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Global Markets Edge Lower Amid Uncertainty Ahead of U.S. CPI Release

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  Published in Stocks and Investing on Monday, December 15th 2025 at 17:53 GMT by Toronto Star

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Global Markets Lacking Direction, Edge Lower Ahead of U.S. Economic Data

In a market that has been largely flat for the past several weeks, the biggest headline this week was that global indices edged lower as investors awaited the release of U.S. inflation data on Monday. The Toronto Stock Exchange’s S&P/TSX composite slipped 0.2 % to close at 18,500, while the benchmark U.S. S&P 500 fell 0.4 % and Canada’s FTSE 100 dipped 0.3 %. Even the Japanese Nikkei 225 slipped 0.2 %, reflecting a nervous appetite for risk‑on stocks amid rising inflationary concerns and a sense of uncertainty over the Fed’s next move.

What’s Driving the Downward Tilt?

1. Inflation expectations and the Fed’s policy stance
The market’s mood has been dominated by a fear that the U.S. Federal Reserve may stay hawkish longer than anticipated. Fed officials have repeatedly signaled that the target range of 5.25 %‑5.5 % will likely stay in place for the foreseeable future. The possibility of a surprise rate hike—or at least a delay in easing—has weighed heavily on bond markets, pushing yields up and pressuring equities. A recent poll of economists suggested that the average estimate for the December CPI would be 3.3 % year‑over‑year, a figure that would imply that inflation is still too high for the Fed to consider a pause.

2. Corporate earnings mixed
Corporate earnings for the third quarter were a mixed bag. Technology and consumer‑discretionary stocks received a lift from robust earnings reports, while financials and energy remained flat or slightly down. The consensus for the S&P 500’s earnings growth was 9.6 % for the year to date, but many analysts warned that this growth could be a temporary spike, not a durable trend.

3. Global risk sentiment
Geopolitical tensions in the Middle East and an uptick in trade tensions between the U.S. and China have added to risk aversion. The dollar has appreciated slightly against the euro and the yen, making U.S. dollar‑denominated assets more attractive relative to their foreign counterparts.

Key Market Numbers

The Upcoming U.S. CPI Release

On Monday, the U.S. Bureau of Labor Statistics will publish the Consumer Price Index for December. Market participants are closely watching the core CPI (which excludes food and energy) as it is considered a more reliable gauge of underlying inflation. A core CPI reading above 3 % would likely confirm that inflationary pressures remain stubborn, while a reading below that threshold could give the Fed a little breathing room.

Impact on Canadian Markets
The Canadian dollar has weakened slightly in the past few days, falling from CAD $1.35 to CAD $1.34 against the U.S. dollar. Analysts suggest that a stronger U.S. dollar, driven by higher Treasury yields, could put further downward pressure on the CAD. The Bank of Canada is expected to keep its policy rate unchanged at 5.25 % for the time being, but it may consider a cut in March if the U.S. CPI shows a slowdown in inflation.

Industry Highlights

• Technology: Apple and Microsoft reported earnings that beat estimates, leading the Nasdaq to trade up by 0.6 % in the afternoon.
• Financials: Major banks such as RBC, TD, and Scotiabank saw modest gains, though their dividend payouts were tempered by a slower credit environment.
• Energy: Oil prices fell as OPEC+ production plans seemed to favor a moderate supply increase, dampening expectations for higher energy costs.

Takeaway for Investors

• Risk‑on stocks remain under pressure as investors stay cautious about potential Fed tightening.
• Safe‑haven assets such as gold and U.S. Treasuries are rallying, reflecting a search for protection against volatility.
• The upcoming CPI data will be a crucial bellwether; a higher-than-expected figure could reinforce the case for continued hawkishness, whereas a lower figure could spark optimism for eventual easing.

For now, the market appears to be in a holding pattern, with the main decision point coming from the U.S. inflation report on Monday. The outcome will dictate the next phase of policy discussions in the U.S. and likely influence the Canadian dollar, bond markets, and equity valuations across the globe.