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Investors on edge as rate hike bets and financials boost Australia shares
Australian shares recorded modest gains on Friday. The majority of sectors were in the green and banking stocks, at the top at the end of a week that was otherwise depressing as investors considered the Reserve Bank’s rate hike trajectory for 2026. The S&P/ASX 200 index closed the day 0.5% higher, at 8,628.20. The benchmark index, however, ended three consecutive weeks of gains by losing 0.8% on Friday. Investors are betting on rate increases in the first half 2026, after a stubbornly high inflation and a hawkish stance at a central bank meeting last week. The markets are still betting on a Reserve Bank of Australia's cash rate of?3.6% next year. Odds of an increase in February? are priced at 25%. They rise to 45% by March, and 75% by May. After a nice rebound from their lows in November, shares are now under pressure. "Our view is that the renewed weakness over the past two weeks was a correction," said Shane Oliver. He is the head of investment strategy at AMP and the chief economist. The Reserve Bank of Australia minutes for its December meeting will be released next week. A key reading of monthly inflation is scheduled to be released early in January. All four "Big Four" banks ended in positive territory, as the financial sector advanced by 1.1%. The sub-index's performance in 2026 will be closely monitored after concerns over frothy values and soft earnings growth put it on track for a 7% annual gain, which is sharply below last year’s 28.2% surge. Stocks of rate-sensitive consumer discretionary and real estate added 0.8% each. The only exception was the mining industry, which lost 0.6%. BHP and Fortescue fell 1.2%?and 3.2% respectively. The sub-index fell 1.7% on a weekly basis, ending three weeks of gains. The S&P/NZX 50 closed at 13,333.40, up 0.6%. The benchmark index, however, fell 0.6% in its third week of losses. (Reporting and editing by Ronojojo Mazumdar in Bengaluru. Nikita Maria Jio is based in Bengaluru.
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MORNING BID EUROPE - Japan's savers can party like it is 1999
Wayne Cole gives us a look at what's ahead for the European and global markets. After 30 years of waiting, Japanese savers are finally able to get 0.75% on their money. Just don't spend all your savings at once. Bank of Japan raised rates by a quarter-point to 0.75%, as was expected. The market's knee-jerk response was to sell the yen and the dollar shot up as high as 156.19 before stabilizing at 156.00. The Nikkei gained 1.2% in the first hour, largely due to a Wall Street rally sparked by stellar Micron Technology results. The BOJ was not dovish. The BOJ noted that real rates remained at "significantly low" levels, even after the increase. It also pledged to continue tightening if the economy and inflation progressed as expected. The policymakers also seemed more confident in the ability of firms to continue raising?wages and maintain inflation at around 2%, a cycle they have spent decades trying create. The bond market took them at their word and 10-year yields climbed by 5 basis points, to 2.115%. This is the highest level since August 1999, when 'Genie in a Bottle' was ranked?No.1 in the charts. 1. Investors now await BOJ Governor Ueda's post-meeting press conference. His comments have previously moved the markets. His thoughts on terminal rates will be one of the main topics. He has long said that neutral is a range between 1.0% and 2.5%. But markets only price in one more increase to the bottom of this band. If Ueda were to hint at anything more, it could hurt bonds while helping the yen. If not, the U.S. CPI data released on Thursday could contain a lot of damned statistics and lies. No serious economist thinks that inflation really slowed down to 2.7% from 3.0% in October (October was lost due to the shutdown). The Bureau of Labor Statistics was only able to collect data from mid-November onwards, in time for Black Friday sales. The BLS' method for addressing the lack of data for October also created a downward bias on rents and owner's equivalent rentals, which is likely to last for some time. The impact of this may not be reversed before the April edition of the CPI, which is when the annual readings are released. What the Fed's policymakers need. The following are key developments that may influence the markets on Friday. ECB's Lane, Cipollone and Kocher are among the speakers - EU Flash Consumer Confidence; German GfK Sentiment; German and French Producer Prices; UK Retail Sales US University of Michigan Consumer Sentiment, Existing Home Sales
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Gold prices fall on lower US inflation figures and a firmer dollar
