Daily Market Report – December 19, 2025
The Bank of Japan raised its key interest rate on December 19, 2025, from 0.5% to 0.75%. A level of 0.75% was last reached in 1995 – more than 30 years ago. The governor of the Japanese central bank, Kazuo Ueda, has reiterated that a weaker yen increases import prices, thereby creating additional inflationary pressure in Japan.
Today's interest rate hike in Japan makes yen carry trades less attractive. With higher interest rates, domestic investments become more appealing for Japanese investors. This could lead to Japanese investors reducing foreign positions and bringing capital back to Japan.
The interest rate differential between the US and Japan is expected to narrow further in 2026, as the Fed continues to lower US rates while the BoJ raises rates – against the backdrop of persistent high inflation in Japan with a core inflation rate of 3% and rising wages.
The global stock markets are trading higher today after the US inflation data for November, released yesterday, came in at 2.7%, below expectations. However, several market observers pointed out that this data could be distorted due to the government shutdown.
Oracle ORCL surged approximately 7% after ByteDance confirmed a binding agreement to transfer control of the US TikTok business to a new joint venture led by Oracle's investor consortium. Nike NKE fell about 10% as declining margins, weak sales in China, and a cautious outlook overshadowed the excitement over better-than-expected numbers. Carnival CCL rose over 9% – thanks to better-than-expected business figures, an optimistic outlook, and the resumption of a quarterly dividend.