Asian stock markets rose driven by Wall Street's tech gains, while the yen hit all-time lows against the euro and Swiss franc amid rising interest rates and speculative selling. The US economy is expected to show strong growth in Q3, but investor sentiment is extremely bullish, raising caution of a potential reversal. The yen's decline prompted warnings of intervention, and commodities like silver and oil saw notable gains.
On December 19, 2025, major U.S. stock indices including the Dow, S&P 500, and Nasdaq closed higher amid a comeback in AI-related trading, with the S&P 500 achieving a slight weekly gain following a tech rally on Friday.
Asia-Pacific markets mostly rose following a tech rally on Wall Street, with Japan's Nikkei leading gains, while concerns over the economy persisted. Australia's market advanced after strong household spending data, and bond markets showed rising long-term yields globally. Hong Kong and China experienced declines amid volatile trading, and US markets closed mixed despite tech optimism.
The U.S. stock market surged as the Federal Reserve cut interest rates by 25 basis points, with the Nasdaq Composite rising over 1.3% led by Nvidia and Amazon. This move comes amid optimism following Donald Trump's presidential election victory, which has fueled expectations of economic growth through corporate tax cuts and deregulation. The Fed's decision to lower rates to 4.5%-4.75% aims to support stable prices and full employment, though it raises questions about future rate cuts. Meanwhile, tech stocks continue to rally, and mortgage rates have risen amid election volatility.
U.S. stock futures were mostly flat on Thursday as investors awaited labor market data, with Nasdaq futures slightly up due to gains in Nvidia. The tech sector's recent rally, driven by AI-related stocks, has boosted market optimism. Nvidia's continued rise, following its recent milestone of surpassing $3 trillion in market valuation, has been a significant contributor to the S&P 500's year-to-date gains. Traders are increasingly betting on potential Federal Reserve rate cuts later this year.
The S&P 500 and Nasdaq Composite closed at record highs, driven by a surge in Big Tech stocks, particularly Nvidia, which saw its market cap surpass $3 trillion. Optimism for potential interest rate cuts due to signs of a cooling economy and slowing labor demand also contributed to the rally.
As the tech rally fades, investors are looking to earnings reports from Microsoft and Alphabet to reignite the market. With rising rates, regulatory restrictions, and geopolitical tensions, tech valuations have become increasingly expensive. However, Big Tech remains the most-crowded trade among fund managers. The earnings growth of these companies is crucial to justify the gains made this year. The five biggest tech-related companies in the S&P 500 have been responsible for the majority of the index's gains. Microsoft and Alphabet are expected to deliver strong profit growth, while investors are seeking protection against potential declines in the near-term. The performance of Microsoft's Azure cloud computing business and the rebound in digital advertising for Alphabet will be closely watched. These earnings reports could serve as a catalyst to turn the market positive.
Apple became the first publicly traded company to reach a market valuation of $3 trillion for the second time, as its shares surpassed $190.74. The tech giant's success can be attributed to its ability to navigate the supply chain crisis caused by COVID lockdowns and the resilience of its iPhone business. While other tech companies have benefited from the AI hype wave, Apple has largely stayed away from AI-related ventures. Instead, its focus has been on the upcoming launch of its Vision Pro AR/VR headset and expanding into the Indian market. Despite facing difficult comparisons due to the pandemic-induced surge in sales, Apple's iPhone sales have continued to grow.
Retail investors are pouring money into AI-related stocks as they chase the next tech rally. Despite a slight decrease in retail investor inflows, stock purchases remain above the daily average following the collapse of Silicon Valley Bank. Micron, Oracle, Adobe, and Snowflake are among the four AI stocks gaining traction among retail investors as they search for new winners in the AI space.
The Nasdaq continues to climb as the tech rally persists, with the stock market benefiting from the strong performance of technology companies, attracting investors looking to capitalize on the sector's growth.