Prices of gold fell on Friday due to lower than expected U.S. inflation figures, which reduced the appeal of bullion as a hedge against rising inflation. As of 0147 GMT spot gold was down by 0.3%, at $4,318.19 per ounce. However, it is expected to finish the week with a 0.4% increase. U.S. Gold Futures dropped 0.4% to $4346.60. Spot silver dropped 0.5% to $65.10 per ounce but was expected to finish the week at a?5% increase after reaching an all-time record of $66.88 an ounce on Wednesday. Silver is up 125% in the past year, surpassing gold, which has seen a rise of 65%. The dollar remained near its one-week-highs, making precious metals priced in greenbacks more expensive to other currency holders. "The softer inflation prints were a double-edged blade (for gold and silver), as it helped justify a more dovish Fed but also meant that they lost some of their appeal in terms of inflation hedges. Tim Waterer, KCM Trade's Chief Market Analyst, says that the dollar is standing firm and creating resistance. Data shows that U.S. consumer price indexes rose by 2.7% in November compared to the same month last year, below the 3.1% rise predicted by economists. Federal funds rate futures?indicate a slightly higher chance that the Federal Reserve will reduce interest rates during its meeting in January, following the data. Goldman Sachs believes that gold prices will?rise 14% to $4900/oz in December 2026, in its base scenario, according to a note it released on Thursday. It also noted upside risks due to the potential diversification of private investors. Platinum rose 0.5% to $1.924.59, after reaching a 17-year high?on Thursday. Palladium dropped 1.1% to $1677.68, after reaching a three-year high Thursday. Both were on track to make weekly gains, while palladium is set to have its best week since Sept. 2024. Waterer said that "precious metals have become popular, and platinum and palladium are now following gold and silver in the fashion world."
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Japan increases rates and Asia stocks rise with Wall Street
The?yen eased on Friday after the Bank of Japan increased interest rates to three-decade-high levels and left the door open for?further easing. The decision to raise rates to 0.75 percent was widely expected and the initial reaction was to sell the yen in anticipation of a more detailed outlook at the media conference by BOJ Governor Kazuo ueda later in the day. The markets had bet on just one rate hike in 2019, to 1.0%. Ueda, however, has said that a neutral rate range would include rates from 1.0% up to 2.5%. Investors should be wary if he suggests that the rates may be raised more than once by 2026. Abhijit Sundera, senior APAC economist for Capital Economics, stated that the BOJ indicated that more tightening would be likely, given that real interest rates are still negative, despite today's increase. He added that he believed the data would more than likely surprise him to the upside, predicting rates of 1.7% by 2027. The core CPI in Japan rose by 3.0% annually in November, the same as it was last month. The dollar has gained 0.3% in the last few days to 156.03yen, and the euro is up 0.3% at 182.96. The yields on Japan's 10 year bonds are now at 1,975%, which is just below a 18-year high. Japan's Nikkei gained 1.3% after following Wall Street's overnight rally. South Korea gained 0.8%, and Taiwan, a tech-heavy country, 1.3%. This was due to the stellar results of chipmaker Micron Technology. The MSCI broadest index of Asia-Pacific shares outside Japan gained 0.7% while Chinese blue-chips gained 0.6%. ByteDance announced that it had reached a deal with major investors in order to create a joint venture for the operation of TikTok’s U.S. App. This was done to avoid an American government ban. ECB AND BoE OFFER DIFFERENT LEVELS of HAWKISHNESS EUROSTOXX Futures and FTSE Futures both fell 0.3% for European bourses. DAX Futures also dropped 0.2%. S&P futures were flat while Nasdaq Futures gained 0.2%. The unexpected slowdown in U.S. inflation rates to 2.7% has boosted sentiment, but analysts warn that the data are clearly distorted by the government shutdown. They cannot be taken at face-value. The Federal Reserve's pricing has only moved marginally. A rate cut was implied in January at 27%. In March, the price increased to 58%. Before the data, it had been 54%. Bond markets welcomed the U.S. CPI figures with caution, as the 10-year Treasury yields remained at 4,126%. This is a far cry from the recent high of 4,209% for the past 3-1/2 months. Overnight, British Bonds?had suffered a blow after the Bank of England lowered rates as anticipated but only following a 5-4 vote. The policymakers have also expressed caution over the pace of future easing. Another cut is not fully priced until June. The European Central Bank, which held rates at 2,0 %, was even more hawkish. It?suggested a probable end to the ease cycle. The markets indicate that there is only a small chance of a reduction for the entire year 2026. The central banks of Sweden and Norway also remained unchanged, although the Norwegians left the door open for one or more reductions. Gold fell 0.3% on the commodity markets to $4,319 per ounce, still below its October peak at $4,381. Silver has seen a drop in price after its meteoric rise, but palladium, platinum and other metals remain in high demand. The possibility of additional U.S. Sanctions against Russia, and the risks of a blockade on Venezuelan oil tankers, helped to support the price of crude. Brent crude fell 0.2%, to $59.71 per barrel. U.S. crude dropped 0.3%, to $56.00 a barrel. (Reporting and editing by Sam Holmes, Jacqueline Wong, and Wayne Cole)
