Global stocks head for record highs as investors price in Fed cuts

Global markets moved toward a banner finish for 2025 on Monday as investors wagered that the Federal Reserve will begin easing policy next year, pushing major equity gauges to fresh highs and lifting commodity prices. The MSCI All Country World Index climbed 1.4 percent last week to a new all time high, leaving the gauge up nearly 22 percent for the year and on track for its biggest annual gain since 2019. That momentum has kept equities on course for a third straight annual gain.

Asia led much of the advance. MSCI’s broad Asia Pacific index rose 0.27 percent on Monday to its highest level since early October, extending a 2025 gain of more than 25 percent as technology and artificial intelligence related stocks powered returns. South Korea’s Kospi surged 1.5 percent to a near two month peak, lifting its year to date return to an extraordinary 74 percent and putting the market on pace for its strongest annual performance since 1999. Taiwan shares touched a record high while Japan’s Nikkei slipped 0.4 percent on profit taking.

Currency moves helped the rally. The U.S. dollar hovered near its lowest level in almost three months as traders increased bets on Fed easing in 2026, a dynamic that supported commodities and emerging market assets. Precious metals staged particularly strong gains, with silver extending a fierce year end rally to reach new highs, reflecting both safe haven demand and real asset flows amid softer dollar dynamics.

Investors are watching policy signals closely and expect the December Federal Open Market Committee minutes to offer clues on the timing and extent of future cuts. "The focus this week will be on the release of the FOMC minutes" from the Fed’s December meeting, market participants said, underscoring how the minutes could reshape positioning ahead of year end. If the minutes reinforce expectations for early easing, bond yields could fall further and provide another tailwind for equities. Conversely, any indication that officials remain prepared to keep policy restrictive would likely cool appetite for high multiple, rate sensitive stocks.

Geopolitical headlines also influenced sentiment as markets digested comments that U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskiy were getting "a lot closer" to a deal that could bring an end to the war in Ukraine. Even tentative signs of deescalation can lift cyclical and riskier assets, though traders cautioned that durable progress would be needed to sustain gains.

At the single stock level, moves were mixed across regions. A handful of mining and pharmaceutical names posted outsized swings, with Aspen Pharmacare up more than 21 percent on Monday and some smaller platinum and junior metal names showing dramatic intraday jumps.

Looking ahead, the market narrative for early 2026 will depend on the FOMC minutes, incoming U.S. economic data and any formal developments on Ukraine diplomacy. For now, investor positioning reflects a powerful combination of AI fueled equity returns, a softer dollar and an expectation that central bank policy will ease, a combination that has pushed global markets to the cusp of record territory as the year ends.