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US economic growth is set to accelerate with cheaper oil. Federal Reserve rate cuts are likely with inflation cooling. Stock pickers are looking for alternatives to artificial intelligence (AI) plays and the American consumer continues to spend.Together it’s a near-perfect recipe for shares in companies that are most closely tied to the economic cycle. Banks like JPMorgan Chase & Co, equipment makers like Caterpillar Inc and retailers like Gap Inc and Dollar Tree Inc are among the companies strategists and analysts expect to do well in 2026.“Investors are starting to sniff out the beginning of an improvement in cyclical areas of the economy,” said Michael Kantrowitz, chief investment strategist and head of portfolio strategy at Piper Sandler.That means financials, industrials and purveyors of non-essential consumer products should be at the vanguard of what Wall Street expects will be another strong year for US equities. Some six dozen economists surveyed by Bloomberg have an average growth target for the US economy of 2% next year — hardly gangbusters but strong enough to drive gains in areas outside of technology.“You want to be positioned for finding names that are going to see an incremental benefit to their earnings picture in the next year as we expect cyclical data to improve and lead to value outperformance in 2026 for the first time in a long time,” Kantrowitz said.The rotation has already started. After moving more or less in tandem with the S&P 500 Index through the year, a Goldman Sachs basket of cyclical stocks has climbed 9.3% over the last month. That advance is twice as fast as the broader market, with the S&P 500 Index rising just 4.2%.Moreover, the cyclicals group has outperformed defensive stocks, which were the key beneficiaries of the October-through-November mini-rotation and pullback from the information tech sector. Another Goldman basket that is long cyclicals outside of the commodities space and short defensive names is up 10% over the last month.“Rotation into the non-tech cyclicals signals encouraging economic expansion expectations,” said Sam Stovall, chief investment strategist at CFRA, in a note to clients. His firm expects real GDP growth of 2.5% in 2026, “aided by a 4.1% rise in retail sales and a decline in Core PCE to 2.4%.”Elsewhere on Wall Street, the cyclical group is seen as a longer-term winner in 2026 with Dennis DeBusschere, founder and chief market strategist at 22V Research LLC, saying that “pro-cyclical trades should last longer than a quarter or two.”His favourite way to play the trade is going long banks and retail stocks and short consumer staples. He also likes buying the transportation group outside of the airlines.The strengthening case for cyclical stocks is also evident in the advance of the Dow Jones Transportation Average, which has climbed 10% over the past month and, after a long period of underperformance, is finally within 0.4% of notching its first record high since November 2024.Tom Hainlin, national investment strategist at US Bank NA, is recommending clients add broad cyclical exposures within equities. “We want more cyclical exposure but not by selling tech stocks to get it,” he said by phone, noting that he expects tech to continue to lead earnings growth next year, followed by materials and industrials stocks.Citi strategists led by Adam Pickett said in a December 15 note that cyclicals should outperform defensives and recommends investors be overweight financials, the bank’s pick within cyclical sectors, and underweight staples. “Industrials are an upgrade candidate, too,” he wrote.One potential challenge to cyclicals’ rise in 2026 is the economy running hot enough that hoped-for rate cuts are either delayed, or potentially reversed, Pickett writes.“It is far from certain,” that the Fed will continue to trim interest rates through the end of 2026, he said.At this point, the market is pricing in two rate cuts over the course of 2026, according to data compiled by Bloomberg. The Federal Reserve is also projecting 2.3% GDP growth through 2026, up from previous views of 1.8% as recently as September.A faster-growing US economy “would especially benefit cyclical businesses and sectors, whose earnings are most sensitive to economic activity levels,” Michael Dickson, head of research and quantitative strategy at Horizon Investments LLC, said in a note to clients. 

