United States Pending Home Sales Surge at a Multi-Year High

U.S. Equity Market Performance

During a shortened trading period due to the New Year holiday, U.S. equity markets experienced a noticeable pullback. Even so, Wednesday marked the completion of 2025 for most major indexes, all of which had achieved double-digit annual growth for three consecutive years. Market losses for the week were uneven, with the Nasdaq Composite registering the steepest decline. The Russell 2000 and S&P 500 followed closely behind. Meanwhile, the Dow Jones Industrial Average (DJIA) and S&P MidCap 400 Index demonstrated greater resilience, although they still slipped by 0.67% and 0.71%.

Energy was one of the rare bright spots in the U.S. market landscape. Growing political instability overseas triggered a surge in crude prices earlier in the week, enabling the energy segment within the S&P 500 to deliver modest positive returns. The holiday pause also reduced overall trading intensity. On Thursday, U.S. markets were entirely inactive in observance of New Year’s Day, while the surrounding days showed substantially lighter-than-normal trading volumes, according to insights from T. Rowe Price’s trading division.

Housing Market Catalysts

Improved borrowing conditions and rising wages injected fresh energy into U.S. housing demand. On Monday, NAR disclosed that its Pending Home Sales Index climbed 3.3% in November, reflecting the sharpest monthly increase since February 2023. The rise signaled renewed interest among prospective buyers, supported by moderating mortgage costs and earnings outpacing property price inflation. Lawrence Yun, NAR’s Chief Economist, stated that improving purchasing conditions were encouraging buyers to cautiously re-engage with the housing market.

Separately, the Federal Housing Finance Agency (FHFA) confirmed that home values rose 0.4% in October compared to the previous month, reversing a brief downturn recorded earlier. Annual growth stood at 1.7%, with the Middle Atlantic and East North Central regions delivering the strongest increases.

Federal Reserve Meeting Takeaways

On Tuesday, the Federal Reserve published the internal summary from its December 9–10 meeting, where officials had approved a 25-basis-point reduction in the federal funds rate target range. Although many members acknowledged that future cuts might be justified if inflation continued trending lower, a smaller group recommended maintaining the current range for an extended period. The market reaction was mild, with rate-cut expectations for January holding steady at roughly 15% according to CME FedWatch.

Unemployment and Credit Market Trends

The U.S. Labor Department indicated that initial unemployment benefit requests for the week ending December 27 totaled 199,000, 16,000 fewer than the revised count from the week prior. This marked one of the lowest weekly figures recorded throughout the year and represented the third consecutive weekly decline. Continuing claims also fell from 1.913 million to 1.866 million.

Bond markets displayed mixed momentum. Short-term Treasury yields remained broadly stable, while long-term yields trended upward, indicating downward pressure on bond pricing. Municipal debt slightly underperformed relative to Treasuries. Investment-grade corporate bonds delivered negative returns, while high-yield credit led weekly performance, buoyed by lower transaction volumes.

U.S. Market Performance Snapshot

The following data reflects the closing values as of 4 p.m. ET, sourced via Reuters, Yahoo! Finance, and Bloomberg:

The indexes above are unmanaged benchmarks reflecting different segments of U.S. equity markets and do not indicate any individual asset performance.

Europe

STOXX 600 Reaches Historic Peak, Regional Data Shifts Sentiment

Market Movements Across Europe

European equity markets concluded 2025 with strong upward momentum. In domestic currency valuations, the STOXX Europe 600 Index climbed 1.26% for the week and reached its highest recorded level. The index delivered an annual price gain of nearly 17%, marking the most impressive yearly performance since 2021. Germany’s DAX rose 0.82%, France’s CAC 40 advanced 1.13%, Italy’s FTSE MIB increased 1.72%, and the UK’s FTSE 100 also grew 0.82%. Earlier in the week, the FTSE 100 crossed 10,000 points for the first time.

Spain: Inflation Softens in December

Spain’s national data agency reported a reduction in December inflation, supported by falling fuel costs and slower growth in leisure service pricing. The EU-aligned preliminary annual inflation rate eased to 3.0%, down from 3.2% in November. Core inflation, excluding food and fuel, remained unchanged at 2.6%.

France: Unemployment Registrations Decline

In mainland France, the number of officially registered unemployed individuals dropped by 21,500 in November, bringing the total to 3.129 million, down from 3.151 million in October. Although this marked an improvement from a seven-month peak, unemployment still rose 197,300 year over year.

UK: Housing Index Weakens Without Warning

The Nationwide Building Society reported that its UK housing price benchmark declined 0.4% in December compared to a 0.3% increase in November. Analysts surveyed by Reuters had projected a modest 0.1% rise instead.

Sweden: Central Bank Maintains Neutral Position

Minutes from the Riksbank’s December meeting revealed that the central policy rate is expected to remain at 1.75% throughout 2026 before increasing gradually. Governor Erik Thedeen noted that policymakers see no near-term urgency for rate changes.

Japan

Government Bond Yields Hit 2.07%, Equity Rally Pauses

Japanese Market Activity

Japan’s equity indexes retreated slightly during the shortened holiday window. The Nikkei 225 fell 0.8%, while TOPIX dropped 0.4%. However, 2025 closed as the third consecutive year of overall index growth. The rally had been supported mainly by semiconductor manufacturers and AI-linked technology firms, as well as domestic infrastructure companies.

Yen Pressure and Possible FX Support

The Japanese yen traded within the 156 JPY range against the U.S. dollar, remaining near its lowest point since January 2025. Despite repeated verbal signals from Japanese financial authorities about readiness to intervene, the currency showed limited sustained recovery.

JGB Yield Climbs to Levels Last Seen in 1999

The 10-year JGB yield increased from 2.04% to 2.07%. The BoJ had implemented a 25-basis-point increase to 0.75% during its December meeting, marking the second hike since January 2025. The Summary of Opinions indicated support for gradual tightening, citing stable corporate profitability and wage improvements.

China

Manufacturing Index Rebounds to 50.1, Hong Kong Leads Regional Gains

Chinese Market Activity

Mainland Chinese equities delivered mixed results. The CSI 300 Index declined marginally, while the Shanghai Composite edged upward. Hong Kong’s Hang Seng Index rose approximately 2.0%, according to FactSet.

China Manufacturing PMI Ends Long Contraction

On Wednesday, Bloomberg cited China’s official PMI release, which confirmed manufacturing expansion at 50.1, up from 49.2 in November. The result ended eight consecutive months of contraction.

Other Key Markets

Colombia

Large Wage Increase May Trigger Monetary Policy Adjustments

President Gustavo Petro announced a 22.7% minimum wage increase for 2026. Analysts noted that this figure exceeded market expectations and could accelerate inflation and interest rate hikes starting early 2026.

South Korea

Exports Reach USD 710B, Equities Begin 2026 With Strong Support

South Korean equities were among the world’s highest-performing markets in 2025, climbing nearly 101% according to RIMES/MSCI. The Ministry of Trade, Industry and Resources confirmed record annual exports of approximately USD 710 billion, driven by semiconductors, automotive manufacturing, ships, cosmetics, and agricultural products.