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Friday, January 02, 2026
What’s happening: US stocks fell during the final trading session of the year but recorded gains for 2025.
What happened: Although tariff-related uncertainties exerted pressure on US stocks last year, interest rate cuts by the Federal Reserve and AI advancements kept investor sentiment bullish.
All three major US stock indices recorded double-digit gains in 2025, rising for the third straight year.
Why it matters: The rally last year was led by AI stocks, which sent all three major indices to record highs in 2025.
Shares of Nvidia jumped around 39% in 2025 and became the first publicly traded firm to reach a $5 trillion market valuation.
The communication services index was the top performer on the S&P 500 in 2025, driven by a 65% surge in Alphabet’s stock.
Shares of chipmakers Micron Technology and Western Digital also recorded sharp gains last year. However, FMC Corp and Fiserv were among the main losers in 2025, dipping around 71.5% and 67%, respectively.
Stocks on Wall Street rebounded from April’s lows after tariffs imposed by the Trump administration resulted in a sharp plunge in global markets, exerting pressure on US stocks and threatened economic growth outlook.
For 2025, the S&P 500 rose around 16.4%, while the Nasdaq 100 jumped more than 20%. The Dow added just 12.97% last year.
The Dow Jones index also recorded gains for the eighth straight month, representing the longest winning streak since 2017. The S&P 500 was also on course to record its eighth consecutive monthly gain, but ended up logging a loss for December.
The S&P 500 fell 0.74% to close at 6,845.50 points on Wednesday, while the Nasdaq 100 tumbled 0.84% to settle at 25,249.85. The Dow Jones index declined 303.77 points, or 0.63%, to close at 48,063.29. Trading volumes remained light during the holiday-shortened week.
All major sectors on the S&P 500 closed the session lower, with energy and communication services stocks being among the top losers on Wednesday. Microsoft’s stock fell around 0.8%, while shares of EQT Corp lost about 1.9%.
The decline in stocks on Wednesday defied market projections of a “Santa Claus rally,” a market phenomenon in which the S&P 500 records gains during the last five trading days of December and the first two sessions in January.
What to watch: Investors will continue monitoring the Federal Reserve’s policy outlook, which is expected to provide direction to global markets in 2026.
Data on S&P Global manufacturing PMI (1845 UAE Time) will be released today. Analysts expect the S&P Global manufacturing PMI to decline to 51.8 in December from 52.2 in the previous month.
Context: The AUD/USD forex pair rose this morning as investors digested the latest economic data.
Details: Data released this morning showed Australia’s Cotality Home Value Index climbed 0.5% in December, lower than the previous month’s 1.0% improvement and recording the weakest monthly rise since May.
The S&P Global manufacturing PMI came in at 51.6 in December, down from the flash reading of 52.2, but steady versus the previous month. The region’s manufacturing activity remained at its highest level in three months, amid gains in both output and new orders, while foreign sales declined for the fourth month in a row.
Minutes from the recent policy meeting of Reserve Bank of Australia showed that policymakers are ready to tighten monetary policy in case inflation does not slow as expected.
The US dollar came under pressure as markets remain concerned about the Fed’s independence under Donald Trump. Weakness in the US dollar lent support to the AUD/USD pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.2% to 98.16.
The AUD/USD forex pair rose around 0.4% to 0.6694 this morning, while the S&P/ASX 200 index gained about 0.2% to trade at 8,732.20.
The Australian dollar closed last year on a positive note, surging around 8% to record its best annual performance since 2020.
What to watch: Investors await the release of economic data on S&P Global composite PMI (0200 UAE Time) and S&P Global services PMI (0200 UAE Time) from Australia on Tuesday. Analysts expect the S&P Global Australia composite PMI to decline to 51.1 in December from 52.6 in the previous month, while the S&P Global services PMI business activity index is projected to ease to 51.0 in December from 52.8 in the previous month.
Next week’s inflation data will also remain in focus, which is expected to impact the policy stance of Reserve Bank of Australia.
Other Markets: European indices closed lower on Wednesday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index down by 0.09%, 0.23% and 0.10%, respectively.
Russia and Ukraine accused each other of attacks on civilians and infrastructure over the New Year. The news sent the USD/RUB pair higher in forex trading this morning.
Singapore’s economy grew by 5.7% year-over-year in the fourth quarter, accelerating from 4.3% in the previous quarter. The region recorded the strongest GDP growth since the third quarter of 2024, which exerted pressure on the USD/SGD forex pair.
Indonesia’s S&P Global manufacturing PMI fell to 51.2 in December from 53.3 in November, which sent the USD/IDR pair higher in forex trading this morning.
South Korea’s S&P Global manufacturing PMI rose to 50.1 in December from 49.4 in the previous month. It signalled the first growth in the manufacturing sector in three months, exerting pressure on the USD/KRW forex pair.
The Philippines’ S&P Global manufacturing PMI climbed to 50.2 in December from 47.4 in the previous month, sending the USD/PHP pair lower in forex trading this morning.
Spain’s HCOB manufacturing PMI (1215 UAE Time), Italy’s HCOB manufacturing PMI (1245 UAE Time), France’s HCOB manufacturing PMI (1250 UAE Time), Germany’s HCOB manufacturing PMI (1255 UAE Time), Eurozone’s HCOB manufacturing PMI (1300 UAE Time), loans to companies (1300 UAE Time), loans to households (1300 UAE Time) and M3 money supply (1300 UAE Time), UK’s S&P Global manufacturing PMI (1330 UAE Time), India’s bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Mexico’s business confidence (1600 UAE Time) and S&P Global manufacturing PMI (1900 UAE Time), Brazil’s S&P Global manufacturing PMI (1700 UAE Time), Singapore’s SIPMM manufacturing PMI (1700 UAE Time), as well as Canada’s S&P Global manufacturing PMI (1830 UAE Time).
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