Asia Market Wrap - Nikkei Hits Three-Week Lows
Japan's Nikkei dropped to its lowest point in three weeks on Thursday. The decline was driven largely by falling prices in major technology companies, as investors grew worried about the future of artificial intelligence and data center businesses.
Overall, the Nikkei index fell by roughly 1%, while the broader Topix index saw a smaller decline.
SoftBank Group was hit particularly hard, losing nearly 4% of its value. This happened after its partner, Oracle, saw its own stock drop due to reports that a major investor might pull out of a $10 billion data center deal. Because SoftBank is working closely with Oracle and OpenAI on a massive US project called "Stargate," this bad news dragged SoftBank's shares down.
Other tech firms, including chipmaker Advantest and cable manufacturer Fujikura, also suffered significant losses.
Financial companies also struggled, with major banks like Mitsubishi UFJ and Mizuho dropping around 1%.
Investors are selling these stocks as they prepare for the Bank of Japan's meeting on Friday, where the central bank is expected to announce an increase in interest rates.
However, not every company did poorly; the software testing firm Shift jumped by over 5%, and the railway operator Keisei Electric Railway also saw solid gains.
European Session - Quiet Start to the Day
European stock markets were mostly quiet on Thursday as market participants waited cautiously for big announcements from central banks and new inflation data from the United States.
The FTSE 100 index dipped slightly, but the UK market managed a small gain. This rise in London comes as investors strongly expect the Bank of England to cut interest rates today, a belief that grew stronger after yesterday's surprise drop in UK inflation.
In contrast, central banks in the rest of Europe, Norway, and Sweden are expected to keep their interest rates exactly where they are.
The market is paying close attention to the European Central Bank's future plans, especially since some officials have suggested they might raise rates next year, which would be different from the US approach.
Energy stocks performed the best as oil prices rose, with BP gaining slightly after appointing a new CEO. However, healthcare companies struggled, with major firms like Novo Nordisk seeing their share prices fall.
On the FX front, the US dollar rose slightly on Thursday as investors prepared for important announcements from central banks in Britain, Europe, and Japan.
The dollar’s value increased by 0.2% overall, largely ignoring comments from President Trump that he wants the next leader of the Federal Reserve to lower interest rates significantly.
Meanwhile, other major currencies struggled against the dollar. The British pound fell because UK inflation dropped unexpectedly, which convinced many traders that the Bank of England will cut interest rates soon.
The Japanese yen also dipped slightly, although its losses were limited because investors expect Japan's central bank to raise interest rates to a 30-year high on Friday. The Euro also declined by 0.2%.
Currency Power Balance
Source: OANDA Labs
Oil prices increased slightly on Thursday as traders evaluated potential problems with global supply. Market participants are currently worried about two main issues: the possibility of new U.S. penalties against Russia and a blockade of Venezuelan oil ships.
As a result of these concerns, the price of Brent crude rose to $60 a barrel, while US crude climbed to $56.32.
Gold prices remained mostly steady on Thursday. While signs that the Federal Reserve might cut interest rates helped support the price, a strong US dollar and the anticipation of important inflation reports limited any major gains.
Meanwhile, silver stayed near its all-time high.
Specifically, the price of gold dropped slightly by 0.2% to roughly $4,333/oz, following a strong rise the day before, while gold futures also fell by a similar amount to $4,364.
Read More:
BoJ preview: Interest rate hike baked in, what’s next for the JPY (further appreciation)?
EUR/USD Forecast: ECB & US CPI to Drive Price Action, Bulls Remain in Control Above 1.1600 Handle
Economic Calendar and Final Thoughts
The European session has been quiet thus far but we do have two major Central Bank decisions ahead of us.
Later today, the US will release its November inflation report, which should give a clearer picture of future American economic policy.
For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)
Chart of the Day - FTSE 100
From a technical standpoint, the FTSE 100 index is finally breaking higher after a period of consolidation.
The index bounced off support at 9661 before breaking above both the 100 and 200-day MAs and making a fresh high eyeing the ATH at 9943.
The question now is can the FTSE 100 reach the 10000 handle?
The period-14 RIS is just shy of overbought territory which could be a cause for concern.
FTSE 100 Index Daily Chart, December 18, 2025
Source: TradingView.com (click to enlarge)
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