Markets Eye a Year-End Comeback Amid Tech Gains, Rate Cut Bets, and Cautious Optimism

Economic

Summary:

Despite early December volatility, rising tech stocks, a crypto rebound, and strong rate cut expectations are rekindling hopes for a year-end rally, even as broader macroeconomic concerns persist....

A Fragile but Growing Hope for a Year-End Rally

Following a tumultuous November, U.S. markets appear to be regaining momentum in early December, with tech stocks and digital assets helping reverse recent pullbacks. Tuesday’s rally broke a brief downturn and reinvigorated investor sentiment, showing that risk appetite remains intact, albeit more selective.

Bitcoin, which recently experienced a sharp correction, recovered some losses, while equities across major U.S. indices posted gains. This rebound suggests that the sell-off was more of a temporary pause than a structural shift in investor positioning.

According to Doug Beath, global equity strategist at Wells Fargo Investment Institute, the market narrative is shifting toward renewed optimism. He noted that traders are now looking beyond the current economic weakness toward improved earnings projections and potential growth acceleration in 2026. This change in outlook provides a psychological anchor for equity markets to stabilize in the final weeks of 2025.

Rate Cut Bets Drive Risk Sentiment

One of the most significant drivers of the recent market optimism is the growing belief that the U.S. Federal Reserve will ease monetary policy. According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut at the upcoming December 10 meeting has surged to 89.2%, up dramatically from just a month ago when odds were near even.

This expectation has created a supportive backdrop for both equities and crypto assets. Lower interest rates reduce the cost of capital and typically boost the valuation of growth-oriented sectors such as technology. The relationship here is causal: as borrowing costs fall, investment activity and asset valuations are incentivized, fueling momentum in interest-sensitive segments.

Technology Leads Market Resilience

Tech stocks have once again taken the lead in lifting U.S. markets. Tuesday’s gains across all three major benchmarks reflect renewed confidence in the sector, possibly supported by strong fourth-quarter earnings projections. European markets, in contrast, remained more muted, with the Stoxx 600 barely finishing above the flatline.

A standout was Bayer, whose stock surged after the Trump administration moved to curb U.S. litigation risks linked to its weedkiller product. This development signals how regulatory actions continue to have material influence on corporate valuations, especially in sectors vulnerable to legal liabilities.

Crypto Volatility Raises Structural Questions

The crypto market, while partially rebounding, remains under pressure. Bitcoin’s recent 20% decline has led to renewed debate about whether the current downturn signals the onset of another crypto winter. Analysts remain divided. For digital asset-linked companies known as Digital Assets Treasury (DAT) entities falling token prices have caused their market valuations to diverge from the actual value of their holdings.

This discrepancy creates both risks and speculative opportunities. On one hand, DATs trading below net asset value suggest potential value traps; on the other, it raises questions about investor confidence in the underlying crypto ecosystem. If sustained, such misalignments could distort funding conditions and undermine transparency in crypto-linked equity markets.

Structural Headwinds: Tariffs and Housing Woes

Beyond asset prices, structural risks continue to challenge investor outlooks. One such issue is the lagging impact of renewed U.S. tariffs under President Trump’s administration. The Institute for Supply Management’s November survey showed a drop in employment metrics, with its hiring gauge falling to 44% the weakest since August suggesting that businesses are beginning to adjust staffing levels in anticipation of higher input costs.

Meanwhile, China’s real estate sector continues to deteriorate. Vanke, one of the country’s top property developers, is under scrutiny amid rumors of a potential state takeover, while November sales for the top 100 developers plunged 36% year-over-year. Morgan Stanley's estimate that average sales by 25 major firms dropped 42% paints a sobering picture of continued excess inventory and weak demand. These developments threaten to deepen the drag on China’s GDP and global construction-linked commodities.

Innovation Spotlight: French AI Startup Mistral Breaks New Ground

In a rare positive development out of Europe’s tech sector, French startup Mistral unveiled what it claims is the “world’s best” open-weight multimodal and multilingual AI model. Backed by €1.7 billion in funding from Nvidia and ASML, the launch positions Mistral as a serious competitor in the global AI race. It also signals continued investor appetite for frontier technologies, even in a climate of general economic caution.