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Lundin Mining sells Eagle nickel-copper to Talon Metals at a price of $84 million
Lundin Mining, a Canadian mining company, announced on Thursday its intention to sell the Eagle Nickel-Copper Mine and Humboldt Mill in exchange for Talon Metals shares. This will create a nickel-copper-only American company. According to the?deal?, Lundin's U.S. subsidiary that owns Eagle Mine in Michigan will be transferred to Talon for 275 million Talon Shares, worth approximately $83.7 million at current prices. Lundin will own about 20% of Talon, on a non-diluted base. Eagle is the only nickel mine in operation today in the United States. Since production began, the mine produced 194,000 tons nickel and 185,000 tonnes copper, generating $3.2 billion revenue by 'the third quarter 2025. Talon is now positioned for processing critical minerals in multiple U.S. locations, including the Humboldt Mill, in Michigan, and a planned future facility in Beulah in North Dakota. After the deal, Talon will have a board of 10 directors with two Lundin nominees. Darby Stacey will be appointed Talon's CEO and Director. He is currently the managing director for Eagle Mine?and Humboldt Mill. Lundin stated that the transaction allowed it to streamline its portfolio, and focus on its large copper?operations? in Brazil and Chile. It also retained exposure?to potential upside?through Talon's exploration assets?including the Tamarack Nickel project?in Minnesota. The deal is expected to close early in January 2026. After the completion of the transaction, Eagle's output will no longer be considered in Lundin Mining’s production guidance.
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Official: Suspect gunman found dead in Brown University shooting
A U.S. Attorney said that the suspect in the mass shootings at Brown University at the weekend is dead. Authorities are investigating whether the same individual killed a professor at the Massachusetts Institute of Technology two days after the Brown rampage. Two other federal officials confirmed that?the?suspected Brown Shooter was dead. The body is believed to have been found in a storage facility in Salem New Hampshire, approximately 30 km north of Boston. A large number of police officers were in the area Thursday night, in connection with an investigation into the Brown University shooting. Unnamed Department of Justice officials, who were not authorized by the Department to speak about the matter, stated that the suspect shooter killed himself. Sources did not give more information on the identity of the shooter or why investigators believe the two cases are linked. They said federal prosecutors from Massachusetts, the state where MIT is situated, have drafted charges for an 'individual' they are looking for in this investigation. MANHUNT LEAVES STUDENTS AND RESIDENTS "RESTLESS" AND "EAGER" The manhunt that has been underway since the shooting on Saturday inside a classroom at Brown University in Providence, Rhode Island left residents and students of Providence, Rhode Island feeling "restless and anxious" to make an arrest. This was confirmed by Mayor Brett Smiley. At least eight students were injured and two were killed at the Ivy League School. Nuno Loureiro was shot dead in Brookline, Massachusetts on Monday. Brookline is a Boston suburb located about 80 km (50 miles) north of Brown University's campus. A FBI official said that authorities believed there was no link between the shooting on Saturday at Brown University and the murder of the MIT professor. Loureiro worked at MIT in the departments of physics, nuclear science and engineering as well as plasma science and fusion center. The lack of cameras in the classroom and the surrounding area led investigators to rely heavily on footage from nearby homes. The police released photos and videos of a man wearing a mask, believed to be responsible for the shooting, based on the accounts of survivors. They have asked the public repeatedly for help in identifying the man. The video showed the suspect walking through a nearby neighbourhood both before and after?the assault, including moments where police cars with flashing lights arrived. Oscar Perez, Chief of the Providence Police Department's, said that the suspect could be anywhere. He added that at first authorities didn't know his identity or motive. The police also distributed photos of a second unidentified male seen in the area, stating that they were interested in speaking with him because he could have important information. The authorities initially said a person had been taken into custody the day following the shooting. However, they later released this individual after concluding that he wasn't involved.