Most Asian markets rose Tuesday, while gold and silver hit fresh records as optimism for more US interest rate cuts and an easing of AI fears helped investors prepare for the festive break on a positive note.In Tokyo, the Nikkei 225 ended flat at 50,412.87 points; Hong Kong - Hang Seng Index closed down 0.1% to 25,764.84 points and Shanghai - Composite closed up 0.1% to 3,919.98 points Tuesday.Data showing US unemployment rising and inflation slowing gave the Federal Reserve more room to lower borrowing costs and provided some much-needed pep to markets after a recent swoon.That was compounded by a blockbuster earnings report from Micron Technologies that reinvigorated tech firms.The sector has been the key driver of a surge in world markets to all-time highs this year owing to huge investments into all things artificial intelligence but that trade has been questioned in recent months, sparking fears of a bubble.With few catalysts to drive gains on Wall Street, tech was again at the forefront of buying Monday, with chip titan Nvidia and Tesla leading the way."The amount of money being thrown towards AI has been eye-watering," wrote Michael Hewson of MCH Market Insights.He said the vast sums pumped into the sector "has inevitably raised questions as to how all of this will be financed, when all the companies involved appear to be playing a game of pass the parcel when it comes to cash investment"."These deals also raise all manner of questions about how this cash will generate a longer-term return on investment," he added."With questions now being posed... we may start to get a more realistic picture of who the winners and losers are likely to be, with the losers likely to be punished heavily."Asian markets enjoyed a bright start though some stuttered as the day wore on.Sydney, Seoul, Shanghai, Sydney, Singapore, Taipei, Wellington, Bangkok and Jakarta were all higher, while Tokyo and Mumbai were flat.Hong Kong and Manila dipped.Precious metals were also pushing ever higher on the back of expectations for more US rate cuts, which makes them more attractive to investors.Bullion jumped to a high above $4,497 per ounce, while silver was just short of $70 an ounce, with the US blockade against Venezuela and the Ukraine conflict adding a geopolitical twist."The structural tailwinds that have driven both of these to record highs this year persist, be it central bank demand for gold or surging industrial demand for silver," said Neil Wilson at Saxo Markets."The latest surge comes after soft inflation and employment readings in the US last week, which reinforced expectations around the Fed's policy easing next year. Geopolitics remains a factor, too."On currency markets, the yen extended gains after Japan's Finance Minister Satsuki Katayama flagged authorities' powers to step in to support the unit, citing speculative moves in markets.The yen suffered heavy selling after Bank of Japan boss Kazuo Ueda held off signalling another rate hike anytime soon following last week's increase."The moves (on Friday) were clearly not in line with fundamentals but rather speculative," Katayama told Bloomberg on Monday."Against such movements, we have made clear that we will take bold action, as stated in the Japan-US finance ministers' joint statement," she added.Oil prices dipped, having jumped more than two percent Monday on concerns about Washington's measures against Caracas.The United States has taken control of two oil tankers and is chasing a third, after President Donald Trump last week ordered a blockade of "sanctioned" tankers heading to and leaving Venezuela. 

Asian markets rallied Monday and gold hit a record high as the latest round of US data boosted hopes for more interest rate cuts, while worries over AI spending also subsided.In Tokyo, the Nikkei 225 closed up 1.8% to 50,402.39 points; Hong Kong - Hang Seng Index ended up 0.4% to 25,801.77 points andShanghai - Composite closed up 0.7% to 3,917.36 points Monday.Investors were back in the saddle for the final business days before Christmas, having had a minor wobble earlier in the month on concerns that the Federal Reserve would hold off on further easing monetary policy in the early part of 2026.Figures last week showing US unemployment hit a four-year high in November came as a report indicated the rise in consumer prices slowed more than expected.That stoked bets on the Fed lowering borrowing costs early next year. Investors had pared their forecasts after the bank indicated it could take a pause on further cuts in its post-meeting statement earlier this month."This labour market softening and inflation moderation strengthened Federal Reserve easing expectations for 2026," wrote IG market analyst Fabien Yip.However, she added that "the low inflation reading may prove temporary as shutdown-related data collection disruptions likely suppressed the figure, which could normalise higher once data gathering processes resume".Asian tech firms led the gains Monday with South Korea's Samsung Electronics, Taiwan's TSMC and Japan's Renesas among the best performers.Hong Kong, Shanghai, Sydney, Seoul, Singapore, Mumbai, Bangkok, Wellington, Taipei and Manila all saw healthy advances.Tokyo was the standout, piling on 1.8% thanks to a weaker yen.However, London, Paris and Frankfurt fell at the open.Gold, which benefits from lower US interest rates, hit a fresh record above $4,420.30, while silver also struck a new peak.The precious metals, which are go-to assets in times of crisis, also benefited from geopolitical worries as Washington steps up its oil blockade against Venezuela and after Ukraine hit a tanker from Russia's shadow fleet in the Mediterranean.Stephen Innes at SPI Asset Management said: "Asian equity markets