Market Report.
💰 We started the week with Bitcoin falling sharply in the last few hours. The lack of dip buyers and the small inflows into Bitcoin exchange traded funds are the main causes for concern. The next significant support level for Bitcoin is $80,000 tested last week.
⚠️ Here are the Top 3 Weekly Risks: 1) Fed Chair Powell Speech, 2) Eurozone CPI & US Core PCE (Inflation Gauges), 3) BoE Financial Stability Report.
🧐 Investors face the possibility that the U.S. Federal Reserve could lower interest rates next week. Later in the day, Fed Chair Jerome Powell is scheduled to speak, and traders will analyse his remarks to determine the direction of rates in the near future.
🏛️ President Trump has decided on his pick for the next Federal Reserve chair, but has not yet announced the nominee. White House National Economic Council Director Kevin Hassett is seen as the likely choice to succeed Powell, according to people familiar with the matter. Hassett declined to address whether he considers himself the frontrunner, but cited positive market reaction to the news that Trump is close to naming his pick.
📉 Hassett emphasized that the American people could expect Trump to pick someone who will help them have cheaper car loans and easier access to mortgages at lower rates. The prospect of Hassett being nominated briefly pushed the 10-year Treasury yield below 4%, indicating market anticipation of the pick.
📜 Whoever Trump picks will require Senate confirmation as chair and likely to a 14-year Fed governor term that begins in February if the selection is an outsider.
💸 Rep. Tim Burchett called for eliminating the federal income tax, arguing that President Trump’s record $33 billion in tariff revenue in October shows it could be replaced. He said ending the income tax would be a major benefit for working‑ and middle‑class Americans.
💱 Even with Japan’s policy normalisation, there will still be a significant difference between the rates in the United States and Japan, thus the yen’s decline may not halt entirely anytime soon. The difference between the yields on U.S. and Japanese 10-year bonds is 219 basis points, the narrowest since April 2022, although U.S. yields are still much higher than Japanese yields.
🏭 Asia’s major manufacturing powerhouses, including China, Japan, South Korea, and Taiwan, struggled with sluggish demand in November, leading to declines in factory activity. In China, the world’s largest manufacturer, factory activity slipped back into contraction, with the output component dropping to a four-month low despite some improvement in demand.
⚙️ Businesses in major exporting nations have been navigating the uncertainty created by U.S. President Donald Trump’s trade policies, even as tensions with China have eased and trade deals with countries like Japan and South Korea have been reached.
📉 Japan’s PMI showed new orders continued to decline, blamed on factors like a sluggish global business environment, tighter client budgets, and subdued capital investment. South Korea’s factory activity contracted for a second month, though a finalized trade deal with the U.S. brought some clarity for manufacturers, as exports rose for a sixth consecutive month. Taiwan’s PMI showed factory activity continued to fall, but at a slower pace.
🏭 China’s factory activity in November contracted slightly, with the private-sector Purchasing Managers’ Index (PMI) dropping to 49.9 from 50.6 in October, missing analysts’ expectations. This follows an official PMI survey on Sunday that showed factory activity shrank for an eighth straight month.
📦 The decline was driven by a slowdown in production growth and new orders, despite an increase in new export orders amid the U.S.-China trade truce. Softening new domestic orders led to renewed job shedding and the first contraction in purchasing since June.
📉 Stocks of both purchases and finished goods depleted, as businesses were reluctant to hold additional inventory due to softening demand growth.
🏚️ The diverging trends between new home and secondary market prices suggest the property crisis in China has not yet bottomed out.
🏗️ China’s property sector has been in crisis since 2021 due to tighter regulations and a liquidity crunch for real estate developers, many of whom have defaulted on debt. China’s new home prices rose at a faster pace in November, up 0.37% month-on-month compared to 0.28% in October. However, prices in the secondary home market declined further, down 0.94% compared to a 0.84% drop the previous month.
🏘️ Stabilizing the property market could boost household consumption and help reduce China’s heavy reliance on government infrastructure investment and exports. Potential near-term policies may include easing home purchase restrictions, lowering transaction costs, and accelerating urban village redevelopment projects to stimulate housing demand.
