24/12/2025 Daily Reports
As the year draws to a close, emerging markets are gaining attention amid a rare alignment of supportive factors. Strong earnings momentum, expectations of a more accommodative U.S. monetary policy and accelerating artificial intelligence adoption are improving the outlook for EM equities. Earnings growth is a key pillar, with forecasts pointing to the strongest EPS expansion among major regions next year, helping offset valuations that sit near historical highs. A sector mix tilted toward growth and technology further supports the investment case.
A potential “soft landing” scenario in the U.S., where interest rates fall without a recession, could also favor emerging markets, as similar periods have historically led to stronger performance outside the U.S. AI remains an additional catalyst, with leading EM technology players expected to deliver rapid earnings growth at relatively attractive valuations. Regionally, North Asia stands out on semiconductor and AI-related demand, while parts of EMEA benefit from valuation appeal. Key risks remain tied to global growth and any slowdown in AI-related investment, but the overall setup suggests EM assets could enter 2026 with supportive momentum.
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US Economy Defies Gravity
- GDP Shock: The US economy grew at an unexpectedly strong 4.3% annual rate in Q3 (up from 3.8% in Q2), pushing the S&P 500 to another record high closing at 6,909.79.
- The Inflation Sting: It’s not all clear skies; the Fed’s favorite inflation gauge (PCE) climbed to 2.8% (up from 2.1%), signaling that price pressures remain sticky.
Sector Movers & Shakers
- Tech Power: Nvidia (+3%) and Alphabet (+1.5%) continued to do the heavy lifting for the indices.
- Pharma Breakthrough: Novo Nordisk surged 7.3% after US regulators approved the first-ever oral pill version of the weight-loss drug Wegovy, a potential game-changer for the obesity market.
Commodities & Currencies
- Gold Rush: The yellow metal is showing no signs of fatigue, rising another 0.4% to $4,525/oz (+70% YTD). Silver also rallied 1.8%.
- Yen Watch: The Dollar fell to 155.96 Yen as Japanese officials ramped up warnings about intervening against “excessive moves.”
Asian Markets
- Trading was thin due to Christmas Eve. Tokyo remained flat, while Hong Kong edged up 0.2%. Most global markets are preparing for holiday closures.
What’s Next?
This data release creates a fascinating headache for the Federal Reserve heading into 2026.
We have a “Goldilocks” GDP number (4.3% growth is impressive), but the rising PCE inflation (2.8%) kills the narrative that inflation is fully conquered. Usually, strong growth + rising inflation = Rate Hikes. However, the slowing labor market suggests the opposite.
