 1.1730.
📉 In Europe, DAX 40 futures lost the 24,000‑point support but may attempt to recover it during today’s session. Euro Stoxx 50 futures slipped below 5,700 points, but they too are pushing to regain that level.
🛢️ Crude oil remains steady around $60 per barrel for spot Brent.
🥇 Gold futures continue to show strong momentum, trading near all‑time highs at around $4,365 per ounce.
₿ Bitcoin attempted an aggressive rebound toward $90,000, but the move was quickly rejected. It has fallen back to around $86,700. This latest decline comes without any apparent stress inside the crypto industry — an unsettling signal.
