S&P 500 and Gold Smash New Records

Global capital markets delivered a stunning performance on Tuesday, defying the usual low-volume lull associated with the holiday season. Wall Street closed at yet another record high, while safe-haven assets simultaneously rallied, creating a complex investment landscape as we head into 2026. The S&P 500 climbed 0.5 per cent to close at 6,909.79, surpassing the peak set earlier in December, driven largely by continued strength in the technology sector.

This rally occurred against a backdrop of mixed economic signals. The latest data reveals that the US economy expanded at a robust 4.3 per cent annual rate during the third quarter, a sharp acceleration from earlier in the year. However, this growth comes with a caveat: inflation remains stubbornly high. The Federal Reserve’s preferred inflation gauge, the PCE index, climbed to a 2.8 per cent annual pace, complicating the central bank’s path for future rate cuts.

As has been the trend throughout 2025, technology stocks did the heavy lifting. Nvidia jumped 3 per cent, asserting its dominance as a primary market mover.

Beyond the trading floor, the corporate landscape is witnessing aggressive consolidation. Paramount Skydance shares rose 4.3 per cent after the company sweetened its hostile takeover bid for Warner Bros. Discovery. The deal now includes an "irrevocable personal guarantee" from Oracle founder Larry Ellison, who is putting up billions to back the deal in a direct challenge to Netflix. In the gig economy, both Uber and Lyft saw gains of over 2 per cent after announcing plans to introduce robotaxi services to London next year, signalling that automation remains a key theme for equity growth.

While equities rallied on growth optimism, the commodities market signalled caution. Gold prices touched new historic records, rising 1.1 per cent early Tuesday to reach an unprecedented $4,519.50 per ounce. This simultaneous rally in risk assets (stocks) and safe havens (gold) suggests institutional investors are hedging against potential volatility stemming from the ongoing trade wars and sticky inflation.

In Asia, markets tracked Wall Street’s optimism, with Australia’s S&P/ASX 200 jumping 1.1 per cent. However, the currency markets remain tense. The US dollar traded at 156.01 yen, weakening slightly after officials in Tokyo explicitly warned they would "intervene if the yen weakened sharply." This verbal intervention highlights the fragile nature of the forex market as central banks navigate diverging monetary policies.

The confluence of strong GDP growth and persistent inflation has placed the Federal Reserve in an "awkward policy position." Although the Fed has cut rates three times in 2025, the bond market is signalling unease. The yield on the 10-year Treasury ticked up to 4.16 per cent following the GDP report.

Wall Street consensus now largely expects the Fed to hold rates steady at its January meeting. With consumer confidence fading and retail sales showing signs of caution, the central bank must balance the risk of overheating inflation against a softening labour market. As noted by strategists, the latest data only "further complicates their dilemma," leaving investors to navigate a market where bad news is bad news, but good news might mean higher rates for longer.