The release could bolster Europe’s position in the global AI supply chain and add momentum to transatlantic tech collaborations. However, it also raises further demand for high-performance chips and cloud infrastructure, placing additional stress on already tight semiconductor supply chains.

Cautious Optimism with Caveats

Despite recent headwinds, markets are exhibiting signs of cautious optimism. Strong tech performance, expectations for monetary easing, and selective bullishness in crypto suggest that a year-end rally is not out of reach. However, the landscape remains fraught with risks from unresolved trade tensions and housing instability in China to potential crypto volatility.

Investors seeking a strong finish to 2025 may find a compelling story in recovering sentiment, but should brace for further turbulence and reassess risk exposure carefully as macro uncertainties persist.

Source: CNBC

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Gerik

Economic

AI Expansion Collides With Fragile Supply Chains

The rapid global build-out of artificial intelligence infrastructure is intensifying a worldwide shortage of memory chips, turning what was once a sector-specific issue into a systemic economic disruption. With Microsoft, Google, ByteDance, and other tech giants accelerating data center expansion, demand for high-bandwidth memory (HBM) and traditional memory components has overwhelmed supply, leading to price surges and bottlenecks across industries.

This mismatch stems from a direct causal relationship between AI’s explosive growth and memory demand. AI models such as those used in ChatGPT require immense memory bandwidth, redirecting production away from traditional DRAM and flash memory used in consumer electronics. As a result, device manufacturers, data center builders, and even component traders are all competing for scarce resources.

Soaring Prices Across Memory Segments

According to TrendForce, prices in some memory categories have more than doubled since February 2025. Inventory levels for DRAM suppliers fell dramatically to just two to four weeks by October, compared to 13–17 weeks in late 2024. This shortfall affects nearly all memory types, from USB flash to advanced HBM, underlining the severity of the constraint.

South Korean firms Samsung and SK Hynix, which dominate over two-thirds of the DRAM market, have raised prices on server memory chips by up to 60%. Micron, another major supplier, has informed clients of upcoming discontinuations in legacy products such as DDR4 and LPDDR4. These strategic shifts, initially intended to favor high-margin AI memory, now risk disrupting broader technology supply chains.

Retail and distributor quotes have become volatile, shifting hourly instead of monthly. In Akihabara, Tokyo’s tech district, stores are limiting memory purchases as prices for DDR5 kits surged from 17,000 yen to over 47,000 yen in just weeks. Traders like Polaris Mobility now issue day-long quotes due to pricing instability, a clear sign of market dislocation.

Impact Beyond Tech: Delays, Inflation, And Consumer Costs

The implications are far-reaching. Chip executives warn that the crisis could delay digital infrastructure projects and reduce productivity gains AI was expected to deliver. According to Citi, SK Hynix expects the shortage to persist through late 2027, reflecting long lead times to build new fabrication capacity. While the demand for AI-related chips continues rising, manufacturers hesitate to overinvest due to the cyclical nature of semiconductor markets.

In the consumer space, smartphone makers like Xiaomi and Realme have started passing on the cost. Realme anticipates device price hikes of 20–30% by mid-2026, citing storage as a non-negotiable component. This inflationary trend is reinforced by ASUS and other electronics firms flagging potential pricing adjustments due to limited memory stockpiles.

The cause-effect dynamic here is clear: AI-driven reallocation of manufacturing capacity toward HBM chips has directly constrained output of consumer-grade memory, creating shortages that ripple through the pricing of smartphones, laptops, and other devices.

The Supply-Demand Tug-of-War Intensifies

OpenAI’s October deal to source chips for its Stargate project requiring up to 900,000 wafers monthly by 2029 underscores the future imbalance. Current HBM production would need to double to meet this target, highlighting the disconnect between projected demand and existing output capacity.

Google, Amazon, Microsoft, and Meta are placing open-ended orders with suppliers like Micron, committing to purchases regardless of price. This approach benefits well-capitalized firms but raises entry barriers for smaller players, accelerating consolidation within the AI and semiconductor ecosystem.

