World stocks mixed, yen friendless as bonds buckle
A stock quotation board is reflected on window glasses at a building in Tokyo, Japan December 11, 2025. REUTERS/Issei Kato
LONDON, Dec 22 : Wall Street looked to open higher while the yen floundered near all-time lows against the euro as higher interest rates piled pressure on Japanese government debt.
S&P 500 futures added 0.4 per cent, with Nasdaq futures up 0.1 per cent while MSCI's broadest index of world shares added 0.2 per cent.
With U.S. equity and bond markets closed on Thursday for Christmas, trading volumes are expected to remain light through the end of the week, said Bruno Schneller, managing director at investor Erlen Capital Management.
"As a result, market moves are likely to be driven more by data outcomes and positioning than by new policy signals, with investors largely focused on closing out the year ahead of January’s labour market and inflation releases," he added.
Despite it being a holiday-shortened week for much of the world, momentum funds were still flowing to equities, precious metals and commodities ahead of delayed data that is forecast to show the U.S. economy had continued to grow strongly in the third quarter.
Median forecasts tip annualised growth of 3.2 per cent, due in part to a sharp pullback in imports after a run-up earlier in the year ahead of the introduction of tariffs.
Yet analysts at BofA had some words of caution, noting their measure of investor sentiment had moved into extreme bullish territory at 8.5, often a prelude to a reversal.
"Sentiment data reinforce the cautionary signal: the Fund Manager Survey shows most bullish sentiment in 3-1/2 years, driven by expectations of rate, tariff, and tax cuts."
European shares dithered 0.2 per cent lower on Monday in thin markets, as investors started a holiday-shortened week on a tepid note following the previous session's record-high close.
Japan's Nikkei finished up 1.8 per cent, extending Friday's bounce as a steep decline in the yen promised to boost export earnings for Japanese corporates. Chinese blue chips closed up almost 1 per cent higher.
The yen selloff came as the Bank of Japan raised rates to a 30-year high of 0.75 per cent and flagged more to come, slamming government debt. Yields on 10-year bonds surged a further 6 basis points to 2.08 per cent, levels not seen since 1999.
Minutes of the BOJ meeting are due on Wednesday, while the head of the central bank speaks to a Japanese business lobby on Christmas Day.
ON INTERVENTION WATCH
The yen touched a fresh record trough on the euro at 184.92. The dollar gained 0.3 per cent at 157.37, with investors wary of testing the November peak of 157.90 in case that triggered intervention from Tokyo.
Japanese officials duly signalled their concern about one-way moves and warned of appropriate action against an excessive decline.
Analysts at TD Securities noted equity markets recorded their highest weekly inflows on record at $98 billion last week, led by U.S. equity funds. Chinese equity funds saw their third largest weekly inflow of 2025, and emerging markets drew their largest inflows since April.
Flows to bonds, however, saw their fourth straight week of slowdown. U.S. 10-year yields crept up 2 basis points to around 4.169 per cent.
Gold jumped past the $4,400-per-ounce level for the first time on Monday, riding on growing expectations of further U.S. rate cuts and strong safe-haven demand.
Silver also hit a fresh record high of $69.44, bringing gains this year to almost 140 per cent.
Oil prices also perked up after the U.S. intercepted a Venezuelan oil tanker over the weekend, and was pursuing another one in what would be the third such operation in less than two weeks.
Brent jumped $1.13 to $61.60 a barrel, while U.S. crude rose $1.06 cents to $57.56 per barrel.
(Reporting by Nell Mackenzie and Wayne Cole; Editing by Stephen Coates and Toby Chopra)
