Markets Today: Asian & European Shares Mixed as German Factory Orders Rise. US PCE Data Remains the Focus

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Asian stock markets went down today because the previous day ended poorly on Wall Street, especially for tech companies and US government bonds (Treasuries). Investors are now nervously waiting for important US inflation data that will be released later today (Friday).

The overall Asian stock index fell by up to 0.7% but is still on track to finish with a gain for the second week in a row.

Leading the losses across the region were Japanese stocks, which saw a significant drop after a strong gain the day before; the Nikkei 225 index fell 1.5% and is expected to close the week mostly unchanged.

Meanwhile, the broader index of Asian stocks outside of Japan was down a slight 0.1% but is still set for a 0.5% gain for the week.

On the data front, household spending in Japan fell in October, and it was the fastest drop in almost two years. This suggests that rising prices (inflation) are severely reducing how much money people feel comfortable spending.

As a result, the interest rate (or yield) on the 10-year Japanese government bond rose to 1.94% early in Asian trading, reaching its highest level since the middle of 2007, indicating that the cost of borrowing money for the government is going up significantly.

The Reserve Bank of India (RBI) lowered its key repo rate by 25 bps to 5.25% during its December 2025 meeting, in line with market forecasts amid confidence in a softer inflation outlook. The RBI has now cut rates by a total of 125 bps since the beginning of the year, bringing the repo rate to its lowest level since July 2022.

New orders for German factories increased by 1.5% in October 2025 compared to September, which was better than the expected 0.5% rise, though it was slower than the 2.0% jump seen the month before.

This increase marked the second month in a row for growth, mainly driven by a massive 87.1% surge in orders for large transportation equipment like aircraft and ships, along with an 11.9% rise in metal production.

However, not all areas did well, as orders for electrical equipment dropped significantly by 16.2%. Looking at the details, orders for capital goods (like machinery) rose 4.9%, but orders for intermediate goods (used in production) and consumer goods both declined.

The overall increase was fueled entirely by the domestic market, which saw a 9.9% surge in orders, completely offsetting the 4.0% fall in foreign demand, which was particularly weak outside the Euro area. If you remove the effect of large, one-off contracts, total orders only rose by 0.5%.

Over the last three months, total factory orders saw a small decline, but excluding the effect of those large, erratic contracts, orders actually grew by 2.0%, suggesting the underlying demand for German manufactured goods remains steady.

European stock markets were stable on Friday after three straight days of increases, keeping them on track for a weekly gain as investors look ahead to key US inflation figures.

The main pan-European STOXX 600 index was up slightly by 0.1%, with Germany's DAX and France's CAC 40 also seeing modest gains.

The main event is the US Personal Consumption Expenditure (PCE) report due later today, which is highly anticipated because it could influence whether the U.S. central bank, the Federal Reserve, decides to cut interest rates soon. Recent economic data and comments from some Fed officials have already led investors to expect an interest rate cut as early as next week.

In terms of market sectors, basic resources were the top performers, rising 1.3% after copper prices hit a new high, and industrial stocks also saw their fourth straight day of gains. Separately, the investment bank Citigroup set a positive forecast for the main European index by 2026 and upgraded several sectors, including autos and industrials, based on expected financial benefits.

Among individual company moves, Swiss Re fell 5.3% after its 2026 targets disappointed analysts, while Ocado surged 12.7% after the company announced it would receive a one-time $350 million payment from U.S. grocer Kroger for closing some planned warehouse facilities.

On the FX front, the US dollar remained weak on Friday, staying near its lowest level in five weeks compared to other major currencies.

The dollar was especially weak against the Japanese yen, which was boosted to a nearly three-week high because investors expect the Bank of Japan to raise its interest rates later this month. The dollar index, which tracks the dollar's value against six other currencies, fell 0.2% and is heading toward a 0.6% decline for the week overall.

In contrast, other currencies saw gains: the euro rose 0.1%, moving back toward its three-week high; the British pound gained 0.2%, approaching a six-week peak; and the Australian dollar advanced 0.3%, reaching its strongest point in over two months.

The Swiss franc also saw a small gain against the dollar.

Currency Power Balance

Gold price rallied again overnight pushing back above the $4230/oz handle before a pullback. The precious metal has traded in a tight range this week with a breakout likely to be forthcoming post today's PCE data.

If not the range could persist heading into next week's FOMC meeting barring any major geopolitical developments.

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The European session will be quiet today with Euro Area GDP data the highlight.

Attention will turn to the US session where the main event is the US Personal Consumption Expenditure (PCE) report due later today, which is highly anticipated because it could influence whether the US central bank, the Federal Reserve, decides to cut interest rates soon.

Recent economic data and comments from some Fed officials have already led investors to expect an interest rate cut as early as next week.

There are also a bunch of medium impact data releases such as the University of Michigan sentiment and revised Durable Goods data.

I do not expect huge volatility from any of these events but given the lack of volatility this week, I am hoping for a bit more from today. Let us see what happens.

From a technical standpoint, the FTSE 100 has held above the 100-day MA since last Thursday afternoon.

This could be seen as a sign of bullish momentum with a potential breakout coming soon.

However, the longer price remains rangebound, this will increase investor angst and a potential pullback may materialize.

For now though, a bullish move appears more favorable as the index continues to grind higher.

Immediate support rests at 9686, 9661 and 9610 respectively.

A move higher may encounter some resistance at 9750, 9800 and 9850.

FTSE 100 Index Four-Hour Chart, December 5. 2025

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