This week the Federal Reserve cut interest rates by a quarter point and hinted that more may follow in 2026. It sounds reassuring. Yet the reaction has been anything but calm. That is because the world is not just adjusting to lower rates. It is also adjusting to doubt about technology, growth and politics.

Start with money. The Fed has nudged rates down and left the door ajar for further easing. Markets, being markets, have pushed that door wider. Traders are now pricing in as much as 50 basis points of cuts by the end of 2026 - more than the Fed itself has promised. Whether that optimism survives will depend on three old-fashioned things: inflation, jobs and risk. Initial jobless claims have already come in higher than expected. Inflation data is due next week. So are payroll numbers. In short, the verdict is still out.

Then there is technology, where faith is being stress-tested. Results from Broadcom and Oracle have reignited fears of an AI bubble. Broadcom warned that future margins on its AI systems will be lower, even as revenues remain strong. Investors heard the first part louder than the second. Its shares slid sharply, dragging others with them. Nvidia and AMD dipped. Oracle's weak outlook lingered like a bad smell.

The dollar is hovering near an eight-week low, weighed down by expectations of easier policy. Oil prices rose on the day but are heading for a hefty weekly loss. Diplomatic efforts to end the war in Ukraine and an expected glut next year have flipped the outlook from scarcity to surplus. Gold has gained for the week and its momentum looks strong.

Major indices remain upbeat and have recently hit record highs. The gains are not coming from AI: blue chips and small caps are doing better than mega-cap tech. The Russell 2000 has outpaced the S&P 500 this quarter as money rotates into value-heavy sectors such as healthcare. Investors are not abandoning growth. They are seeking cheaper, rate-sensitive areas that might actually benefit from lower borrowing costs.

Some argue investors should not fight the AI bubble. History suggests that even if excesses burst, useful technologies tend to survive and winners eventually emerge. Cisco did, after all. The US networking giant's share price has, for the first time in 25 years, surpassed its March 2000 peak: just before the dot-com bubble burst. It has taken all this time for the company, once lauded for its role in the rise of the internet, to reclaim those levels.

Meanwhile, Lululemon's chief executive is stepping down after pressure to restore the brand's "cool", sending shares sharply higher. Warner Bros. Discovery is buoyed by speculation of a higher takeover bid. Walt Disney, once wary of artificial intelligence, has quietly warmed to OpenAI, a sign that even sceptics are adapting.

There are legal clouds too. A lawsuit against Boeing over alleged toxic fumes on a commercial flight hints at wider liabilities for an industry already short on goodwill.

In Europe, the Stoxx Europe 600 has not yet hit a new record, but the peak is drawing closer. The index broke through the 581-point threshold yesterday, now sitting less than 1% from its all-time high of 13 November, despite a slump in the defence sector: a major driver of performance in recent quarters. This decline coincides with concessions announced by Ukraine in a bid to secure a ceasefire with Russia. Kyiv has signaled its willingness to accept a demilitarized zone in the Donbas, marking a major concession. Donald Trump, acknowledging the proposal, stated a few hours ago that the United States would send a representative to attend peace talks in Europe this weekend, provided there was a real prospect of progress towards a ceasefire agreement. The mere prospect of a breakthrough dragged oil prices down, though the fall was tempered somewhat by Washington's seizure of a Venezuelan tanker earlier in the week.

In the Asia-Pacific region, markets are broadly higher to close the week. Japan, Australia, South Korea and Hong Kong are all up more than 1%, while India and Taiwan are posting gains of around 0.5%. European indices are slightly bullish, while US futures are mixed.

Today's economic highlights:

On today's agenda: industrial production in Germany; the harmonized CPI of the eurozone and the CPI in Germany; the monthly GDP in the United Kingdom; the harmonized CPI of the eurozone and wages in France. See the full calendar here.

  • Dollar index: 98,412
  • Gold: $4,337
  • Crude Oil (BRENT): $61.16 (WTI) $57.55
  • United States 10 years: 4.18%
  • BITCOIN: $92,379

In corporate news:

