While central banks (Fed, ECB, BoE) made largely unsurprising monetary decisions, investors have focused on recent U.S. economic data, particularly unemployment and inflation.
Although the unemployment figures were met with a muted reaction, the decline in inflation allowed stock indices to recover slightly from recent losses. The end of the quarter and year is marked by triple witching day, a traditional market event, but no significant year-end rally has been observed.
In this context, bond yields remain stable, gold continues to hover near historic highs, and stock indices are consolidating flat, reflecting a period of transition and caution.
📊 Current economic environment
-
Concerns over valuations of AI-related companies weighed on markets, but positive signals such as the sharp decline in U.S. inflation and strong results from Micron Technology provided support.
-
The market remains uncertain about the Fed’s trajectory in 2026, balancing the promise of interest rate cuts against fragile expectations of sustained AI-driven growth.
-
The holiday period, with reduced volumes and several market closures, limits significant movements before the start of the new year.
📈 Investment Recommendation
✅ Why Consider Investing or Staying Exposed?
-
Stability amid uncertainty
Indices have shown relative resilience since April lows, providing a solid base for potential recovery in 2026. -
Opportunities related to inflation and interest rates
The decline in U.S. consumer prices could support rate-sensitive stocks, particularly in technology and cyclical sectors. -
Selectivity in technology and AI stocks
Despite volatility around AI, well-positioned companies like Micron may offer attractive long-term entry points. -
Cautious approach for year-end
With lower volumes and partially closed markets, measured and diversified exposure helps limit risks from erratic price movements.
⚠ Risks to Consider
-
Increased volatility around economic data and monetary policy decisions.
-
High valuations of AI-related companies, with potential for correction.
-
Low liquidity during year-end can amplify market swings.
-
Uncertainty regarding the Fed’s interest rate path in 2026.
📌 Verdict
👉 Year-end 2025 is characterized by a calm and cautious market environment. Investors may adopt a carefully selective approach, focusing on solid companies and opportunities linked to falling inflation and well-positioned technology stocks. Potential recovery in 2026 offers an attractive investment horizon for patient and disciplined investors.