Today, December 4th, 2025, as I review the financial markets at 5:00 PM through Investing.com, the macroeconomic narrative is again being shaped by central bank speculations, geopolitical tensions, and continued uncertainty around global demand. The markets today showed a mixed performance, but under the surface, some key trends are emerging that I believe are giving shape to the late 2025 macro environment.
The most significant headline today was the statement from Federal Reserve Chair Lisa Cook during a scheduled policy discussion, where she emphasized a continued data-dependent approach going into the January 2026 FOMC meeting. While the Fed has effectively ended its interest rate hiking cycle with the last rate hike occurring in September, Cook noted that inflation remains “persistently resilient” in the services sector, particularly in healthcare and housing. Markets reacted with a mild uptick in yields, with the U.S. 10-year Treasury yield climbing back above 4.5% after dipping below that level earlier this week. This signals a market that is dialing back earlier optimism around a March 2026 rate cut.
On the equities front, the S&P 500 closed marginally lower by -0.2%, but the real concentration of weakness came from the Nasdaq Composite, which dropped about -0.6%, led by a continued pullback in AI-mega-cap names like Nvidia and Meta. Investors seem to be repositioning after an extraordinary run in tech equities over the last quarter. Nvidia in particular has come under pressure, falling over 3% today on profit-taking and reports that China is ramping up domestic semiconductor production, which could impact forward-looking sales projections. I believe this is a short-term correction more than a change in the underlying AI narrative, although valuations remain stretched even at current levels.
Over in Europe, the DAX pulled back by 1.1% driven by lower-than-expected German industrial orders data, signaling that Europe’s largest economy may still be struggling to escape stagnation. ECB President Christine Lagarde reiterated that interest rates would remain “sufficiently restrictive” for the next few quarters. The euro moved slightly lower against the dollar, now trading near 1.0740, as the yield spread continues to favor dollar-denominated assets. The BOE, on the other hand, has started showing signs of a policy pivot, with traders now pricing in a 50% probability of a rate cut as early as March 2026.
In commodities, oil saw a sharp drop today, as WTI crude fell more than 4% to $71.45 per barrel. This was largely due to OPEC+ failing to agree on deeper production cuts beyond Q1 2026. Market participants had expected more clarity from the group after last week’s virtual meeting, but internal divisions between Saudi Arabia and Angola appear to be widening. This, coupled with the recent unexpected build in U.S. crude inventories, is adding downside pressure on energy prices. Personally, I see this as a warning sign — not just about oversupply risks, but also about fading expectations for a robust global GDP growth outlook in the first half of 2026.
In the currency markets, the U.S. dollar rebounded slightly, with the DXY index hovering near 104.6. What stood out to me today was the resilience of the Japanese yen, which is holding around 146.30 per dollar, as BOJ officials continue to lean toward ending negative rates in the first quarter of 2026. If that materializes, it could sharply influence global carry trade positions, many of which are still yen-funded.
In short, today’s market reflects a cautious shift driven by central bank recalibrations and cooling expectations on earnings and global demand. The optimism from last month’s “soft landing” narrative is fading, giving way to a more sober trading environment as we approach year-end.