are stepping onto the floor with a constructive bias, taking their cue from Friday's solid rebound in US stocks and the growing belief that the final stretch of the year still belongs to the bulls."The equity gains tracked a surge on Wall Street led by the Nasdaq as technology giants following a bumper earnings report from chip giant Micron Technology that reinvigorated the AI trade.That came on top of news that Oracle will take a 15% stake in a TikTok joint venture that will allow the social media company to maintain operations in the United States.The tech bounce came after a bout of selling fuelled by concerns that valuations had been stretched and questions were being asked about the vast sums invested in artificial intelligence that some warn could take time to see returns.Forex traders are keeping tabs on Tokyo after Japan's top currency official said he was concerned about the yen's recent weakness, which came after the central bank hiked interest rates to a 30-year high on Friday."We're seeing one-directional, sudden moves, especially after last week's monetary policy meeting, so I'm deeply concerned," Vice Finance Minister for International Affairs Atsushi Mimura said Monday."We'd like to take appropriate responses against excessive moves."The comments stoked speculation that officials could intervene in currency markets to support the yen, which fell more than 1% against the dollar on Friday after bank boss Kazuo Ueda chose not to signal more increases early in the new year. 

Gold and silver soared to all-time highs, as escalating geopolitical tensions and bets on further US rate cuts added momentum to the best annual performance in more than four decades.Bullion climbed as much as 2.1% to surpass the previous record of $4,381 an ounce set in October, while silver rallied as much as 3.4%, closing in on $70 an ounce. The move extends a blistering rally that has put both metals firmly on course for their strongest annual performance since 1979.The latest push higher comes as traders bet that the Federal Reserve will cut interest rates twice in 2026, and as US President Donald Trump also advocates for looser monetary policy. Lower rates are typically a tailwind for precious metals, which don’t pay interest.Rising geopolitical tensions are also enhancing the haven appeal of gold and silver. The US has intensified an oil blockade against Venezuela, stepping up pressure on the government of President Nicolás Maduro, while Ukraine attacked an oil tanker from Russia’s shadow fleet in the Mediterranean Sea for the first time.“Today’s rally is largely driven by early positioning around Fed rate-cut expectations, amplified by thin year-end liquidity,” said Dilin Wu, a strategist at Pepperstone Group Ltd. Sluggish jobs growth and softer-than-expected US inflation in November supported the narrative for more rate cuts, she said.Gold has surged by more than 65% this year, underpinned by increased central-bank purchases and inflows into bullion-backed exchange-traded funds. Trump’s aggressive moves to reshape global trade — as well as his threats to the US central bank’s independence — added fuel to the scorching rally earlier this year.Investors have also played an important role in gold’s ascent, spurred in part by the so-called debasement trade — a retreat from sovereign bonds and the currencies they are denominated in over fears their value will erode over time due to ballooning debt levels. Gold-backed ETFs have seen inflows rise over the last four straight weeks, according to data compiled by Bloomberg, and World Gold Council figures show total holdings in these funds have risen every month this year except May.Other precious metals also surged, with palladium rallying as much as 5.1% to hit the highest in nearly three years. Platinum rose for an eighth straight session and traded above $2,000 for the first time since 2008.Gold has bounced back quickly after a retreat from its peak in October, when the rally was seen as crowded and overheated, and is now positioned to carry these gains into next year. Goldman Sachs Group Inc is among several banks who predict prices will keep rising in 2026, issuing a base-case scenario of $4,900 an ounce with risks to the upside. ETF investors, it said, are starting to compete with central banks for limited physical supply.Central-bank buying, physical demand and geopolitical hedging were “medium- to long-term anchors, while Fed policy and real rates continue to drive cyclical swings,” according to Pepperstone’s Wu. New entrants to the gold market, such as stablecoin issuers like Tether Holdings SA and certain corporate treasury departments, were creating a “broader capital base” that “adds resilience to demand,” she said in a note.Silver’s recent advance has been buoyed by speculative inflows and lingering supply dislocations across major trading hubs following a historic short squeeze in October. The total trading volume for silver futures in Shanghai spiked earlier this month to levels near those seen during the crunch a couple of months ago.Platinum — which has rallied about 125% this year — has risen with added speed in recent days as the London market shows signs of tightening. Banks are parking more metal in the US to insure against the risk of tariffs, while exports to China have been robust as demand grows and contracts begin trading on the Guangzhou Futures Exchange.The main factors affecting the market were the prospect of more rate cuts and “geopolitical concerns, particularly around Ukraine and the Trump administration’s recent national security strategy,” said Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney, adding that Japan-China tensions and the situation in Venezuela were also supporting gold. 

