The start of a Santa Rally or more ‘bah humbug’?
And so… December is approaching.
Since November, there has been a volatile transition as the US major indexes have underperformed and the Nasdaq has moved lower due to steep declines. In Europe, the Stoxx 600 index managed to maintain its gains, marking the fifth positive month in a row for November. But technology stocks also suffered due to concerns about artificial intelligence valuations and spending plans in global equity markets.
So what does this mean for December? Could stocks stage a seasonal Santa Claus Rally, or will it be more ‘bullshit’ in the final trading month of the year?
Macy’s Santa Claus is greeted by traders at the New York Stock Exchange (NYSE) in New York City, USA, November 26, 2025.
Brendan McDermid | Reuters
Case for Santa Claus Rally
Fidelity International released the figures: The FTSE 100 has had a positive return in December for 24 of the last 30 years. There could be some festive atmosphere for the UK this year, with markets pricing in a 90% chance of the Bank of England cutting interest rates in December after the budget appeared to avoid any serious inflationary measures.
It’s a different picture for the European Central Bank, where markets see the chances of a rate cut as zero, but it’s also seen as a positive sign as its governing council said in the final minutes that policy was “in a good place”. According to CME Fedwatch, European and Asian stocks follow the US higher each time expectations for a rate cut rise at the December Fed meeting; The probability of an interest rate cut expected by the markets is close to 83%.
Central banks can help bring in the festive spirit this December.
‘Bahh fraud’ case
But there are market forces that could cause bulls to find a lump of coal in their stocks. The factors behind November’s volatility did not magically disappear; Some investors and market watchers are still expressing concerns about the pace of AI hyperscaler spending. Even the ECB made its usual move this week, warning that US tech valuations were being held up because investors had FOMO, or “fear of missing out.” The central bank warned of “sharply correlated price adjustments”, a key risk for AI-focused stocks.
Cryptocurrency may also cause problems in the last month of the year. As CNBC reported last week, Compass Point predicts that Bitcoin will continue to decline as new investors sell the token and its affiliated exchange-traded funds. Compass also suggests that long-term holders may sell their holdings due to the “halving” program, which occurs every four years and “programmatically halves the amount of rewards individuals receive from mining new tokens on the bitcoin blockchain.”
Why the pressure on Bitcoin may continue until the end of the year
Whether you believe in the Santa Claus Rally or not, December will be a fascinating year for asset classes around the world, making 2026 predictions difficult to make.
Global events in December:
December 10: Federal Reserve policy decision
December 11: Policy decision of the Swiss National Bank
18 December: Bank of England policy decision
18 December: European Central Bank policy decision
19 December: European Leaders summit in Brussels
