Published: 26 December 2025,06:31
Daily Market Analysis New
Key Takeaways:
*U.S. equities remain near record highs, supported by easing inflation expectations, a softer U.S. dollar, and growing confidence that the Fed’s tightening cycle has ended.
*Rate-cut expectations for 2026 are anchoring sentiment, lowering discount rates and underpinning equity valuations particularly for growth and technology stocks that dominate the Nasdaq.
Market Summary:
U.S. equities continued to trade near record highs in thin year-end conditions, with Wall Street supported by a combination of easing inflation expectations, a softer U.S. dollar, and growing conviction that the Federal Reserve’s tightening cycle is firmly behind it. The S&P 500, Nasdaq, and Dow Jones have all benefited from expectations that policy rates will begin to move lower in 2026, reinforcing the so-called Santa Claus rally even as liquidity remains subdued ahead of year-end holidays.
Recent U.S. macro data has tilted the balance in favour of risk assets. Softer inflation prints earlier this month, alongside cooling producer prices and signs of moderation in labour market momentum, have reduced fears of renewed policy tightening. While economic growth remains resilient, the data mix has been “soft enough” to keep rate-cut expectations alive, lowering discount rates and supporting equity valuations particularly for rate-sensitive technology and growth stocks that dominate the Nasdaq.
Dollar weakness has further underpinned U.S. equities. A declining greenback improves overseas earnings translation for multinational firms and has encouraged global portfolio flows back into U.S. stocks. At the same time, falling real yields have reduced competition from fixed income, keeping equities attractive despite elevated valuations. Investors appear willing to look through near-term macro uncertainty, focusing instead on easing financial conditions and stable corporate earnings expectations into early 2026.
Geopolitically, a tentative easing in Middle East tensions has helped stabilize broader risk sentiment, allowing equities to grind higher while volatility remains suppressed. However, markets remain cautious beneath the surface. Concerns around rising U.S. fiscal deficits, heavy Treasury issuance, and the sustainability of equity multiples linger, suggesting upside momentum could slow once the seasonal tailwinds fade. For now, Wall Street remains supported by policy optimism and year-end positioning, but vulnerable to renewed inflation surprises or abrupt shifts in Fed communication.
Technical Analysis
The Nasdaq continues to trade within a well-established medium-term uptrend on the chart, with price action holding comfortably above key Fibonacci retracement levels derived from the broader advance. Recent price action shows Nasdaq consolidating just below the 25,700 resistance level, an area that has repeatedly capped upside attempts. Despite several pullbacks from this region, the absence of aggressive downside follow-through suggests that selling pressure remains corrective rather than trend-reversing. Higher lows continue to form above the 24,800–25,000 area, reinforcing the integrity of the bullish structure.
Structurally, the index remains supported by rising short-term moving averages, with price consistently reclaiming the 20- and 50-period MAs after brief pullbacks. This behavior reflects healthy trend digestion rather than distribution, keeping the broader bullish bias intact.
Momentum indicators are broadly constructive. The RSI is holding near 60, remaining above the neutral 50 threshold and signaling sustained bullish momentum despite periodic consolidations. This suggests that upside pressure remains dominant, even as the market pauses near resistance. Meanwhile, the MACD is attempting to stabilize after a mild pullback, with the histogram showing signs of improving momentum. While a strong bullish expansion has yet to re-emerge, downside momentum appears limited.
Resistance Levels: 25,700.00, 27,000.00
Support Levels: 23,900.00, 22,500.00
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