In contrast, traditional memory buyers are “begging for supply,” as one executive put it. Companies like ASUS, Winbond, and numerous Chinese electronics firms are now forced to navigate an increasingly hostile procurement landscape, one in which availability, not cost-efficiency, determines survival.

Secondhand Markets And Stockpiling Surge

The crisis has also triggered a resurgence in secondary markets. In California, used memory chip seller Caramon saw monthly revenue jump from $500,000 to nearly $900,000, with demand largely driven by Chinese intermediaries. In Beijing, traders are stockpiling thousands of DDR4 units in anticipation of further increases.

This speculative behavior signals a shift from normal supply dynamics to scarcity-driven arbitrage. As demand continues to exceed supply, especially in Asia, resale value appreciation becomes a new revenue strategy not just for suppliers, but also opportunistic middlemen.

Industry Response: Capacity Expansions Are Too Late For Now

While major players like SK Hynix and Samsung have committed to expanding production, factories tailored for conventional memory chips won’t come online until 2027 or later. Even smaller players like Winbond are increasing capital expenditure sharply, with $1.1 billion approved to expand capacity.

Yet these investments cannot immediately resolve the supply crunch. The feedback loop between high demand, delayed supply response, and speculative hoarding is already well entrenched, reinforcing inflationary pressure globally.

AI’s Promise Faces Real-World Constraints

The AI revolution’s infrastructure needs have exposed fragile supply chains and long-overlooked bottlenecks in the semiconductor industry. What began as a rush for computational power has evolved into a structural challenge that affects both industrial strategy and consumer well-being.

The current chip shortage exemplifies how rapid innovation can outpace physical supply chains, turning a technological leap into a macroeconomic vulnerability. With AI’s trajectory unlikely to slow, global supply chain resilience especially in memory manufacturing may prove to be one of the defining economic challenges of the next decade.

Source: Reuters

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Economic

Commodity

Silver Holds Ground After Surging To Record Levels

Silver prices paused in early Asian trading, stabilizing after reaching an all-time high of $58.84 per ounce on Monday. As of the latest trading session in Singapore, the white metal held firm, reflecting strong investor interest driven by expectations of easing monetary policy and intensifying supply constraints.

Gold, in comparison, remained flat after two consecutive days of decline, while platinum and palladium showed minor losses. These mixed movements in the precious metals market reflect diverging investor strategies as macroeconomic uncertainty continues to shape risk appetite and safe-haven demand.

Speculation And Supply Constraints Drive Silver Surge

The recent spike in silver prices is largely attributed to a wave of speculative capital entering the market. A record volume of silver flowed into London last month, signaling heightened demand from institutional traders and hedge funds positioning for gains on the back of potential shortages.

Concurrently, inventories in warehouses tied to the Shanghai Futures Exchange have declined to their lowest level in a decade. This notable depletion in available stock reinforces the perception of structural supply constraints, particularly as industrial demand for silver continues to grow in sectors such as electronics and green energy.

The relationship between shrinking inventories and speculative interest is causal: tight supply conditions increase price volatility and attract short-term bets, which in turn amplify price movements. The self-reinforcing nature of these dynamics has pushed silver to historically unprecedented territory.

Federal Reserve Rate Outlook Boosts Precious Metals

Market participants are increasingly expecting a rate cut from the Federal Reserve during its upcoming meeting this month. Lower interest rates generally benefit non-yielding assets like gold and silver by reducing the opportunity cost of holding them. This relationship is well-established: when real yields decline, the relative attractiveness of precious metals typically improves.

As such, silver and gold have found fundamental support in monetary policy expectations, even as gold’s recent retreat suggests that some investors may be taking profits or adjusting positions in anticipation of the Fed’s final decision.

Volatility Ahead Amid Macro And Market Tensions

While silver’s price appears to have stabilized for now, the combination of physical scarcity and speculative momentum suggests continued volatility. Any shifts in central bank policy, warehouse inventory data, or investor sentiment could rapidly alter the price trajectory.

