10 min readWeekly recap:
US Global stocks recap
US major stock indices finished the first week of December higher, adding to strong gains from the previous week, while the USD fell for a second straight week amid rising expectations of an interest rate cut from the Federal Reserve at its December meeting.
The tech-heavy Nasdaq led the major indices higher, rising 0.9%, while the S&P 500 and the Dow Jones lagged but still posted modest weekly gains of 0.3% and 0.5%, respectively.
Major US data/themes
On the data front, ADP payrolls were significantly weaker than expected, falling by -32,000, the sharpest decline in 18 months. Challenger job cuts showed that US employers announced 71,000 job cuts in November, the most for the month since 2022, bringing the year-to-date total to 1.17 million, the highest since 2020.
Elsewhere, ISM manufacturing PMI fell to 48.2, down from 48.7. On the other hand, the services activity expanded at a slightly faster pace, rising to 52.6 from 52.4. Although the prices paid index dropped to 65.4, the lowest level since April.
September Core PCE, the Federal Reserve’s preferred gauge of inflation, rose 2.8% YoY, down from 2.9%. The original release was delayed due to the government shutdown.
Gold moves
Gold fell 0.8% last week, giving up some of the previous week’s 4% gains and pulling the price just below $4200. Gold weighed up data that showed mixed signals last week, with manufacturing weakness and a cooling labor market, while the services sector remained stable. Attention is turning to the upcoming FOMC meeting. With rate-cut expectations building, markets are poised for sharp reactions in the dollar and gold, depending on Powell’s tone and the Fed’s projections.
Meanwhile, the central bank demand for Gold remained robust in October, totalling 53t (+36% MoM), continuing a strong trend seen throughout the year. Buying remains concentrated among a small number of central banks led by the National Bank of Poland.
While Gold impressed, Silver was also in focus, rising to a fresh record high of $59.32 per oz. Silver is following in Gold’s footsteps but could still be considered cheap relative to its structural deficits and rising demand for electrification.
Oil moves
Oil prices rose for a second straight week, gaining 2.6% last week to settle above $60.00 amid geopolitical tensions. Conflicts, including the escalation of tensions between the US and Venezuela (a major oil producer for China), raised concerns over supply.
Meanwhile, the stalled Russian-Ukrainian peace talks mean the prospect of Russian sanctions being lifted soon is fading. Furthermore, Ukraine has ramped up its attacks against Russian energy infrastructure, raising supply concerns.
Looking ahead to next week, the FOMC meeting could be key. A Fed rate cut and the prospect of further rate cuts could lift oil prices.
Indian markets
Indian markets rose to fresh record highs last week, with notable intraday volatility as investors weighed optimism over the RBI’s rate cut against currency weakness. Both the Nifty 50 and the Sensex ended the week at 26,186 and 85,710, respectively. Despite the Rupee falling to a record low against the USD, equity sentiment held firm, suggesting that the market is treating Rupee depreciation as manageable, given stable economic growth and steady institutional flows.
Foreign Institutional Investors (FIIs) remained net sellers, offloading Rs 9999 crore so far in December, after selling across November.
In contrast, Domestic Institutional Investors (DIIs) continue to support the market, recording solid net inflows of Rs 15,596 crore.
On Friday, the RBI cut its key repo rate by 25 basis points to 5.25% and left the door open to further easing, as it stepped in to boost banking sector liquidity by up to 16 billion to support the economy. The world’s fifth-largest economy is under pressure from tariffs imposed by President Trump, widening its trade deficit and pushing the currency to a record low. The RBI has reduced rates by 125 basis points since February in its most aggressive easing since 2019.
USD/INR rose 0.66% last week, reaching a record 90.46 before settling at 89.94 on Friday.
Pakistan markets
The KSE 100 closed the first week of December in positive territory despite volatility and a lack of positive economic triggers. The KSE 100 index rose by 0.24% on a week-on-week basis to 167,086, supported by the Prime Minister’s summary for Field Marshall Syed Asim Munir’s appointment as Chief of Defence Forces, terminating months of uncertainty. Saudi Arabia’s decision to extend its $3 billion deposit with Pakistan’s central bank for another year was another key catalyst for the market’s recovery.
