Year-end rally: global markets hit new records as the yen strengthens

The surge in global equities continues, supported by solid corporate earnings and expectations of more accommodative monetary policy. Gold reaches new historic highs, while the yen gains ground following comments from Japan’s Finance Minister.

Global stock markets continue their record-breaking run, with the MSCI All Country Index extending its rally for the fourth consecutive day. Investor confidence remains high, driven by resilient corporate earnings and a growing belief that major central banks will adopt a more accommodative stance over the coming year. In Asia, the Pacific equity index rose 0.6%, while European and U.S. futures held steady after another positive session for the S&P 500.

The commodities sector is also shining: gold has posted yet another all-time high - its fiftieth record of 2025 - accompanied by a new peak in silver. Strategists note that the prevailing “Goldilocks” sentiment - an economic environment that is neither too hot nor too cold - is contributing to further weakness in the U.S. dollar, creating favorable conditions for rival currencies.

Among these, the yen stands out, having strengthened in recent hours beyond the 156-per-dollar threshold. Remarks by Finance Minister Satsuki Katayama, who reiterated the government’s determination to counter excessive market movements, sent a strong signal to traders. Her comments fueled expectations of a possible new intervention, following the roughly $100 billion spent last year to support the Japanese currency.

In the United States, the S&P 500 has erased December’s losses and is heading toward an eighth consecutive month of gains, the longest streak since 2018. Technology stocks remain at the center of the rally, led by Tesla and Nvidia. Despite some concerns over high sector valuations, many fund managers maintain a markedly optimistic stance, with cash levels at their lowest in years.

On the macroeconomic front, the Federal Reserve’s policy direction remains crucial: markets are pricing in two rate cuts in 2026, while some central bank officials warn of recession risks if monetary easing proceeds too slowly.

Meanwhile, oil prices are stabilizing after four days of gains amid rising tensions between the United States and Venezuela. Bitcoin is down about 1%, as markets head toward the end of the year in an atmosphere marked by optimism.

Andrea Pelucchi