Meanwhile, the broader precious metals complex may remain under pressure or in consolidation mode, depending on the clarity and direction of monetary easing in the US and other major economies. For now, silver stands out as the most active and tightly supplied asset in this space, and its recent rally underscores the potent mix of structural scarcity and financial speculation.

Source: Reuters

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Economic

Economic Expansion Falls Short Of Expectations

Australia’s economy expanded by just 0.4% in the third quarter of 2025, a noticeable miss compared to the 0.7% anticipated by analysts. On an annual basis, GDP rose 2.1%, slightly under the forecasted 2.2%. While this annual growth rate aligns closely with the RBA’s projection, the weaker quarterly figure signals fragility beneath the surface of the broader economic outlook.

The shortfall has already impacted financial markets. Australian government bond yields declined immediately following the data release, reversing earlier gains. Investors responded by scaling back expectations of another interest rate increase, with many interpreting the report as a sign the RBA will hold rates steady at 3.6% in its upcoming December meeting.

Savings Rise As Households Turn Cautious

The GDP report also revealed subtle shifts in household behavior. The savings rate increased to 6.4% from 6% in the previous quarter, supported by rising incomes. This behavioral change coincided with a 0.2% decrease in discretionary spending and a 1% increase in essential expenditures, suggesting households are becoming more cautious.

The underlying causal factor appears to be growing economic uncertainty and a reallocation of budgets in response to rising living costs. The transition away from optional purchases implies a defensive stance by consumers, potentially dampening momentum in sectors reliant on non-essential goods and services.

Mixed Interpretations Of The Private Sector’s Role

Despite headline softness, some economists see encouraging signs beneath the data. Su-Lin Ong of the Royal Bank of Canada highlighted that the private sector continues to gain traction. With employment remaining strong and inflation exceeding the RBA’s target range, she argued there is no room for rate cuts, even if hikes may be paused.

This argument rests on the assumption that labor cost pressures, particularly unit labor costs, are continuing to rise. While not conclusive evidence of overheating, this trend suggests an enduring inflationary undertone, especially in a low-productivity environment.

Inflation Risks Remain In Focus Despite GDP Disappointment

RBA Governor Michele Bullock reiterated that the central bank remains ready to act if price pressures intensify again. Traders initially brought forward expectations of a rate hike to August 2026 following her comments, only to quickly retract them after the GDP release. The market reaction reflects a tension between inflation concerns and apparent economic weakness.

This response illustrates a correlation rather than a direct cause-effect pattern: stronger-than-expected inflation may pressure the RBA into tightening policy, but disappointing growth complicates such decisions.

Productivity Constraints Limit Economic Capacity

Australia’s potential growth rate has been downgraded to 2%, reflecting deteriorating productivity levels. Economic output per person remained stagnant in Q3, and GDP per capita has declined over seven consecutive quarters during 2023 and 2024. These numbers indicate that while the headline GDP is rising modestly, Australians are experiencing falling living standards.

Chief economist Alex Joiner of IFM Investors stressed that public-sector-driven growth persists, with the hoped-for pivot to private sector expansion yet to fully materialize. He warned that the economy is growing close to its reduced capacity, raising the risk of renewed inflation if demand continues rising without matching productivity gains.

This imbalance is a causal concern: weak productivity directly limits how much the economy can expand without generating inflation. Consequently, even moderate demand growth risks translating into price pressures.

Key Contributions To GDP Growth And Drag

A detailed breakdown of the components of GDP growth shows that household spending rose 0.5%, contributing 0.3 percentage points. Government spending increased 0.8%, adding another 0.2 percentage points. However, changes in inventories subtracted 0.5 percentage points, and net exports slightly reduced GDP by 0.1 percentage point.

The shift in consumer behavior, increasing public spending, and weakening net trade reflect a complex interplay of domestic resilience and global headwinds. Inventory reductions likely stem from supply chain normalization or demand uncertainty, which may or may not persist into the next quarter.