Qatar National Bank (QNB) has reaffirmed its previous forecast that the US Federal Reserve will implement two additional 25-basis-point interest rate cuts. One of these cuts is expected next week, with the second likely to occur in the first quarter of 2026. This would bring the interest rate closer to the bank's estimated neutral level of 3.5%.In its weekly commentary, QNB said: "The US Federal Reserve (Fed) has entered one of its most contested policy periods in decades. The 25 basis points (bps) policy rate cut delivered in October was notable not for its size, but for the lack of consensus in reaching this decision. As highlighted in our November commentary, Kansas City Fed President Jeffrey Schmid voted against any cut while Governor Stephen Miran dissented in favour of a larger 50 bps reduction. This combination of simultaneous "hawkish" and "dovish" dissents remains exceedingly rare in the modern Fed, an institution that historically prized for consensus and predictability.The divisions were further illuminated by the latest FOMC minutes released in late November. They show growing disagreement around both the inflation outlook and the appropriate pace of easing. While most participants acknowledged that disinflation is progressing and that labour market slack is widening, the degree of conviction varies widely. Some policymakers view the current stance as still "restrictive," requiring continued steps toward more rate cuts to neutral or even accommodative territory. Others, however, fear that easing too quickly could risk re-accelerating price pressures, especially given uncertainty surrounding tariffs and supply-side bottlenecks."These divisions have translated into volatile market expectations. There is still significant market uncertainty about rate cuts throughout 2026. The key question is whether the Fed's internal fragmentation will push policy either toward a much deeper easing cycle or toward an early pause if inflation surprises to the upside. We believe neither extreme is likely and reiterate our call for two more rate cuts towards 3.5%, which we consider the low end of the "neutral" level range where rates are neither restrictive nor accommodative."The bank pointed out, "First, political pressures and incoming changes in the Board of Governors favour at least a move towards a neutral stance from the Fed. President Trump's increasingly vocal preferences for deeper rate cuts and his early signalling about the type of "dovish" successor he wants for the Chairmanship after Powell's term ends in May 2026 have raised the stakes around every FOMC meeting. This dynamic is compounded by ongoing changes in the Board's composition. Each new appointment or possibility of new appointment shift expectations about the Fed's medium-term bias, making decisions more contentions. At the margin, however, "doves" are getting stronger, even if this has been met with stronger opposition from the dwindling "hawks" that want to prevent too much easing."Second, inflation uncertainty has declined significantly compared to the peaks witnessed after the "Liberation Day" tariffs. Shelter inflation, previously the main source of inflation stickiness, has moderated steadily, and goods inflation continues to normalise as supply chains adjust. As we discussed in previous notes, tariffs still pose short-term upside risks to inflation but are increasingly seen as transitory and "looked through" by most policymakers, rather than a structural driver of inflation. This opens the door for further rate cuts."Third, despite month-to-month volatility and uncertainty associated with shutdown date release delays, labour markets trends continue to point to a significant deterioration. Job opening has fallen precipitously, layoffs have accelerated, and private payroll trackers point to further softening. As highlighted in our November commentary on the Fed, US employers cut more than 150,000 jobs in October, the sharpest reduction for the month in over two decades. For the first time since the pandemic, the labour market "jobs gap" now suggests slack or more civilian labour force than the sum of employment and job openings. This dynamic strengthens the argument for additional easing, even for members of the FOMC who have been cautious about inflation."QNB concluded: "All in all, we maintain our view that there is policy space for two additional 25 bps cuts, one later this week in December and another one in Q1-2026, bringing the policy rate close to the lower bound of our neutral level estimate of 3.5%. However, we also believe market expectations for a longer series of cuts throughout 2026 are too optimistic. The economy is slowing but shows no sign of a sharper downturn, and the trajectory for inflation, while improving, faces uncertainties related to tariffs and the speed of convergence back to the 2% target. In other words, the Fed is divided, the debate is intensifying, but the medium-term path is likely to be more moderate than either the most dovish FOMC members or current market pricing suggest." 

