Wall Street holds on to year-end highs; precious metals keep their lustre
Dec 26 (Reuters) – Major U.S. stock indexes traded near record peaks on Friday in muted post-Christmas trading, while expectations of Federal Reserve interest rate cuts helped propel precious metals prices to all-time highs.
Public holidays kept markets closed in Australia, Hong Kong and most of Europe, but the bourses that were open pushed towards ending the year in positive territory, with Asian stocks rising to multi-week highs in their trading session earlier.
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Megacap tech companies have driven the S&P 500 higher in 2025, and investors have been branching out to cyclical sectors including financials and materials, broadening the upswing and leaving the main U.S. indexes set for a third straight year of gains.
Data suggesting the U.S. economy is resilient, paired with the possibility that a new central bank chair to replace Jerome Powell could look to cut rates next year, is supporting markets.
Pressure on AI stocks stemming from concerns over high valuations and profit-sapping capital expenditures has also lessened.
A weakening dollar further burnished dollar-denominated gold for overseas investors, sending an ounce up 1.45% to $4,544.
Soojin Kim, commodities analyst at MUFG, said in a note the rally could continue, supported by “major banks forecasting further gains into 2026, the strength of physical demand and persistent geopolitical and monetary uncertainties”.
DOLLAR’S DECEMBER BLUES
Investors are preparing for 2026 focused on when the U.S. Federal Reserve might further cut rates and by how much, with traders pricing in at least two cuts over the year, although they do not expect the Fed to move before June.
The central bank itself has projected one more cut next year but divisions among decision makers has left investors on edge about the U.S. policy outlook.
The U.S. dollar has been under pressure as a result, pushing the euro , sterling and the Swiss franc to highs. The dollar index , which measures the U.S. currency against six rivals, fell 0.02% to 97.93 on Friday.
The Japanese yen softened against the dollar on Friday as investors remained on watch for potential intervention to shore up the currency. Analysts say year-end trading, when volumes are thin, provide an opportunity for authorities to take action.
The yen has weakened despite the Bank of Japan delivering a well-telegraphed interest rate hike last week. Data on Friday showed that core consumer inflation in Japan’s capital slowed in December but stayed above the central bank’s 2% target, bolstering the case for further rate hikes.
Reporting by Isla Binnie and Ankur Banerjee; Editing by Muralikumar Anantharaman and Hugh Lawson
Our Standards: The Thomson Reuters Trust Principles.
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