🚗 Chinese carmakers lost some ground in the European passenger car market in October. Chinese brands’ share of the hybrid market fell around 3 percentage points to 12.6% from September’s peak. New EV registrations for Chinese brands declined to 11.8% from 12.6% across the EU, EFTA countries, and the UK. The drop was mainly driven by lower sales in the UK, while in the rest of the European market, Chinese share continued to rise. Despite the pullback, Chinese brands still notched their second-best month on record for EV, hybrid, and overall market share in the region.
📈 India’s economy grew faster than expected in the quarter ending September, with an annual growth rate of 8.2%. This was an acceleration from 7.8% in the previous quarter. The sharp improvement in GDP growth was due to a pickup in manufacturing, construction, and domestic consumption. Financial and real estate services also saw substantial growth.
💵 Domestic consumption was held back ahead of planned cuts to the goods and services tax (GST), which were announced in September to boost consumption. The 50% U.S. tariffs on Indian goods that took effect in August partially affected the quarter, but the impact was mitigated by the GST cuts and earlier reduction in the individual income tax rate.
📊 The International Monetary Fund projects India’s real GDP to grow 6.6% in fiscal 2026 before moderating to 6.2% in fiscal 2027, assuming a prolonged delay in a U.S.-India trade deal. The IMF also forecasts India’s merchandise exports to fall 5.8% in fiscal 2026, while goods imports are expected to rise 2.4%.
💪 Despite external headwinds, India’s growth is expected to remain robust, supported by favorable domestic conditions, and the country is projected to become a $5 trillion economy by fiscal year 2029.
💹 The Bank of Japan (BOJ) governor Kazuo Ueda has signaled that the central bank will consider raising interest rates at its next policy meeting on December 18-19: Ueda said the BOJ will examine the “pros and cons” of raising rates, providing the strongest indication yet that a hike could be on the cards.
🧩 Ueda cited improving economic conditions, including labor shortages and high corporate profits, as factors that could support a rate hike. The BOJ is actively collecting information on wage hikes, which Ueda said is key to determining when to raise rates.
🚀 Ueda said raising rates would be “easing off the accelerator” rather than “applying the brakes” on the economy, as real interest rates remain deeply negative. He also noted that a weak yen, which pushes up import costs, is a factor the BOJ must be vigilant about in setting policy.
🎯 The BOJ must time the rate hike carefully to ensure Japan smoothly achieves its 2% inflation target and long-term growth path, according to Ueda.
⚔️ The trade war continues to affect the corporate world. Nexperia is a new victim.
🔧 Nexperia, a Dutch chipmaker, has publicly called on its China unit to help restore supply chain operations, warning that customers across industries are reporting “imminent production outages”: Nexperia’s Dutch unit said it had repeatedly tried to establish direct communication with its China unit but did not receive any meaningful response.
🌐 This is the latest twist in a long-running saga that has threatened global automotive supply chains and stoked a bitter battle between Amsterdam and Beijing over technology transfer. Wingtech Technology, Nexperia’s Chinese parent company, accused the Dutch unit of making “a large number of misleading and untrue allegations” and claimed the “unlawful deprivation of Wingtech’s control and shareholder rights over Nexperia” was the root cause of the ongoing supply chain chaos.
📜 The dispute began in September when the Dutch government invoked a Cold War-era law to effectively take control of Nexperia, reportedly after the U.S. raised security concerns. Beijing responded by moving to block Nexperia’s products from leaving China, leading to the current supply chain disruptions.
📈 In times of concern about the AI bubble and the US tech sector, there are other attractive markets that could be the next vanguard if these technologies fail.
📊 Nvidia has seen its stock price gain nearly 1,000% in the three years since ChatGPT’s launch, making it the S&P 500 stock with the largest gains. However, beyond the few companies directly involved in AI, ChatGPT has not yet significantly altered the global economic order or the performance of broader market indices.
📉 The stock market’s reaction has been more about future hopes than current results, as evidenced by the divergence between the S&P 500’s cap-weighted and equal-weighted price-to-earnings ratios.