Limited Policy Room As Growth Slows

Looking forward, the RBA forecasts economic growth of around 2% in 2026. The forecast rests on expectations of sustained population growth, stable household income, and lower borrowing costs. Yet questions remain about how much room the RBA has to lower rates in an environment with weak productivity and tight labor supply.

Australia may no longer be able to rely on its historical growth patterns. The economy is not contracting, but per capita stagnation indicates that individuals are not materially better off. Policymakers now face the difficult task of balancing inflation risks with subdued growth, in an environment where structural constraints are tightening the country’s economic boundaries.

Source: Reuters

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Commodity

China–U.S. Trade War

Soybean Trade Resumes as U.S.–China Relations Stabilize

The long-stalled flow of U.S. soybeans to China is showing signs of revival. According to shipping schedules reviewed by Reuters, at least six bulk vessels are slated to load soybeans at Gulf Coast ports through mid-December. A seventh vessel, already loaded over the weekend, marks the first U.S. soybean shipment bound for China since May, breaking a months-long freeze that had paralyzed agricultural exports during a renewed round of tariff tensions.

This renewed activity comes in the wake of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea in late October. The White House claimed Beijing had committed to purchasing 12 million metric tons of U.S. soybeans before year-end. Although China has not officially confirmed this figure, the market has begun to react as if trade flows are gradually normalizing.

Export Bookings Offer Hope, But Remain Below Pre-Tariff Levels

According to U.S. Department of Agriculture (USDA) data, Chinese buyers booked nearly 2 million metric tons of soybeans in November for shipment during the 2025/26 marketing year, which ends in August 2026. However, the pace of confirmed purchases since that initial surge has been minimal. Total volumes are still significantly below pre-trade war norms, reflecting lingering uncertainty and the deep damage caused by prolonged political friction.

The muted purchase volumes have had a clear impact on pricing. Soybean futures remain near five-year lows, under pressure from excess domestic inventories and limited global demand. China's absence from the market throughout much of the year was a key driver of this price decline.

Loading Activity Signals Renewed Physical Trade

Current shipping data shows a ramp-up in physical trade activity. On Tuesday, the vessel Tokugawa was being loaded with soybeans, and Katagalan Brave is scheduled to follow. Additional vessels RB Eden, Hua Xing Hai, Donna Alexandra, and SSI Dominion are expected to arrive and load over the next two weeks. This cluster of activity points to a tangible shift in logistics and trade execution.

Additionally, U.S. sorghum exports to China, which had been dormant since March, have also resumed. The Bungo Queen is currently being loaded at a Texas Gulf Coast terminal, and another ship, the YM Navigator, is set to load from the Pacific Northwest next week. These shipments suggest a broader, albeit cautious, reopening of agricultural trade lines beyond soybeans.

Policy Signals and Farmer Support Measures in Focus

Amid this trade recovery, U.S. Agriculture Secretary Brooke Rollins reiterated the administration’s intent to finalize a formal agreement with China by the end of the week. She also announced plans for a new aid package targeting farmers impacted by price declines and trade disruptions. This fiscal support is meant to bridge the gap between resumed trade flows and lingering market weakness.

The Trump administration’s efforts to provide both market access and direct support reflect the economic and political importance of stabilizing rural economies heading into 2026.

The return of U.S. soybean and sorghum shipments to China is a welcome development for American agriculture, signaling a thaw in trade tensions and improved logistics momentum. However, the gap between current and historical trade volumes and China’s cautious purchase behavior highlight that a full recovery remains uncertain. Farmers and traders alike are looking to upcoming policy announcements and sustained shipping flows for confirmation that this rebound is more than a short-term reprieve.

Source: Reuters

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Samantha Luan

Forex

Economic

Thailand's annual headline inflation rate was negative for an eighth month in November, data showed on Wednesday, and the Commerce Ministry said it was due to falling energy prices and government measures to alleviate the cost of living.

The headline consumer price index fell 0.49% in November from a year earlier, following an annual drop of 0.76% in the previous month. It was also the ninth consecutive month that inflation was below the central bank's target range of 1% to 3%.

Severe flooding in parts of the country's south had little impact on inflation, Nantapong Chiralerspong, head of the Trade Policy and Strategy Office, told a news conference.