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The price of oil is expected to fall for the second consecutive week
Early Friday trading saw oil prices fall and they were expected to close lower than last week as the prospects for a Russia-Ukraine deal outweighed concerns about supply disruptions due to a blockade on venezuelan tankers. Brent crude futures were down 9 cents or 0.2% to $59.73 a barge by 0111 GMT. U.S. West Texas Intermediate crude traded 16 cents or 0.3% less at $55.99 a barge. Both benchmarks are down over 2% on a weekly basis. Donald Trump, the U.S. president, said on Thursday that he believed talks to end the?war? in Ukraine were "getting closer to something". This is ahead of an upcoming U.S.-Russian?officials meeting this weekend. It was not clear, in the case of the second potential geopolitical trigger, how the U.S. could enforce Trump's declaration to blockade oil tankers that enter and leave Venezuela (which?makes 1%?of global supply) under sanctions. The U.S. Coast Guard seized an oil tanker from Venezuela in a historic move last week. Tony Sycamore, IG analyst, said on Friday that "uncertainty about enforcement details and the optimism of a possible U.S. led Ukraine peace deal (are) easing supply concerns in global markets and reducing geopolitical risks premiums." Analysts say that further measures against Russian oil may pose a greater risk to supply than Trump's Venezuelan?blockade on tankers. According to sources familiar with Venezuelan oil export operations, Venezuela authorized on Thursday two very large crude carriers that were not sanctioned by the country?to sail towards China. Analysts at the Bank of America predict that the lower oil price will reduce the supply of oil, preventing a freefall in prices. Sycamore, IG's analyst, said that a rally above the resistance level of $56.70-$56.90ish could strengthen the argument that the selloff this week to the $54.98 bottom was a false breakdown lower. "Conversely a break under $54.98/90ish will reignite the downside momentum and target the psychological $50.00 threshold." (Reporting and Editing by Shri Navaratnam).
