Global markets traded cautiously on Tuesday as investors awaited the Federal Reserve’s final policy decision of 2025, which is widely expected to deliver a rate cut. Wall Street edged higher after Monday’s dip, Europe held steady amid light data and earnings, and Asia mostly declined as traders weighed mixed macro signals and policy divergence across the region.
US stocks moved into positive territory on Tuesday as the Federal Reserve began its final policy meeting of the year and fresh labour data offered a mixed read on economic momentum. The DOW fell -0.2%, the S&P 500 gained +0.1% and the NASDAQ added +0.2%, recovering from Monday’s declines as JOLTS figures showed an unexpected uptick in job openings even as layoffs increased. Markets remained focused on Wednesday’s decision, with nearly 90% odds priced in for a quarter-point rate cut. This is reinforced by President Trump’s call for a new Fed chair who would move immediately to lower borrowing costs, even as questions linger about the pace of easing into 2026 following December’s ‘hawkish cut’ and cautious remarks from White House economic adviser and Fed chair frontrunner, Kevin Hassett. Treasury yields continued to edge higher, with the US two-year yield up +2bp to 3.604% and the 10-year yield unchanged at 4.172% as investors weighed inflation risks and the durability of the Fed’s easing cycle into next year.
European stocks struggled for direction on Tuesday as caution prevailed ahead of the Federal Reserve’s rate announcement, leaving the STOXX 600 down -0.1%. Germany’s DAX rose +0.5%, France’s CAC 40 dropped -0.7%, while the UK’s FTSE 100 remained flat as traders weighed soft sentiment against a modest improvement in German trade figures, with October’s surplus widening on stronger exports and weaker imports. EssilorLuxottica fell -5.6% after Google revealed plans to launch its first AI-powered glasses in 2026, intensifying competition in the emerging wearable AI market and overshadowing the company’s smart-glasses partnership with Meta.
Asian markets declined on Tuesday as investors positioned cautiously ahead of the Federal Reserve’s rate decision, with traders focused on the pace of easing amid cooling labour data and sticky inflation. China’s Shanghai Composite fell -0.4% after the Politburo signalled a shift toward ‘more proactive fiscal policy’ and ‘appropriately loose monetary policy’ to support domestic demand in 2026, while Hong Kong’s Hang Seng slid -1.3% on tech weakness. Japan’s Nikkei 225 edged up +0.1%, with chip-related names gaining on the back of Nvidia (-0.3%) receiving approval to ship H200 AI chips to China in exchange for a 25% sales cut. South Korea’s Kospi slipped -0.3% amid uncertainty over the Fed’s future policy path, while Australia’s ASX 200 dropped -0.4% after the RBA delivered a hawkish hold and warned inflation risks had ‘tilted to the upside’. New Zealand’s NZX 50 fell -0.2% as traders reversed earlier rate-cut expectations, now almost fully pricing in a hike after the RBNZ signalled a higher bar for easing.
WTI crude lost -1.1% to US$58.22/bbl, gold inched up +0.4% to US$4,203.53/oz, and iron ore fell -0.8% to US$106.42/MT. Silver surged +3.6% to a record of US$60.23/oz as growing expectations for rate cuts continued to fuel a rally across the metals market.