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• European markets on the rise, while Ukraine gives up on NATO membership 
• Dour Chinese data highlights need for additional stimulus
• Hassett comments highlight Trump’s influence on monetary policy in 2026

A strong start to the week for European equities, with a wide breadth of stocks gaining ground in what looks to be the last major week of data for 2025. Despite the fact that we have such an incredibly busy week up ahead, traders are taking a largely positive tone, with the Fed’s rate cut meaning that the jobs report and inflation data will have less of an immediate impact on monetary policy. Meanwhile, the elevated levels of market confidence around both the Bank of England’s rate cut (91%) and the BoJ’s hike (82%), does alleviate much of the risk that we see any major unexpected hurdles for traders to navigate. Elsewhere, we have seen Ukraine apparently drop their NATO aspirations, relying instead on security guarantees from the US and Europe in a bid to further heighten the chance of an end to the war. While on the face of it this would lessen the geopolitical risk in Europe, Trump’s strategy document shows a shift that leaves their historical allies in Asia and Europe more isolated and at risk in the years ahead.

The pessimistic tone set within Asian markets stood in stark contrast to the gains seen in Europe today, with traders reacting to a raft of Chinese data that saw underperformance across the trio of fixed asset investment, retail sales, and industrial production. With factory output growth slowing to a 15-month low, and retail sales posting their worst metric since the Chinese ended its zero-covid restrictions, there is a clear need for the government to step in to lift economic prospects. However, with Xi Jinping warning against reckless decision-making in the pursuit of growth, those hoping for a silver bullet may be left waiting.

Today provides a largely quiet economic schedule, with Canadian inflation providing the one particular release of note. Notably, the coming days do provide an almost unprecedented amount of data and central bank announcements, as the belated US inflation and jobs data comes into play within a week that already has a huge amount of key market moving events. Coming hot off the heels of a Fed rate decision that saw the third cut of the year, Kevin Hassett’s statement that he would consider Trump’s opinions if he is given the job highlights the likeliness of a uber-dove driving the Fed going forward. With the President calling for his “voice to be heard,” the prospect of sharply lower rates in the second half of 2026b does provide a bearish backdrop to the US dollar in 2026.

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