Uncertainty starts with the Federal Reserve, or rather its future leadership. Donald Trump has reportedly narrowed his shortlist for the next Fed chair to Kevin Warsh, a former governor, and Kevin Hassett, head of the National Economic Council. Markets have read this as good news for rate cuts. A dovish chair, or at least one perceived as open to quicker easing, has become the latest asset class. Jamie Dimon, boss of JPMorgan, is said to favor Mr Warsh, while fretting that Mr Hassett might be too keen to cut rates in the short term. The decision is expected early next year.

That narrative is running ahead of the data. Inflation in America remains above the Fed's 2% goal. Elsewhere, price pressures are pushing central banks in Europe, Britain and Japan towards tighter policy, adding to a crowded global calendar of rate decisions. Yet investors continue to price in lower US rates next year, comforted by the idea that a softer labour market and calmer inflation would give the Fed room to move.

This week's economic releases will test that optimism. Non-farm payrolls for November and October are due, with the October figures delayed by the government shutdown earlier in the quarter. Reports on business activity, jobless claims and inflation will follow. 

Fed officials, Stephen Miran and John Williams, both permanent voters and both seen as relatively dovish, are scheduled to speak. Their words may matter almost as much as the data.

Equities, for their part, are behaving nervously. America's main indices suffered their sharpest daily falls in more than three weeks on Friday, dragged down by fears of sticky inflation and the sheer scale of borrowing tied to artificial-intelligence investments. Two AI darlings stumbled. Broadcom, the chipmaker star, posted solid results boosted by AI, but the market abruptly decided it wanted even more spectacular figures to justify paying 76 times this year's expected earnings. Meanwhile, Oracle tumbled because it's all-in move into data centres comes at a time when the profitability of such ventures is increasingly being questioned.

These concerns have resurfaced several times over the past three months, enough to allow Europe's STOXX 600 to outperform both the S&P 500 and the Nasdaq on a quarterly basis. For a continent better known for caution than exuberance, that is a small but telling reversal.

ServiceNow's shares fell on reports of talks to buy cybersecurity start-up Armis, while iRobot's collapse into bankruptcy wiped out much of its value in a single day. There are also some bright spots. Nvidia is reportedly considering boosting production of its powerful H200 AI chips, offering some relief after a recent slide in its share price. 

Uncertainty has also sent investors looking for hedges. Precious metals have benefited, lifting shares in miners such as Newmont and Barrick. Even cannabis stocks have enjoyed a lift on reports that America could ease restrictions on marijuana.

The takeaway? Midway through December, the so-called Santa rally has yet to make an appearance. Statistically, the week now beginning is supposed to be pivotal if tradition is to hold. However, recent years have done little to inspire faith in seasonal probabilities. True, 2023 closed with a 4.4% gain, but 2022 ended down 5.9%, and 2024 finished with a 2.5% drop for the S&P 500.

Still, the broad US index is up 16.1% year-to-date in 2025, slightly ahead of Europe's Stoxx 600, which has gained 13.9%. Yet when dividends are factored in, the two are neck and neck: +17.1% for the S&P 500 Total Return versus +16.9% for the Stoxx Europe 600 Total Return. Europe's greater dividend generosity accounts for the difference. Whatever the eventual winner, and barring a year-end catastrophe, 2025 is shaping up to be a strong year for equities, with the US market's long-term average real return hovering around 9% over the past quarter-century.

In other news, Volodymyr Zelensky has suggested that US security guarantees could replace Ukraine's NATO candidacy. Another round of talks between US and Ukrainian officials is scheduled for today. Russia wants the Donbas; Ukraine seeks more modest concessions. Washington is expected to mediate.

China released weaker-than-expected November data overnight for retail sales and industrial production. Nonetheless, consumer-related stocks are holding up, buoyed by government pledges to bolster household spending.

In the macro calendar,  the normalisation of economic data releases disrupted by the shutdown is ongoing. This week brings two key prints: November's jobs report (Tuesday) and inflation data (Thursday). December flash PMIs for major economies are also due (Tuesday), along with several monetary policy decisions: the eurozone and UK on Thursday, Japan on Friday.

In corporate earnings, this week sees results from Micron (semiconductors), Accenture (consulting), Nike (sportswear), and FedEx (logistics).

Asia-Pacific markets were under pressure this morning. Hong Kong and mainland China are in the red following the disappointing Chinese data. Japan and South Korea are down more than 1%, dragged by their tech sectors. India is flat, and Australia is down 0.7% amid a pullback in industrial commodity prices, which is hitting the mining sector. In Europe, indices are bullish, with the Stoxx Europe 600 up 0.8%. U.S. equity futures are pointing higher, with Dow Jones futures up 0.44%, S&P 500 futures gaining 0.48%, and Nasdaq 100 futures also trading in positive territory.