The core CPI reading rose 0.66% from a year earlier, the ministry said.

Over the first 11 months of 2025, headline inflation was down 0.12% from the same period a year earlier.

Inflation next year was expected to be in a range of 0.0% to 1.0%, Nantapong said.

Economists expect the central bank to cut interest rates at a policy review on December 17, after the Bank of Thailand held its key rate steady at 1.50% in October.

On Monday, Bank of Thailand Governor Vitai Ratanakorn said he saw room to lower rates, but added such a move had only a limited impact on an economy facing structural problems.

Source: Investing

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Winkelmann

Political

Economic

A senior Japanese national security official confirmed with a French foreign policy adviser that both nations would cooperate toward realizing a free and open Indo-Pacific, ahead of Emmanuel Macron's visit to China, according to Japanese media reports.

Keiichi Ichikawa, Japan's secretary general of national security, held a telephone conversation with Macron's diplomatic adviser Emmanuel Bonne on Tuesday, Kyodo News and the Sankei newspaper reported Wednesday. The two officials also agreed to strengthen bilateral security cooperation, the reports said.

Japanese government officials didn't clarify whether the Taiwan issue was discussed during the call, according to the reports.

The call took place after Chinese Foreign Minister Wang Yi said to Bonne during a Nov. 27 telephone call that the two sides needed to support each other, condemning Japanese Prime Minister Sanae Takaichi's "provocative remarks" on Taiwan.

Macron is set to start his three-day visit to China on Wednesday as Beijing tries to seek support from France, one of five permanent members of the United Nations Security Council, in its ongoing dispute with Tokyo.

Source: Bloomberg Europe

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Markets Eye a Year-End Comeback Amid Tech Gains, Rate Cut Bets, and Cautious Optimism

A﻿ Fragile but Growing Hope for a Year-End Rally

Rate Cut Bets Drive Risk Sentiment

Technology Leads Market Resilience

Crypto Volatility Raises Structural Questions

Structural Headwinds: Tariffs and Housing Woes

Innovation Spotlight: French AI Startup Mistral Breaks New Ground

Cautious Optimism with Caveats

Source: CNBC

Global Memory Chip Shortage Worsens as AI Demand Outpaces Supply, Raising Inflation and Tech Prices

AI Expansion Collides With Fragile Supply Chains

Soaring Prices Across Memory Segments

Impact Beyond Tech: Delays, Inflation, And Consumer Costs

The Supply-Demand Tug-of-War Intensifies

Secondhand Markets And Stockpiling Surge

Industry Response: Capacity Expansions Are Too Late For Now

AI’s Promise Faces Real-World Constraints

Source: Reuters

Silver Steadies After Record Highs Amid Supply Crunch and Fed Rate Cut Bets

Silver Holds Ground After Surging To Record Levels

Speculation And Supply Constraints Drive Silver Surge

Federal Reserve Rate Outlook Boosts Precious Metals

Volatility Ahead Amid Macro And Market Tensions

Source: Reuters

Australia’s Economic Engine Loses Momentum As Rate Hike Bets Cool

Economic Expansion Falls Short Of Expectations

Savings Rise As Households Turn Cautious

Mixed Interpretations Of The Private Sector’s Role

Inflation Risks Remain In Focus Despite GDP Disappointment

Productivity Constraints Limit Economic Capacity

Key Contributions To GDP Growth And Drag

Limited Policy Room As Growth Slows

Source: Reuters

U.S. Soybean Shipments to China Resume Amid Trade Thaw

Soybean Trade Resumes as U.S.–China Relations Stabilize

Export Bookings Offer Hope, But Remain Below Pre-Tariff Levels

Loading Activity Signals Renewed Physical Trade

Policy Signals and Farmer Support Measures in Focus

Source: Reuters

Thai Inflation Posts Eighth Straight Negative Reading In November

Source: Investing

Japan, France Officials Confirm Policy Cooperation, Reports Say

Source: Bloomberg Europe

Risk Disclosure

A Fragile but Growing Hope for a Year-End Rally