In today’s session, global markets exhibited a mixed yet cautiously optimistic tone, driven by a combination of easing inflation indicators, central bank signaling, and better-than-expected corporate performance in key sectors. After reviewing the latest data and commentary on Investing.com, my analysis leads me to believe that markets are gradually transitioning into a late-cycle phase, where monetary policy and macroeconomic resilience play a more dominant role than pure earnings growth.
U.S. equities opened higher today following the release of November retail sales figures, which showed a modest yet positive growth of 0.3% month-over-month, outperforming the expected 0.1%. This reinforces the narrative that despite elevated interest rates, consumer demand remains resilient, especially during the holiday season. The S&P 500 is approaching key resistance levels around the 4,750 mark, a zone that has historically signaled caution, but the underlying momentum suggests that traders are increasingly confident in a soft-landing scenario.
On the inflation front, PPI data pointed to continued deceleration, with core PPI rising merely 0.1% in November. Such developments have deepened investor expectations that the Federal Reserve is done hiking rates. Fed fund futures now price in a high probability of rate cuts as early as May 2026, with today’s FOMC communiqué reinforcing a more dovish tone. Chair Powell emphasized the importance of data-dependence, but notably refrained from emphasizing the risk of re-accelerating inflation, which many interpret as a green light for risk assets.
In Europe, the ECB and BoE remain relatively more cautious, with ECB President Lagarde clarifying today that while inflation is easing, wage growth remains a concern moving into Q1 2026. European equities, however, tracked global optimism and saw modest gains. The DAX rose 0.45% and the FTSE 100 gained 0.32%, reflecting improved investor sentiment in large-cap exporters thanks to the easing euro and pound.
In Asia, Chinese equity indices rebounded modestly after the PBoC injected further liquidity through reverse repos, and signaled continued accommodative monetary policy into the first quarter of 2026. Despite persisting concerns over property defaults and slowing GDP growth, today’s market response suggests that investors are finding confidence in government backstops. The Hang Seng was up 0.8%, and the CSI 300 gained almost 1%, although volumes remain below their 90-day average.
In my opinion, markets are currently navigating a critical inflection point. The interplay between softening inflation, a potentially dovish pivot by central banks, and ongoing geopolitical tensions is driving a recalibration in asset allocation strategies. There is increased rotation into cyclicals and tech, while defensive sectors like Utilities and Healthcare are underperforming. The Nasdaq is leading this move today, jumping over 1%, buoyed especially by semiconductors following Micron’s bullish revenue guidance for Q1 2026.
Treasury yields are retreating again, with the 10-year yield dipping below 4.00%—a psychological level that has historically triggered stronger equity market participation. The bond market is clearly pricing in slower growth ahead, yet not a full recession, which paradoxically supports equities under the current macro regime.
From a personal perspective, I remain cautious but optimistic. The macro data suggests that we may be past peak tightening, and as long as inflation continues to trend downward, the market is likely to sustain its current upward trajectory into early 2026. However, risks from global conflict zones, particularly in the Middle East and Ukraine, and internal U.S. political stability ahead of the presidential election will surface more strongly in Q2.