💊 The obesity drug market has also seen significant gains, with Eli Lilly emerging as a major winner, becoming the first healthcare company to cross the $1 trillion market cap threshold. Despite concerns about the impact of Medicare price discounts on obesity drug makers, investor optimism remains high, as evidenced by the strong performance of related ETFs.
🧬 The biotech sector has also seen a resurgence, using also the AI in drug development contributing to a valuation premium for AI-focused companies.
🇬🇧 In the UK, political turbulence has not completely disappeared.
🏛️ UK Prime Minister Keir Starmer is making a renewed push to curb welfare spending, as he tries to revive his struggling Labour administration: Starmer plans to give a speech defending the recent budget and setting out his priorities, including a pledge to cut Britain’s growing benefits bill.
📉 Starmer and Reeves are facing mounting pressure as Labour continues to trail Nigel Farage’s Reform UK in the polls, raising doubts about Starmer’s leadership. Reeves’ latest budget has worsened their position, with a YouGov poll showing it received the second-worst public reception of any fiscal package since 2010, making the task of reviving the Labour government even more difficult.
📢 A key criticism is that the budget hiked spending on welfare while increasing taxes on working people, despite Labour’s election pledge not to raise taxes. Starmer says the welfare state is “trapping people, not just in poverty, but out of work” and that they need to “remove the incentives which hold back the potential of our young people.”
Geopolitics.
🤝 Trump believes there is “a good chance” for peace in Ukraine, but corruption in Kiev “does not help”.
⛴️ Reports suggest the Mersin, an oil tanker, may have been hit by Ukrainian‑operated Unmanned Surface Vessels (USVs) as part of a wider campaign targeting Russia’s shadow fleet. If verified, an attack near Senegal would mark a major expansion of Ukraine’s naval reach beyond the Black Sea. However, some sources say the damage could have resulted from a mechanical failure, not an attack. The incident is being referred to as the third in a sequence because it occurred around the same time as two confirmed Ukrainian strikes on other vessels in the Black Sea.
🇮🇹 Is Italy preparing to leave the Euro?
🥇 Based on reports from late November 2025, Italy’s ruling coalition has indeed revived a controversial effort to assert state ownership over the nation’s gold reserves. Lawmakers from Prime Minister Giorgia Meloni’s party (Fratelli d’Italia) submitted an amendment to the 2026 Budget Law declaring that the gold reserves held by the Bank of Italy “belong to the state, in the name of the Italian people”.
🏦 Italy holds 2,452 metric tons of gold, the third-largest national stockpile in the world after the United States and Germany. As of late 2025, these reserves are valued at approximately $300 billion. Senator Lucio Malan of Fratelli d’Italia is leading the initiative. He argues the move is necessary to “safeguard” the reserves from future misuse or unilateral liquidation by the central bank, though he explicitly denied current plans to sell the gold.
⚖️ This move directly challenges the legal framework of the Eurozone, specifically the independence of central banks.
📚 While the gold is held by the Bank of Italy, ownership has historically been a gray area. The central bank acts as the custodian, but the “shareholders” of the Bank of Italy technically include private banks and insurers, the gold doesn’t fully belong to the public under the current system.
Market View.
📉 We start the week with declines in US futures as well as in Bitcoin. Mini S&P 500 futures are pulling back toward 6,815 points, while Nasdaq 100 futures are retreating toward 25,270 points.
💥 Bitcoin has suffered another sharp drop: after trading near $92,000, it has fallen suddenly in recent hours to the current $86,600.
💲 Meanwhile, the DXY dollar index continues to cool, breaking below 99.50 and now trading at 99.33. At the same time, EUR/USD is moving higher, breaking above 1.16 and currently trading at 1.1615.
📉 In Europe, futures are also declining. DAX 40 futures have fallen below 23,800, now at 23,765, while EuroStoxx 50 futures, which closed near 5,700 on Friday, are retreating to 5,655.
🛢️ Crude oil is moving higher, with Brent approaching $63.75 in spot trading.
🏅 Gold futures continue their strong upward trend, heading toward the latest all‑time highs near $4,400 per ounce, currently trading at $4,280 with a clearly bullish tone.
