Inflation cools down, boosting global stock markets. The three major U.S. stock indices all rose, led by memory chip stocks.

Inflation Data Unexpectedly Weakens, Market Reignites Hope for Rate Cuts

The U.S. Bureau of Labor Statistics released the November Consumer Price Index report on Thursday, showing the overall CPI growth rate slowing to 2.7% year-over-year, the slowest since early 2021, below economists’ forecast of 3.1%. More notably, the core CPI, excluding food and energy volatility, fell to a 2.6% annual rate, well below the market expectation of a 3% increase.

This surprising inflation data immediately fueled market expectations for further rate cuts by the Federal Reserve. The VIX fear index dropped 4.37%, short-term U.S. Treasury yields sharply retreated, with the 2-year Treasury yield falling to 3.43%, a nearly two-month low. The 10-year benchmark bond yield also declined to 4.12%, down 3 basis points from the previous trading day.

However, some economists questioned the authenticity of this data. Capital Economics economist Ashworth pointed out that housing prices have been essentially flat over two months, which is unusual during non-recession periods, especially with the sudden halt in the growth of services like rent. Morgan Stanley economist Gapan suggested that data volatility might reflect methodological issues, with some statistical categories possibly relying on outdated price data, making definitive conclusions difficult.

U.S. Stocks Rise Across the Board, Micron Leads Tech Stocks Up Over 10%

Boosted by positive inflation data, the three major U.S. stock indices rose broadly on Thursday. The Dow Jones increased 0.47%, ending its recent weakness; the S&P 500 gained 1.16%, breaking a four-day losing streak; and the Nasdaq outperformed, rising 1.81% to close at 23,006 points.

In individual stocks, memory chip manufacturer Micron Technology performed spectacularly on strong earnings prospects, surging over 10% to become a market focus. Amazon’s stock rose 2.5%, making it the best performer among Dow components; Nvidia and Tesla increased 1.9% and 3.5%, respectively; Oracle rebounded 0.8%; Apple stabilized after fluctuations.

European markets also gained, with Germany’s DAX 30 up 1%, France’s CAC 40 up 0.8%, and the UK FTSE 100 rising 0.65%. China’s Golden Dragon Index also rebounded 0.97%.

Commodities and Forex: Gold Retreats, Oil Falls, USD Slightly Up

In commodities, gold retreated after a rally, down 0.15%, at $4,332.5 per ounce. WTI crude oil fell 1.48% to $55.9 per barrel. The U.S. dollar index rose slightly by 0.02% to 98.4, USD/JPY declined 0.08%, and EUR/USD fell 0.14%.

Crypto Assets Slightly Decline

Bitcoin dropped 0.94 in the past 24 hours, currently at $85,406. Ethereum declined 0.25%, now at $2,825. Hong Kong night market futures closed at 25,675 points, up 161 points, 177 points higher than yesterday’s Hang Seng close.

U.S. Employment Data Meets Expectations

The initial unemployment claims for the week ending December 13 decreased by 13,000 to 224,000, slightly below the expected 225,000, reflecting a relatively resilient labor market.

Central Bank Policy Movements: ECB Hints End of Rate Cut Cycle, Bank of England Continues Easing

The European Central Bank kept policy rates unchanged at Thursday’s meeting, with deposit rates remaining at 2%. According to sources, based on the latest economic growth and inflation outlook, ECB officials believe the rate cut cycle may have ended. The bank stated that after eight rate cuts starting from a 4% peak, barring significant shocks, deposit rates should stay at 2%.

The Bank of England announced a 0.25% rate cut on Thursday, lowering the rate to 3.75%, in line with market expectations and the lowest since February 2023. The decision was approved by a 5-4 vote, with Greene, Lombardelli, Mann, and Pill voting to maintain current rates. Governor Bailey shifted to support a rate cut, citing further confirmation of inflation easing and moderate easing space. Bailey noted that as rate cuts proceed, decision-making will become more difficult, and the pace of cuts may slow at some point, though the exact timing remains uncertain.

Market Risk Warning: AI Valuation Risks the Biggest Threat in 2026

According to a recent survey by Deutsche Bank of global investors, valuation risks related to artificial intelligence have become the single biggest threat to market stability in 2026. Up to 57% of respondents believe that a collapse in tech stock valuations due to waning enthusiasm for AI will be the greatest risk next year. The second concern is the potential for the new Fed Chair to push aggressive rate cuts and trigger market turmoil. Respondents also expressed worries about crises in private capital markets and bond yields rising beyond expectations.

In terms of investment preferences, about 71% of respondents prefer to allocate funds to other parts of the U.S. stock market rather than the “Big Seven” companies, a preference that has remained stable since July 2024. Looking ahead to 2026, respondents are cautiously optimistic about market returns, expecting the Big Seven to deliver an average return of about 7%, with the S&P 500 rising nearly 7%, the strongest outlook in the past four years.

Commodities and Energy: Copper Supported by Multiple Factors, Supply Tightness Expected to Persist Through 2026

BHP CEO Henry stated that copper is widely used in semiconductors, electronics, construction, and military applications, with a market size of $300-400 billion annually. The company expects copper demand to grow 70% from now until 2050, but supply will become increasingly difficult due to fewer new discoveries, smaller and lower-quality deposits, and challenges in rapid extraction. BHP is confident that copper supply shortages will continue into next year and even until 2030. Additionally, market attention to gold and silver prices is expected to support copper prices.

NYMEX copper has risen 34% year-to-date, and LME copper hit a new high of $11,952 per ton last Friday. UBS expects copper prices could reach $13,000 per ton by the end of 2026.

Corporate Developments: Nike Profits Decline, Tech Giants Accelerate AI Deployment

Nike plunged nearly 10% after hours, trading at $59.2. The company’s Q2 revenue was $12.43 billion, up 0.6% YoY, slightly above the estimated $12.24 billion; but net profit for Q2 was $792 million, down 32% YoY; EPS was $0.53, also down 32%. Gross margin was 40.6%, down from 43.6% a year earlier.

In tech, Meta is secretly developing a new AI model codenamed Mango for images and videos, alongside next-generation large language models. Sources say Meta’s Chief AI Officer Alexandr Wang discussed these projects in an internal Q&A on Thursday, with a launch expected in the first half of 2026.

Oracle and OpenAI’s data center power supply plans in Michigan received regulatory approval. Michigan regulators approved DTE’s request to support the construction of large data centers by both companies. The facility, located in Saline Township, will cost billions of dollars and have a capacity of 1.4 gigawatts. According to OpenAI and Oracle, their combined planned capacity across the U.S. will exceed 8 gigawatts, with over $450 billion in investments over the next three years.

Today’s Major Macro Events

• Bank of Japan announces interest rate decision
• Japan November core CPI YoY data release time
• Bank of Japan Governor Ueda Kuroda holds press conference
• Germany January GfK Consumer Confidence Index
• Germany November PPI MoM release time
• Eurozone December Consumer Confidence preliminary estimate
• U.S. December University of Michigan Consumer Sentiment Final
• U.S. December 1-year inflation expectations final
• U.S. November Existing Home Sales Annualized
• U.S. crude oil rig count for the week ending December 19
• NYMEX January crude oil futures last trading session