Global Stock Markets on Dec. 25, 2025: Thin Christmas Trading, Asia Mixed, Gulf Slips - and the 2026 Outlook Turns to AI and Rate Cuts
Focus: AI Trends . Global Economy . Interest Rates . Market Outlook . Stock Markets
Christmas Day is a low-liquidity day for markets, with most Western exchanges closed and volumes thin where trading is open. Price moves can look bigger than they are, simply because fewer orders are in the book. U.S. stocks headed into the break at record highs, Asia traded mixed, and Gulf markets eased on softer oil.
What's open, what's closed - and why volumes matter
Many European markets are closed today and some stay shut on December 26 as well. The U.S. is closed, and the final pre-holiday session saw below-average volume even as indexes pushed to fresh records. Thin tape can exaggerate moves and cut both ways.
Asia-Pacific: steady Japan, policy-supported China, Hong Kong closed
Japan's Nikkei 225 edged to 50,407.79, capping a standout year with gains near 30%. Mainland China's Shanghai Composite rose to 3,959.62 on signals that the PBOC will keep liquidity supportive for financing and growth. Hong Kong was closed, limiting regional price discovery and adding to today's patchwork feel.
In FX and commodities, the dollar eased against the yen, the euro ticked higher, and oil stayed subdued versus earlier in the year. That mix is broadly supportive for risk assets outside oil-linked markets.
Japan's next move after a historic hike
After the Bank of Japan lifted its policy rate to 0.75%-a multi-decade high-investors are watching for hints on the 2026 path. Governor Ueda's year-end remarks are in focus for any tilt on inflation trends, wage dynamics, and balance-sheet plans. For official updates, see the Bank of Japan.
Gulf markets: oil's 2025 slide weighs
Most Gulf indexes drifted lower as weaker oil met thin holiday participation. Saudi benchmarks eased with pressure on energy and financials; Dubai and Qatar slipped as well. With crude on track for its steepest annual decline since 2020, risk appetite in the region remains cautious.
Wall Street: closed today, but records set the tone
U.S. equities closed at record highs in the December 24 session, extending a multi-day run. Three supports stand out: an AI-led rebound after capex worries, steady U.S. macro data (including cooler claims), and market pricing for roughly 50 bps of Fed cuts in 2026. The "Santa Claus rally" window into early January is in play, but thin tape can amplify any wobble.
Why December 26 matters
Historically, December 26 screens as one of the more consistently positive single sessions for the S&P 500. Seasonality isn't a strategy, but it often shapes near-term positioning when liquidity returns after the holiday.
Europe: closed today, ending 2025 near records
European shares head into the break near all-time highs and on pace for their strongest year since 2021. Easing-rate dynamics, Germany's fiscal push, and some rotation away from stretched U.S. tech leadership helped the move. Follow market wraps on Reuters Markets.
2025: volatile path, strong finish
Despite tariff shocks and cross-asset swings, global equities added about $14 trillion in market cap in 2025. Gold surged toward one of its best years in decades, the dollar weakened, and oil fell sharply. Those shifts filtered through earnings (energy costs), discount rates (yields), and risk appetite (FX and policy stability).
2026 outlook: higher, but harder - with correction risk
Strategists expect further gains in 2026 but with more modest returns and fatter tail risks. Many see a correction as likely in the months ahead. Poll medians: S&P 500 near 7,490 by end-2026, STOXX Europe 600 around 623, and the Nikkei up roughly 13%-all paths that leave room for chop.
Three swing factors for pricing in 2026
- AI spending: Can earnings breadth catch up to the hype? The next leg depends on how capex converts to revenue, margins, and free cash flow.
- Rates regime: 2025 delivered a broad easing push. In 2026, tone and cadence matter-less-dovish hints could challenge multiples.
- Oil and the dollar: Softer oil helps importers but pressures oil-linked equity markets. A weaker dollar supports EM flows and multinationals' translation, but reversals can bite.
What to watch next
- Post-holiday reopen: December 26 liquidity and whether momentum extends or stalls.
- Japan inflation and BOJ signals after the 0.75% hike.
- AI: capex vs. profitability-does earnings breadth improve, or is the move multiple-led?
- Policy uncertainty: tariffs, growth sensitivity, and inflation path into early 2026.
Practical playbook for finance teams
- Liquidity reality check: Use the thin-tape window to place, not chase. Scale entries and exits; widen risk bands around support/resistance.
- AI exposure audit: Split between core infrastructure, application leaders, and cash-flow positive beneficiaries. Trim overlap; press names with improving unit economics.
- Rates hedging: If 2026 cuts slip, duration and high-multiple growth are vulnerable. Consider barbell duration and keep an eye on funding spreads.
- Oil asymmetry: Importers vs. exporters will trade differently. Stress-test earnings to $5/bbl ranges and review FX sensitivity.
- Dollar path: Keep hedges flexible. A USD rebound can hit EM beta and multinational revenues.
- Correction plan: Predefine rebalance levels (e.g., 5-10% drawdown), stagger buy programs, and maintain dry powder.
AI skills and tools (for finance roles)
If AI spending remains a core driver, upgrading team capability pays off. A good starting point: practical AI tools for finance that improve workflow, forecasting, and reporting.
Bottom line
2025 ends on a high with thin liquidity and a constructive tone. 2026 starts with higher expectations and less room for mistakes. Earnings breadth, rate signals, and AI ROI will decide whether the rally extends-or takes a needed pause before the next leg.
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