Today's economic highlights:

On today's agenda: the Tankan Large Manufacturing Index in Japan; industrial production and retail sales in China; industrial production in the eurozone; in the United States, the Empire Manufacturing and the NAHB Housing Market Index. See the full calendar here.

  • Dollar index: 98,333
  • Gold: $4,339
  • Crude Oil (BRENT): $61.01 (WTI) $57.33
  • United States 10 years: 4.17%
  • BITCOIN: $89,895

In corporate news:

  • Airbnb was fined €64 million ($75 million) by Spain for listing 65,000 unlicensed tourist rentals in violation of local regulations.
  • Google, a unit of Alphabet, signed a solar power purchase agreement with Shizen Energy to support a 30 MW solar project in Malaysia, aiming for carbon-free operations.
  • Johnson & Johnson was ordered by a California jury to pay $40 million to two women who alleged its talc-based baby powder caused their ovarian cancer.
  • Johnson & Johnson also received FDA approval for its prostate cancer drug Akeega (plus prednisone), which significantly reduced disease progression risks in BRCA-mutated cases.
  • Tesla directors have earned over $3 billion in stock options, far exceeding compensation at other top tech firms, raising concerns over governance and board independence.
  • Xpeng partnered with EP Manufacturing to begin electric vehicle production in Malaysia starting in 2026, amid nearly doubling overseas deliveries in 2025.
  • Intel is reportedly in late-stage talks to acquire AI chip startup SambaNova Systems for around $1.6 billion, with a deal potentially closing next month.
  • Palantir Technologies renewed its software contract with France's domestic intelligence agency for three more years, extending a decade-long partnership.
  • Boeing's delivery of new Air Force One aircraft has been delayed until mid-2028 due to ongoing issues in the $5 billion project with the U.S. Air Force.
  • JPMorgan Chase is launching a $100 million tokenized money-market fund called MY OnChain Net Yield Fund (MONY) on the Ethereum blockchain.

Analyst Recommendations:

  • Adobe Inc.: KeyBanc Capital Markets downgrades to underweight from sector weight with a target price of USD 310.
  • Agilent Technologies, Inc.: Barclays upgrades to overweight from market weight with a target price of USD 165.
  • Air Products & Chemicals, Inc.: Citi downgrades to neutral from buy and reduces the target price from USD 300 to USD 245.
  • Akamai Technologies, Inc.: KeyBanc Capital Markets upgrades to overweight from underweight with a price target raised from USD 66 to USD 115.
  • Bellring Brands, Inc.: Deutsche Bank downgrades to hold from buy with a target price of USD 35.
  • Caesars Entertainment, Inc.: Goldman Sachs downgrades to neutral from buy and reduces the target price from USD 25 to USD 24.
  • Cbre Group, Inc.: Keefe Bruyette & Woods upgrades to outperform from market perform and raises the target price from USD 168 to USD 185.
  • Doximity, Inc.: Morgan Stanley upgrades to overweight from equalwt with a price target raised from USD 62 to USD 65.
  • Hca: Morgan Stanley downgrades to underweight from market weight with a target price of USD 425.
  • Hilton Hotels: Goldman Sachs upgrades to buy from neutral with a price target raised from USD 285 to USD 317.
  • Keurig Dr Pepper Inc.: Deutsche Bank downgrades to hold from buy and reduces the target price from USD 35 to USD 32.
  • Kla Corporation: Jefferies upgrades to buy from hold with a price target raised from USD 1100 to USD 1500.
  • Las Vegas Sands Corp.: Goldman Sachs upgrades to buy from neutral with a price target raised from USD 64 to USD 80.
  • Masco Corporation: Wells Fargo upgrades to overweight from equalweight and raises the target price from USD 70 to USD 75.
  • Mccormick & Company, Incorporated: Deutsche Bank upgrades to buy from hold and raises the target price from USD 71 to USD 75.
  • Norwegian Cruise Line Holdings Ltd.: Jefferies downgrades to hold from buy and reduces the target price from USD 26 to USD 20.
  • Oracle Corporation: CITIC Securities Co Ltd upgrades to hold from sell and reduces the target price from USD 243 to USD 200.
  • Servicenow, Inc.: KeyBanc Capital Markets downgrades to underweight from sector weight with a target price of USD 775.
  • The Hershey Company: Morgan Stanley upgrades to overweight from equalwt and raises the target price from USD 195 to USD 211.
  • Viking Holdings Ltd: Jefferies upgrades to buy from hold and raises the target price from USD 60 to USD 80.
  • Wyndham Hotels & Resorts, Inc.: Goldman Sachs downgrades to neutral from buy and reduces the target price from USD 88 to USD 76.
  • Zoominfo Technologies Inc.: KeyBanc Capital Markets upgrades to market weight from underweight.