Gold prices rose on Wednesday, as bargain hunters stepped in after bullion dropped to a near one-week low in the previous session, while focus was also on the US private payroll data for cues on future interest rate cuts.Spot gold rose 0.8% to $3,961.85 per ounce. Bullion fell more than 1.5% on Tuesday, hitting its lowest since Oct. 30.US gold futures for December delivery rose 0.2% to $3,970.10 per ounce.Bullion hit a record high of US$4,381.21 on Oct. 20, but has fallen close to 10 percent since then.Elsewhere, spot silver rose 1.2 percent to US$47.68 per ounce, platinum gained 0.1 percent to US$1,537.10, and palladium climbed 0.2 percent to US$1,394.75.

Gold prices declined on Monday, weighed down by a stronger US dollar as investors scaled back expectations for further Federal Reserve interest rate cuts following hawkish remarks by Chair Jerome Powell last week. Easing US-China trade tensions also pressured bullion.Spot gold fell 0.8% to $3,968.76 per ounce, while US gold futures for December delivery slipped 0.5% to $3,978.30 per ounce. The US dollar held firm near its three-month high reached last week, making the greenback-priced metal more expensive for holders of other currencies.The US Federal Reserve cut interest rates on Wednesday by 0.25 percentage point, marking its second rate cut this year, bringing the benchmark overnight rate to a target range of 3.75%-4.00%. Among other precious metals, spot silver dropped 0.5% to $48.41 per ounce, platinum eased 0.1% to $1,566.40, and palladium declined 0.6% to $1,424.88.

Gold prices surged to a new record high above $4,100 on Tuesday, driven by growing expectations of US Federal Reserve interest rate cuts and renewed US-China trade tensions that spurred safe-haven demand. Silver also rallied to an all-time high. Spot gold rose 0.4% to $4,124.79 per ounce, after touching a record $4,131.52 earlier in the session. US gold futures for December delivery gained 0.3% to $4,143.10. The precious metal has climbed nearly 57% since the beginning of the year, breaking above the $4,100 mark for the first time on Monday. The rally has been underpinned by geopolitical and economic uncertainty, expectations of monetary easing, robust central bank purchases, and strong inflows into gold-backed exchange-traded funds. Spot silver advanced 0.3% to $52.49 per ounce, after earlier hitting $52.70. Among other precious metals, platinum rose 0.5% to $1,653.45 per ounce, while palladium added 1.6% to $1,498.25, its highest level since May 2023.

Gold eased on Thursday from the record high hit the day before, pressured by profit-taking and a slight uptick in the dollar, although expectations of further US rate cuts and political uncertainty lent some support to prices. Spot gold was down 0.2% at $3,858.50 per ounce, after hitting an all-time high of $3,895.09 on Wednesday. US gold futures for December delivery fell 0.4% to $3,883.60. The dollar index was up 0.1% against its rivals, making gold more expensive for other currency holders. Elsewhere, spot silver slipped 0.5% to $47.07 per ounce, platinum fell 0.3% to $1,552.05, and palladium gained 1% to $1,256.93.

