Asian stock markets rose broadly to reach a new record, led by Chinese technology shares, as investors searched for more attractive valuations compared with the US market. The MSCI Asia Pacific Index gained 1.1 percent, while markets in Hong Kong, Shanghai, and Japan posted notable advances. Elsewhere, silver rallied sharply and gold edged higher, while the dollar weakened and US Treasury yields moved up.

US manufacturing activity remained in contraction territory for the tenth consecutive month in December 2025, with the ISM index falling to 47.9, the lowest level in a year. A sharp drawdown in raw material inventories, weaker new orders, and sluggish exports were the main drivers, while input costs remained elevated. However, the rapid decline in customer inventories may signal a relative improvement in orders and production in the coming months, although trade uncertainty and tariffs continue to weigh on the sector.

UK food inflation rose in December 2025 for the first time since August, reaching 3.3 percent. According to the British Retail Consortium, this pushed overall shop price inflation to 0.7 percent, while non food price inflation continued to decline. Weak consumer confidence led shoppers to seek cheaper options during the Christmas period, helping discount retailers such as Aldi and Lidl post record sales.

Morgan Stanley believes the US stock market still has room to rise through 2026, despite late cycle concerns. The bank cites six underpriced drivers, including strong earnings growth, easier monetary policy, deregulation, and productivity gains from artificial intelligence, as factors supporting the ongoing uptrend. Based on this outlook, Morgan Stanley has set a 2026 target of 7800 for the S&P 500 index.