Markets Steady as Investors Await Fed Signals Amid Rising Geopolitical Uncertainty

Index Update:  Investors are now focused on the Federal Reserve’s December meeting minutes, which may show differing views on next year’s interest-rate path and add to policy uncertainty. Meanwhile, Nvidia has become the first company to exceed a USD 5 trillion market value this year, highlighting rising AI-related spending among major tech firms. Markets also face continued pressure from global geopolitical and energy risks, including the war in Ukraine, Venezuela’s energy instability, oil oversupply concerns, and soaring electricity demand tied to AI infrastructure.

Market Movers;  On Monday, the top gainers were Brand Engagement Network Inc. (+108.75%), followed by Society Pass Incorporated (+60.99%). On the contrary, Ultragenyx Pharmaceutical Inc. (-42.32%), and New Era Energy & Digital, Inc. (-41.01%) declined the most the same day.

Commodities Update:  WTI and Brent crude futures held steady after jumping over 2% on renewed geopolitical tensions, including heightened uncertainty around Ukraine peace talks, U.S. action against Venezuelan oil assets, and rising Middle East risks tied to Iran. Despite these concerns, both benchmarks remain nearly 20% lower year-to-date on expectations of abundant global supply, putting them on track for their biggest annual decline since 2020. Gold rebounded above $4,360/oz on Tuesday after its sharp 4% drop the prior session, with safe-haven demand supported by persistent geopolitical tensions involving Ukraine, Iran, and Venezuela. Despite recent volatility, gold remains on track for its strongest annual gain since 1979, helped by central-bank buying, ETF inflows, and expectations of further U.S. rate cuts. Silver also recovered—up over 1% to $73/oz after an 8% slump—while geopolitical risks and solid industrial demand continue to support prices, leaving silver poised for one of its best annual performances in decades.

Macro Updates:  U.S. crude inventories rose by 405,000 barrels in the week ending December 19, surprising markets that had expected a sizable drawdown. The increase kept commercial stocks above 424 million barrels—above historical norms—and reinforced perceptions of a well-supplied global oil market despite sanctions on Venezuela and Russia. Gasoline inventories climbed by 2.8 million barrels, while diesel stocks edged up by 200,000 barrels.

Bonds Commentary:  The 10-year U.S. Treasury yield held near 4.12%, its lowest level in over three weeks, as investors awaited the Fed’s meeting minutes for clues on future policy. Markets currently expect two rate cuts in 2026, though Fed officials remain split, and attention is building around President Trump’s upcoming choice of the next Fed Chair. Recent data painted a mixed economic picture: pending home sales beat expectations with a 3.3% rise in November, while the Dallas Fed’s December survey pointed to weakening manufacturing conditions.

Futures Update:  U.S. stock index futures were mostly flat Monday evening after Wall Street closed lower, led by declines in tech stocks. With trading volumes still light in a holiday-shortened week, investors remained cautious ahead of new signals on the Federal Reserve’s policy direction. S&P 500 and Nasdaq 100 futures were each down about 0.1%, while Dow futures were unchanged.

Stocks opened lower at the opening and gradually consolidated near those levels throughout Monday's trading day. The major averages showed a correction after their winning streak for five consecutive days, with both the Dow and S&P 500 near new record highs. The S&P 500 went down by 24.22 points, or 0.35%, closing at 6,905.73. From a technical perspective, the index found support at important levels and steadily advanced, indicating the potential for a sustained upward trend in the near term. The 14-day Relative Strength Index (RSI) has crossed above the midpoint, further supporting a positive outlook. Key support levels are around 6,844, while resistance is anticipated near 6,988.