The exceptionally muscular approach of President Donald Trump towards economic policy has revealed itself in direct efforts to undermine the independence of the Federal Reserve. He has made open personal criticisms of the chairman Jay Powell, and made overt attempts to have Lisa Cook, a member of the Board of Governors of the Federal Reserve, removed over an allegation related to a mortgage application.President Trump’s determination to oversee a devaluation of the dollar and lower interest rates will have direct effects on the Gulf, but will it bring a welcome stimulus or excessive inflation?In addition to the issue of whether his criticisms and actions are justified in terms of domestic politics, there are global implications to his actions and the direction of policy, with a particular impact on Gulf nations.President Trump’s strategic objective on economic policy is to oversee a devalued dollar, reduced trade deficits, and onshoring of production. A lower interest rate, for the short and medium term at least, is a central part of this policy, in addition to tariffs, so he has been frustrated that the current Board of Governors at the Federal Reserve has not made a reduction in 2025, following the three cuts totalling 100 basis points, between September and December 2024.The Federal Reserve has considered inflationary pressures to be too significant to justify a cut, but the pressure is growing, moreover Jay Powell’s term comes to an end next year, and the successor regime is likely to have a more dovish approach. It is likely that there will be two or three cuts this year. This, combined with continued rise in public debt, amount to an exceptionally loose fiscal policy. On the day after President Trump confirmed his intention to seek the removal of Lisa Cook, yields on long-dated US Treasuries rose significantly, confirming that while domestic checks and balances to his policies are weakened, he cannot avoid having to placate the international bond market.For the Gulf nations, there will be significant and direct effects. Most Gulf nations, including Qatar, have currencies that are pegged to the dollar. The Qatar Central Bank will effectively have to follow interest rate cuts by the Federal Reserve, and the riyal is set to depreciate in value against the Euro and Renminbi.The current interest rate in Qatar is 5.1%, higher than the US rate of 4.25-4.5%, and the Qatar Central Bank would like to reduce the gap. If the Federal Reserve cuts rates by 50 basis points this year, I would expect the Qatar rate to be 60 basis points lower.There will be a stimulus effect to this. Reduced returns for cash will stimulate business investments, and there is set to be a particularly positive impact on the real estate sector.On the downside, there are risks to inflation. Qatar imports around 90% of the goods that it needs, so as the effective cost rises as the riyal declines in value, imported inflation is likely to feature. While many invoices are in dollars, if the euro, renminbi and rupee appreciate in value against the dollar, costs in those currency areas will rise and the cost is likely to be passed on.This means that policymakers in Qatar will have to rely on measures other than the principal interest rate to curb inflation. This policy should be easier to implement than a decade ago, when inflationary pressures were also significant. This was because the state was embarking on a significant program of public sector investment, primarily to modernise infrastructure ahead of the 2022 FIFA World Cup. That phase is now complete, so the economy should be able to absorb additional stimulus without significant inflation rises, but it will be a feature to manage.Another side effect of Trump’s policies is appreciation of tangible assets, as the value of fiat currencies falls. Gold has appreciated considerably, and has been stockpiled by central banks, including China’s. Holdings of gold by central banks now represent a bigger share than US Treasuries, for the first time since 1996. The price of gold leapt from around $2,500 per ounce in late 2024 to above $3,600 by September 2025.Other precious metals, as well as land, real estate and rare earth metals, are also likely to appreciate in value, or stay at an elevated level. Oil and gas prices will likely also rise, to the advantage of the Qatar exchequer as liquefied natural gas (LNG) is the primary export.There should be bullish prospects also for Qatari equities. The stimulus promises growth and with a downward nudge in the value of the riyal, they may appear cheap.To an extent, President Trump is achieving his policy aims: the dollar is declining in value – down around 11% in the first half of 2025 – tariff receipts have increased, interest rates are likely to be forced down.The risks to the US are considerable, however, as a long-term decline in the value of the dollar combined with high and rising public sector deficits and debt can cause instability and nervousness in the bond markets. An independent Federal Reserve had an uneven record on curbing US inflation, but if there is little concerted effort to keep it under control, we may be heading for uncharted territory. Outcomes for Gulf states, however, may be surprisingly benign.The author is a Qatari banker, with many years of experience in the banking sector in senior positions.

European stocks edged lower on Friday as investors awaited key eurozone indicators and a US inflation report for signals on the timing of potential US interest rate cuts.The pan-european stock index slipped 0.2% to 552.41 points, putting it on track for its first weekly loss in a month.Markets broadly expect the US Federal Reserve to begin cutting rates in September, with traders closely monitoring upcoming economic data for confirmation of that outlook.