Market Report.
📌 Readers, take note that tomorrow’s report will be the last report of the year. Market reports will resume on Friday, January 9.
⚡ Although we have already mentioned that our perception is that more strategic sectors such as energy, much more discounted than the technological, could be key in 2026, especially if the technological loses strength. Not everyone sees it that way.
🏦 The Dallas Federal Reserve’s fourth quarter survey results indicate that energy industry activity is shrinking for the second quarter in a row, which could lead to a market correction. The Dow Jones could drop around 10% to 44,000, while the S&P 500 could fall to around 6,300, though the exact timing is uncertain.
📉 Lower prices now will likely lead to higher prices and supply constraints in the future. Other industries like beef and agriculture are also facing challenges due to factors like labor shortages, which could contribute to higher consumer prices.
🥈 Silver surged past $80 an ounce for the first time, as traders locked in gains after a record rally. Copper also raced higher, closing in on an all‑time high near $13,000 a ton on the LME, driven by fears of tighter supply.
🇯🇵 Japan will most likely be one of the main topics of markets in the first quarter of 2026. Its economy is facing changes and challenges not seen in decades. Maintaining equilibrium in the face of this new monetary paradigm will be a challenge.
💴 Japan’s government has proposed a record $783 billion spending budget for the next fiscal year starting in April 2026. This reflects Prime Minister Sanae Takaichi’s challenge of boosting the economy while keeping inflation above the central bank’s 2% target.
📊 The budget aims to strike a delicate balance between providing fiscal support and restraining debt, capping new bond issuance and reducing the debt dependence ratio. This is an effort to reassure bond investors concerned about Japan’s heavy debt burden and fiscal expansion, which has driven up long-term government bond yields.
📈 Tokyo’s core inflation remained above 2% in December, backing the Bank of Japan’s case for further interest rate hikes, despite a slowdown from November. Japan’s factory output also fell more than expected in November, highlighting the economic challenges the government faces.
🇨🇳 In China, the industry will also have to face new challenges in 2026 that will allow further consolidation and survival in the face of possible new global turbulence, given what happened during the first year of Trump’s administration.
🏭 Profits at China’s industrial firms fell 13.1% year-on-year in November, accelerating from a 5.5% drop in October. This represents the fastest pace of decline in over a year. The sharp drop in profits came despite better-than-expected goods exports, highlighting the drag from weak domestic demand on the Chinese economy.
📉 For the first 11 months of 2025, industrial profits rose only 0.1% year-on-year, slowing from 1.9% growth in January-October, driven by a 47.3% plunge in profits at the coal mining industry. The recovery in industrial firms’ profitability still needs to be put on a firmer footing amid a volatile global backdrop and continued structural adjustment in the Chinese economy.
🏛️ Policymakers have pledged to maintain a “proactive” fiscal policy next year to support both consumption and investment, as they aim to bolster employment, lift household spending, revive prices, and stabilize the property market.
🇪🇺 Thierry Breton, the former EU digital chief, said the EU must resist US attempts to influence its legislation aimed at regulating social media platforms. Breton has been sanctioned by the Trump administration with a travel ban to the US, in what he sees as a weak response from EU institutions that are being surrounded by “predators.”
📵 As an EU commissioner, Breton was the chief enforcer of the Digital Services Act, which regulates content moderation on social media platforms. In other words, it is the number one censor in the EU regime, publicly bragging about the cancellation of elections in Romania when a candidate not endorsed by the EU was elected by the Romanians.
🌍 Geopolitics.
🇺🇸 President Trump said he made “a lot of progress” in talks with Ukrainian President Volodymyr Zelenskyy over a possible peace deal, but that it might take a few weeks to get it done with no set timeline.
🤝 The two leaders met at Mar-a-Lago and later spoke on the phone with European leaders to brief them on the progress made. While they discussed all aspects of a peace framework, with 90% agreed, major sticking points remain, such as the future of the Donbas region.
🕊️ Trump said he could envision a trilateral meeting with Zelenskyy and Russian President Putin, but the timing would need to be right. Zelenskyy said the meeting will take place in Washington in January, with European leaders participating.
🛡️ Ukraine has pushed for binding US protection guarantees, while Trump has said Ukraine won’t be allowed to join NATO. Exactly the guarantees that Russia demanded since the origin of the conflict in 2014 and before the war. Unfortunately, hundreds of thousands of lives had to be lost for these claims to be reconsidered.
⚠️ War in Ukraine could fracture the EU. The conflict has been a watershed moment, exposing deep divisions within Europe and the inability of the EU and NATO to provide a unified response. This has opened the door for a reconfiguration of the continent’s security landscape.
💼 U.S. has been pursuing a “geoeconomic” strategy, using economic tools like sanctions and trade policy to weaken Russia and assert American dominance. This is creating tensions with European allies who have different economic interests.
🌐 Russia, for its part, is seeking to build new economic and security partnerships, particularly with China, to counter Western influence. This is leading to the formation of a new “multipolar” order in Eurasia.
🇮🇳 A clear example of this new order are the steps taken by India. From US partner to active member of the BRICS.
❄️ India is shifting its approach to the Arctic from primarily scientific research to a more strategic economic and geopolitical focus, particularly around the Northern Sea Route (NSR). By committing to multi-faceted cooperation on the NSR, trade and investment in the Russian Far East and Arctic, and regular bilateral consultations, India is positioning the Arctic as an integrated industrial corridor where it aims to be a rule-shaper.
🧭 This ‘Arctic pivot’ fits into India’s broader quest for strategic autonomy in its energy transition. India sees the NSR not just as a shipping lane, but as a ‘northern minerals corridor’ linking Russia’s resource-rich Arctic and Far East to India’s industrial base, helping diversify critical mineral supply chains for its clean energy transition.
📣 According to Bloomberg, French Prime Minister Jordan Bardella and British PM Nigel Farage, both from patriotic parties, are polling strongly and could potentially form an alliance supported by Donald Trump and Vladimir Putin.
🏴 Their parties, the National Rally and UK Reform party, are gaining ground. While still divisive, Bardella and Farage are making inroads with the business elite by promising lower taxes, less regulation and a more fiscally conservative approach.
📈 Market View.
📅 We begin the final week of the year for financial markets with mild corrections following the recent highs reached in US equities. S&P 500 futures are edging slightly lower, hovering just below the 7,000‑point threshold and currently trading around 6,965 points. Nasdaq 100 futures have lagged behind and will end the year without reaching all‑time highs, retreating to around 25,785 points.
💱 The US Dollar Index (DXY) fell to 97.75 last week before rebounding to the current 98 level. This move has generated volatility in EUR/USD, which briefly broke above 1.18 a few days ago before retreating towards the 1.1750 area. In recent hours, however, the pair has resumed a modest upward move and is now trading near 1.1775.
🛢️ Brent crude oil, which managed to hold relatively elevated levels last week, fell sharply into the weekly close. It begins the new session with a rebound, moving back towards $60.90 per barrel in spot trading.
🥇 Last Friday, gold futures posted another new all‑time high, approaching $4,585 per ounce.
₿ Finally, Bitcoin has made yet another attempt to break higher, testing the $90,250 level before easing slightly. It currently trades around $89,675.