  • The FDA plans to add a 'black box' warning—the most serious label—to COVID-19 vaccines from Pfizer, Moderna, and Novavax, highlighting potential serious risks, according to a CNN report.
  • Alphabet's Google has partnered with the UK's National Quantum Computing Centre to provide access to its Willow quantum processors, boosting UK quantum research.
  • OpenAI and Microsoft are facing a lawsuit in California alleging that ChatGPT contributed to a murder-suicide in Connecticut by reinforcing a user's delusions.
  • Microsoft is being sued for $2.81 billion in the UK over claims it overcharged for cloud software compared to competitors like Amazon, Google, and Alibaba.
  • Reddit is suing the Australian government to overturn its under-16 social media ban, claiming it violates constitutional free speech protections.
  • Executives at Pinduoduo were arrested following a physical altercation with Chinese regulators during a food safety inspection, though the company denies the incident.
  • Goldman Sachs says Japan's M&A market will remain strong into 2026, driven by innovative private finance structures and strategic corporate reforms.
  • Banco Bilbao Vizcaya Argentaria and OpenAI formed a strategic partnership to develop AI tools for financial services and internal operations.
  • The European Union reportedly plans to fine Google in 2026 for violating the Digital Markets Act by favoring its own services in search results.
  • Broadcom shares fell 5% after it warned of margin pressure due to a higher mix of AI-related revenue, despite beating revenue forecasts.
  • Intel tested chipmaking tools from ACM Research, whose overseas units are under U.S. sanctions, raising national security concerns.
  • Uber and WeRide launched a Robotaxi trial service in Dubai, with full commercial rollout expected in 2026.
  • Amgen received FDA approval for Uplizna to treat generalized myasthenia gravis, marking a new use for the autoimmune disorder therapy.
  • Taiwan launched a new AI supercomputing center equipped with Nvidia chips, supporting its strategic push into AI and digital infrastructure.
  • Yum China expanded its share repurchase program by $1 billion, boosting investor returns amid ongoing stock buyback efforts.
  • Halliburton and VoltaGrid will deliver 400 MW of modular natural gas power systems by 2028 to support data centers in the Eastern Hemisphere.
  • AI-driven data center investments are increasingly funded through debt, raising concerns about financial risks as firms like Oracle, Meta, and Alphabet issue large bonds.
  • Google will build three subsea cables in Papua New Guinea under an Australia-funded defense treaty, enhancing the nation's digital infrastructure.
  • JD.com pledged $3.12 billion over five years to provide housing for delivery riders, intensifying its rivalry with Meituan in China's food delivery market.
  • U.S. President Donald Trump signed an executive order to override state-level AI regulations, aiming to maintain national dominance over China in the technology.
  • Oracle sees increased scrutiny on its credit default swaps due to rising debt from AI data center investments.
  • Walt Disney invests $1 billion in OpenAI, licensing characters for AI-generated content on Sora.

Analyst Recommendations:

  • Centerpoint Energy, Inc.: KeyBanc Capital Markets upgrades to overweight from sector weight with a target price of USD 41.
  • Choice Hotels International, Inc.: JP Morgan upgrades to neutral from underweight and reduces the target price from USD 102 to USD 95.
  • Cousins Properties Incorporated: Mizuho Securities upgrades to outperform from neutral and reduces the target price from USD 31 to USD 29.
  • Eastgroup Properties, Inc.: Piper Sandler & Co upgrades to overweight from neutral and raises the target price from USD 185 to USD 220.
  • Gaming And Leisure Properties, Inc.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 52 to USD 53.
  • Lantheus Holdings, Inc.: Truist Securities upgrades to buy from hold and raises the target price from USD 61 to USD 80.
  • Lululemon Athletica Inc.: Jefferies upgrades to hold from underperform and raises the target price from USD 120 to USD 170.
  • Snap Inc.: President Capital Management Corp initiates coverage with a buy recommendation and sets a price target of USD 9.10.
  • Tradeweb Markets Inc.: Barclays downgrades to market weight from overweight and reduces the target price from USD 132 to USD 121.
  • Veeva Systems Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Antero Resources Corporation: Wells Fargo maintains its overweight recommendation and raises the target price from USD 39 to USD 49.
  • Broadcom Inc.: Baird maintains its outperform rating and raises the target price from USD 300 to USD 420.
  • Ciena Corporation: B Riley Securities Inc. maintains its neutral recommendation and raises the target price from USD 113 to USD 222.
  • Eli Lilly And Company: CTBC Securities Investment Service Co LTD maintains its add recommendation and raises the target price from USD 823 to USD 1157.
  • Micron Technology, Inc.: Stifel maintains its buy recommendation and raises the target price from USD 195 to USD 300.
  • Paypal Holdings, Inc.: Baird downgrades to neutral from outperform and reduces the target price from USD 83 to USD 66.
  • Rivian Automotive, Inc.: Goldman Sachs maintains its neutral recommendation and raises the target price from USD 13 to USD 16.
  • Robert Half Inc.: Truist Securities maintains its buy recommendation and reduces the target price from USD 50 to USD 35.
  • Roblox Corporation: JP Morgan downgrades to neutral from overweight and reduces the target price from USD 145 to USD 100.
  • Sandisk Corporation: GF Securities Co. Ltd. downgrades to hold from buy and reduces the target price from USD 351 to USD 239.
  • Yeti Holdings, Inc.: Stifel maintains its hold recommendation and raises the target price from USD 34 to USD 43.