Global Markets Mixed as Rate Expectations Diverge

Global asset performance was uneven in December, with commodities rallying, equities mixed, and bond yields rising early in the month as markets reassessed how close central banks are to the end of rate-cutting cycles.

US Federal Reserve Cuts Rates, Signals Caution Ahead

The Fed delivered a widely expected 25bp cut to 3.50–3.75%, describing policy as near neutral and reinforcing a data-dependent approach, with markets pricing two further cuts in 2026.

Precious Metals Surge to Record Highs

Gold and silver hit record levels following the Fed’s rate cut and supply pressures, with silver posting a standout +26.8% monthly gain despite late-month margin-related volatility.

US Economic Data Softens but Growth Surprises

Payrolls declined due to federal workforce adjustments and unemployment rose to 4.6%, yet Q3 GDP surprised to the upside at +4.3% QoQ, driven by strong consumer spending.

Australian Markets Pivot to Rate Hike Expectations

The RBA held rates but struck a more hawkish tone, removing its easing bias for 2026, prompting bond markets to price potential rate hikes and lifting bank stocks.

ASX200 Gains as Banks and Miners Lead

Australian equities rose +1.2%, supported by strong commodity prices, major bank gains, and exceptional performance from gold and copper stocks.

Europe Outperforms on Commodities and Rate Stability

European equities were among the strongest globally, with the STOXX600 and FTSE100 reaching record highs, buoyed by resource stocks and steady central bank policy.

China Shows Early Signs of Stabilisation

Manufacturing and non-manufacturing PMIs returned to expansion for the first time in months, while exports rebounded, although retail sales remained weaker than expected.

Australian Dollar Strengthens on Policy Divergence

The AUD gained +1.9% against the USD, supported by diverging interest rate expectations between Australia and the US, despite weak local employment data.

Property and Fixed Income Face Rate Headwinds

Global property securities softened as yields rose, while bond markets reflected diverging central bank outlooks, with Australia, New Zealand and Canada shifting toward potential hikes in 2026.

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