Omnis Weekly Market Update – 01 December 2025

Optimism surrounding a December interest rate cut in the U.S. saw global equities rebound strongly. The rebound was led by U.S. equities, in particular small caps and big tech.

 

Last week’s performance – major stock markets 

 

S&P 500	3.73%
Nikkei 225	3.35%
CSI 300	1.64%
Euro Stoxx 50	2.78%
FTSE 100	1.90%

 

Commentary

 

US: Small caps and Tech stocks rally on December interest rate cut hopes
U.S. stock indexes rallied, boosted by dovish comments from Federal Reserve officials and several weaker-than-expected economic reports that seemed to reinforce the idea that a December rate cut remains on track. Small-cap stocks outperformed, with the Russell 2000 Index advancing 5.52%. The technology-heavy Nasdaq Composite also posted strong returns, rebounding from the prior week’s sell-off. In economic news, the Commerce Department reported that U.S. retail sales increased by 0.2% in September, down from 0.6% in August and below estimates for around a 0.4% increase. Initial claims for U.S. unemployment benefits came in at 216,000 for the week ended November 22, down from the prior week’s upwardly revised figure of 222,000 and marking the lowest reading since April. Meanwhile, The Conference Board reported that consumer confidence fell sharply in November, with its Consumer Confidence Index dropping 6.8 points to 88.7, the lowest level since April.

Japan: Stocks rebound on expectations of a December interest rate cut in the U.S.
Japanese equities jumped on rising expectations of a December interest rate cut in the U.S. Japanese tech and AI-related shares rebounded, following a sharp sell-off the previous week amid ongoing concerns of overstretched valuations in the sector. Tokyo’s core inflation held steady in November at around 2.8% year over year, remaining above the Bank of Japan’s (BoJ’s) target of 2% and reinforcing views that the BoJ could move toward a rate hike in the coming months. A string of stronger-than-expected October activity data, including industrial production, retail sales, and a steady unemployment rate, created optimism that the domestic economy remains resilient.

China: Equities rebound on improved sentiment surrounding domestic tech and AI stocks
Mainland Chinese stock markets advanced as investor enthusiasm for domestic technology and artificial intelligence trades outweighed growth slowdown concerns. On the economics front, profits in China’s industrial sector unexpectedly fell 5.5% in October year on year, the country’s statistics office reported. The drop in industrial profits came after increases of more than 20% in each of the prior two months, adding to evidence that China’s economy lost momentum in the fourth quarter. Nevertheless, most analysts believe that China will meet its official growth goal of about 5% this year.

Europe: European stocks rally on optimism surrounding a U.S. December interest rate cut

Major European equity indices rallied strongly for the week. Germany’s DAX gained 3.23%, Italy’s FTSE MIB added 1.63%, and France’s CAC 40 Index was up 1.77%. Data from several regions indicated that inflation was relatively subdued in November, suggesting that broader eurozone inflation could remain around the European Central Bank’s (ECB’s) 2% target. According to data published Friday, consumer prices increased 0.8% year over year in France, in line with October’s reading, while inflation in Spain eased to 3.1% from 3.2% over the same period. Italy’s reading dropped to 1.1% from 1.3% in the prior monthly for the week. German business sentiment suffered an unexpected decline in November, according to data from the Ifo Institute, which reported that its Business Climate Index fell from the prior month “due to more pessimistic expectations.”

 

UK: Investor relief following budget announcement sees equities rise
UK equities staged a relief rally on the back of the budget, with investors relieved there were no major negative surprises. UK Chancellor of the Exchequer Rachel Reeves announced plans to raise taxes by an estimated GBP 26 billion in the government’s 2025 autumn budget, the second consecutive year of tax hikes amid efforts to bolster public finances. The wide-ranging measures include an extension of a freeze in personal tax thresholds, a tax surcharge on high-value properties, and higher taxes on investment income, among other measures. In response to the new budget, the Office for Budget Responsibility (OBR), which inadvertently published details of the budget prior to Reeves’ statement on Wednesday, lowered its economic growth forecasts and noted that it expects the total tax burden to reach 38% of GDP by 2030–2031, up from about 35% in 2024-2025.