Markets Weekly Outlook - GDP Data, US/Asia Events, and Silver's Breakout

[Ben Graham]

Week in review

US stocks finished the week strong on Friday, recovering from a rocky start earlier in the week.

The rise was driven mostly by technology companies, which performed well enough to outweigh heavy losses in consumer stocks like Nike.

Big tech companies continued to gain value, following a surge of optimism sparked on Thursday when chipmaker Micron Technology released a very positive financial forecast. This renewed investor confidence in Artificial Intelligence (AI) stocks, which had recently been struggling due to worries that they were becoming too expensive.

Several specific companies saw major gains. Micron shares hit an all-time high, while Nvidia stock rose after news broke that the US government might allow the company to ship its advanced AI chips to China.

Oracle also saw its stock price jump after the owner of TikTok, ByteDance, signed a deal to hand over control of the app's U.S. operations to a group of investors that includes Oracle.

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Source: LSEG

On the economic front, investors were relieved to see that consumer prices in November did not rise as much as feared. However, some experts warned that these numbers might be inaccurate because a 43-day government shutdown prevented the proper collection of data in October.

Despite this uncertainty, traders are betting that the Federal Reserve will cut interest rates at least twice next year, with a 20% chance that the first cut could happen as early as January.

The Bank of Japan (BoJ) hiked interest rates to 0.75%, the highest in three decades. This sets the stage for an interesting week ahead as Japanese traders will still be at their desks next week.

Wrapping Up 2025

Market participants may be looking forward to relax after a very chaotic year that began with Donald Trump returning to the White House.

Over the last twelve months, global politics have become unstable and a trade war has officially started. While the US dollar lost 9% of its value, gold prices had their best performance since 1979, and European weapons companies saw their value jump by 65%.

Global stock markets grew by $14 trillion, driven by an obsession with Artificial Intelligence and risky debt, even though government bond markets are nervous about budget issues.

At the same time, oil prices are near a ten-year low, Bitcoin has lost one-third of its value in the last three months, and cocoa is having its worst year ever.

After all this drama, it is definitely time for Market participants to take a break.

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Source: LSEG

However, next week still brings some key events even if liquidity may prove thin. Let us take a look at what we can expect.

The Week Ahead - Shortened Week & Low Liquidity Environment

Even though the holiday season is approaching, the coming week will still be very busy for market participants. There are several major events to watch, ranging from the first report on how the US economy performed in the third quarter to new updates regarding the ongoing political conflict between the United States and Venezuela.

Asia Pacific Markets

In Japan, factory production is expected to drop, which will undo some of the progress made over the last two months. However, retail sales are still growing because people are earning higher wages. Experts believe that the data for November will not yet show any major damage caused by the recent decrease in tourists visiting from China.

After the Bank of Japan rate hike, on December 24, the BoJ will release minutes for its October meeting, at which it kept rates on hold shortly after new Prime Minister Sanae Takaichi took office. On December 25, BOJ Governor Kazuo Ueda will speak to Japan's business lobby, the Keidanren. He is expected to give clues on the path of interest rates during 2026.

Meanwhile, in China, most of the big economic reports for the year are already finished, so attention is turning to Saturday's decision on interest rates. I expect this to be uneventful, with the key lending rates likely remaining exactly where they are at 3.0% for one-year loans and 3.5% for five-year loans.

US Markets - Will GDP Data Validate the Fed Outlook?

Although the upcoming third-quarter economic growth report might not shake up the financial markets due to delays caused by the government shutdown, it raises some interesting questions.

If the report shows the economy grew by more than 3% for the second time in a row, many will wonder why the Federal Reserve cut interest rates three times in 2025. It seems unusual to cut rates when inflation is still higher than the 2% target, unemployment is low, and the stock market is at an all-time high.

The Federal Reserve defends these cuts as a safety measure to manage future risks. They argue that interest rates are still high enough to control the economy, and since recent taxes on imports didn't raise prices as much as feared, they are now more worried about protecting jobs.

Therefore, moving interest rates down toward 3% is seen as a smart move. The report is expected to show that investment in technology and spending by wealthy households are currently driving growth.

However, the economy is expected to slow down significantly to around 1% growth in the next quarter, largely due to the disruptions caused by the government shutdown.

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For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Week - Silver (XAGUSD)

Silver has been on a tear with a breach of the $67/oz handle taking place on Friday.

This leaves Silver with a weekly gain of around the 8.5% mark and the rally just continues to gather pace.

It is very difficult to look at silver from a technical point of view given the lack of historical price action at these levels.

Optimism surrounding AI and electronics (where silver is used) contributes to the momentum while the soft US inflation data this week further fueled rate cut hopes for 2026.

Next to the upside the 70.00 handle may be a point to watch.

In terms of support, any pullback may find support at $64.50 (Previous breakout level) and $62.00.

Silver (XAG/USD) Four-Hour Chart, December 19, 2025

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Source: TradingView.Com (click to enlarge)

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