On the data front, Pakistan’s headline inflation for November stood at 6.15%, slightly down from 6.24% in October, suggesting a minimal change. Meanwhile, the trade deficit for November widened to $2.86 billion, a 33% increase. Exports fell by 15.4% year on year, while imports saw a modest 5.4% rise.
USD/PKR fell for a third straight week, dropping -0.71% last week, settling at 280.50 on Friday.
Weekahead (focus US & Asia)
US-India trade talks
India-US trade negotiations will be in focus this week. A US delegation led by Rick Switzer is due to arrive in New Delhi to push ahead with a multi-phase trade deal aimed at reducing retaliatory tariffs, which have hampered key sectors of the Indian economy. Indian Commerce Secretary Rajesh Agrawal said that India was optimistic about finding a solution before the end of the year. A framework trade deal is needed to address the reciprocal tariffs. Any sense of an agreement being close could help boost demand for stocks and the Rupee, pulling USD/INR lower. However, PM Modi’s warm welcome of Russian President Putin last week could irritate Trump further.
IMF Executive Board meets (Monday)
The IMF executive board meets at the start of the week to approve $1.2 billion in loans to Pakistan. The IMF reached a staff-level agreement with Pakistan on its loan programmes in October, following extensive talks from 24 September to 8 October. The agreement still requires approval from the IMF’s executive boards before funds can be released. This will be around $1 billion under the extended fund facility and another $200 million under the resilience and sustainability facility.
In its earlier assessment, the IMF noted Pakistan had made substantial progress in its fiscal consolidation, reducing inflation and strengthening external buffers. If approval is combined with improved credit ratings from global agencies and increased foreign portfolio and direct investment inflows, it could provide a foundation for a sustained market rally.
FOMC rate decision (Wednesday)
The market is increasingly confident that the Federal Reserve will deliver a 25-basis-point interest rate cut on 11 December, marking a third straight rate reduction. Expectations have swung wildly in the build-up to this week’s FOMC meeting after Federal Reserve chair Jerome Powell suggested that a rate reduction in December was not a foregone conclusion, far from it, and the minutes to the decision showed many members were leaning away from a December cut, given the lack of official data.
On 19 November, the market was pricing in just 7 basis points worth of cuts in the December meeting. However, weak jobs data have raised some concerns among policymakers, with Governor Chris Waller and NY president John Williams favouring a rate cut. That said, inflation is still sticky. US Core PCE is still above the Fed’s 2% target at 2.8%. The market is pricing in an 87% chance of a rate cut. Attention will be on Fed Chair Powell’s press conference and the summary of projections, with resh growth, inflation, and rate expectations.
In the September projections, the Fed pointed to a median forecast of 3.4% for mid-year 2026, which would be one more cut after this week’s. If the Fed holds that projection, it could give the USD a boost and pull stocks and Gold lower. The market is pricing in 2 more rate cuts and a 50% chance of a third. Meanwhile, a dovish Fed could give Gold and stocks a boost while weighing on the USD. The Fed meeting could be a deciding factor as to whether there is a Santa Rally this year.
Chinese inflation (Wednesday)
In the previous report, CPI rose 0.2% year on year in October, with the monthly report also showing a 0.2% gain. However, PPI was -2.1%. The October release showed factory gate deflation easing and consumer prices turning positive for the first time in three months. Expectations are for this trend to continue with CPI rising 0.9% year on year in November amid fading food price declines.
The uptick of CPI inflation to an almost three-year high would be notable, but it would not be a threat that would force the PBoC to tighten policy. The Chinese central bank last month left its one-year lending rate unchanged at 3.45%, signaling a preference for stability. This environment of low but rising inflation and steady policy could support stocks such as the Hang Seng and the yuan.
Indian retail inflation (Friday)
In June, retail inflation as measured by the CPI fell to a record low of 0.25% year-on-year in October 2025, down from 1.44% in September. This marked the ninth straight month that inflation was below the Reserve Bank of India’s 4% target. In response, the Reserve Bank of India cut its 2026 inflation projection to 2% from 2.6%. The data released on 12 December will reveal whether the downward trajectory continues, with forecasts suggesting a slight rebound to 0.6% year-over-year as base effects fade.
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