December failed to deliver on the “Santa Clause rally” many investors anticipated, but global markets still ended the year on a positive note supported by easing inflationary pressures, solid corporate earnings, and expectations that major central banks will continue lowering interest rates in 2026. The S&P 500, FTSE 100 and Euro STOXX 50 ended the month up by 0.1%, 2.3% and 2.3%, respectively, and measured in their local currencies, while the Nasdaq slipped by 0.5%, as profit-taking in technology stocks continued amid concerns over elevated valuations. In fixed income, both the Bank of England and the Federal Reserve Bank cut interest rates by 25 basis points over December, while the European Central Bank kept rates unchanged, reflecting a cautious approach to easing as hawkish expectations remain for future policy paths. The yields on US and UK 10-year bonds increased by 15 and 4 basis points respectively, despite the December rate cuts. In commodity markets, copper surged by 8.1% supported by strong demand in green energy projects amid falling global inventories. In currencies, sterling strengthened by 1.8% against the US dollar and 0.5% against the euro.

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