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Asia stocks rally with Wall St., but prepare for BOJ hike
Asian share markets recovered on Friday, as a turnaround in the?tech sector lifted Wall Street. Investors are now counting down until a possible interest rate hike from the Bank of Japan which could have a major impact on currencies and bonds. The U.S. consumer prices inflation rate dropped to 2.7% in a "shock" move. Analysts cautioned that the data was clearly distorted by the shutdown of the federal government and should not be taken as a fact. The Federal Reserve's pricing has only moved marginally. A rate cut was implied in January at 27%. In March, the price increased to 58% compared to 54% prior. The markets indicate that there is a 90% probability the BOJ will increase its rate by a quarter-point to 0.75% on Friday. Investors bet on a further 1.0% increase in 2026. Any hint of more could offer the much-needed support for the embattled Japanese yen but also put pressure on government bonds. Analysts at CBA wrote in a report that "the policy rate is still stimulatory and there is a good case for further BOJ policy standardisation." The BOJ has set a 2% inflation target for the next two years. Inflation will increase as the yen weakens sharply in the last two months. The latest figures released on Friday show that Japan's core CPI increased at a rate of?3.0% annually in November, which is the same as it was for the previous month. Japan's Nikkei gained 0.6%. South Korea rose 1.2%, boosted by the stellar results of chipmaker Micron Technology. The broadest MSCI index of Asia-Pacific stocks outside Japan increased by 0.2%. ECB AND BoE OFFER DISTINCT LEVELS of HAWKISHNESS S&P futures and Nasdaq were flat overnight after the overnight bounce. The bond markets welcomed the U.S. CPI figures with caution, as the 10-year Treasury yields remained at 4,126%. This is a far cry from the recent high of 4,209% that was reached three-and-a half months ago. Japan's 10-year bond yield was 1.980%. This is a new high for the past 18 years. British bonds took a big hit overnight after the Bank of England cut interest rates, as expected, but only with a 5-4 vote. The policymakers have also expressed caution over the pace of future easing. Another cut is not fully priced until June. The European Central Bank's hawkish stance was further accentuated by its decision to keep rates at 2,0 %, and signal a probable?end of the easing cycle. The markets indicate that there is only a small chance of a reduction for the entire year 2026. The central banks of Sweden and Norway also remained unchanged, although the Norwegians left the door open for one or more reductions. Both the pound sterling and the euro briefly spiked, but then quickly retreated. The pound was at $1.3378, while the euro was at $1.1725. The dollar's value against the yen was 155.60, which is still within the range between 154.34 and 156.96. Gold was still stuck at $4.333 per ounce, below its October peak of $ 4,381. Silver has seen a drop in price after its meteoric rise, but palladiums and platinums remain in high demand. The possibility of additional U.S. Sanctions against Russia, and the risks of a blockade on Venezuelan oil tankers affecting supply, were the main drivers of the oil prices. Brent crude oil rose by 0.2%, to $62.04 per barrel. U.S. crude oil increased 0.2%, to $58.35 a barrel. (Reporting and editing by Sam Holmes; Reporting by Wayne Cole)
The price of oil is expected to fall for the second consecutive week
The oil prices fell on Friday, and are expected to fall for the second consecutive week as rising prospects of a Russia/Ukraine deal counteract concerns about supply disruptions due to a Venezuelan blockade.
Brent?crude?futures fell 9 cents or 0.2% to $59.73 a bar by 0456 GMT. U.S. West Texas intermediate crude traded 13 cents or 0.2% lower at $56.02 a bar.
Brent fell 2.3% on a weekly basis while WTI?was down by 2.5%.
Donald Trump, the U.S. president, said on Thursday that he believed talks to end?the conflict in Ukraine were "getting closer to something". This is ahead of an upcoming U.S.-Russian?officials meeting this weekend.
It was not clear, in the case of the second potential geopolitical trigger, how the U.S. could enforce Trump's declaration to blockade oil tankers that enter and leave Venezuela (which?makes?around 1%?of global supply) under sanctions. The U.S. Coast Guard seized an oil tanker from Venezuela in a historic move last week.
"Uncertainty about enforcement details and the optimism that a possible U.S. led Ukraine peace deal may still emerge (are) easing supply concerns in global markets and tempering risk premiums," IG Analyst Tony?Sycamore stated on Friday.
Analysts say that further measures against Russian oil may pose a greater risk to supply than Trump's Venezuelan?blockade on tankers.
According to sources familiar with Venezuelan oil export operations, Venezuela authorized on Thursday two very large crude carriers that were not sanctioned by the country?to sail towards China.
Bank of America analysts predict that the lower oil price will reduce the supply of oil, which may prevent a rapid fall in the prices.
Sycamore, IG's analyst, said that a rally above the resistance level of $56.70-$56.90ish could strengthen the argument that the selloff this week to the $54.98 bottom was a false breakdown lower.
"Conversely a break under $54.98/90ish will reignite the downside momentum and target the psychological $50.00 threshold." (Reporting and Editing by Shri Navaratnam).
(source: Reuters)