Summary of this article
BoJ hiked interest rates by 25 bps to 0.75 per cent, highest level in three decades
US inflation eased to 2.7 per cent in November from 3 per cent in September
Japan's government bond yields rises after BoJ rate hike, US bond yields fall after softer inflation data
ECB kept interest rates unchanged, while BoE delivered a 25 bps rate cut
Stock Market Cues: In the session on December 19, investor sentiment is likely to be guided by interest rate decisions from the Bank of Japan (BoJ), the European Central Bank and the Bank of England. Key US cues, including the November inflation data and weekly jobless claims for the week ended December 13, are also expected to influence trade.
In the previous session on December 18, benchmark indices extended their losing streak amid uncertainty over a potential India-US trade agreement, which kept sentiment cautious. The Sensex closed at 84,481.81, down 77.84 points, or 0.09 per cent, while the Nifty 50 ended at 25,815.55, lower by 3 points, or 0.01 per cent.
Stock Market Cues To Watch On Dec 19
The following are the opening cues that are likely to dictate investor sentiment on the D-Street on December 19.
Bank of Japan Interest Rate Decision
The Bank of Japan (BoJ) raised short-term interest rates by 25 basis points (bps) to "around 0.75 per cent," it said in a statement on December 19. This is the highest level in three decades, reinforcing its shift away from ultra-loose policy.
The BoJ said it raised rates as it believes “the mechanism in which both wages and prices rise moderately will be maintained”.
US Inflation November 2025
US inflation eased unexpectedly to 2.7 per cent in November from 3 per cent in September. However, it is worth noting that the slowdown was likely distorted by the 43-day long government shutdown, which had severely disrupted data collection. This left gaps in October’s prices and delayed November’s figures, which makes the consumer price index (CPI)-based inflation less reliable than usual. As a result, monthly inflation changes could not be calculated for many categories.
US Jobless Claims
US jobless claims fell by 13,000 to 2,24,000 in the week ended December 13, staying within a range that signals a resilient labour market. The figure, released by the US Labor Department, was broadly in line with expectations of 2,25,000 from economists polled by Reuters.
Japan’s Bond Yields
Japan's benchmark 10-year government bond yields climbed to its highest level since August 1999, after the BoJ hiked its interest rates.
The benchmark yield jumped 5 basis points to hit 2.015 per cent, surpassing the 2 per cent mark that had served as a symbolic ceiling during Japan's decades-long struggle with deflation.
US Bond Yields
US benchmark 10-year treasury yields fell by 4 basis points to 4.116 per cent in the previous session after a softer US inflation data raised expectations of more rate cuts by the US Federal Reserve. However, in early session today, it recovered 2 basis points to 4.136 per cent.
ECB Holds, BoE Cuts Interest Rates
The European Central Bank (ECB) kept interest rates unchanged for a fourth straight meeting, leaving its key deposit rate at 2 per cent, as widely expected. The decision was announced on December 18 after the bank’s policy meeting in Frankfurt.
Meanwhile, the Bank of England (BoE) cut its policy rate by 25 basis points to 3.75 per cent at its meeting on December 18, in line with market expectations. This marked the fourth rate cut by the BoE this year.
US Stock Market
US stocks closed higher overnight following a softer inflation report that increased hopes of US Federal Reserve rate cuts. Apart from this, an upbeat forecast from Micron highlighted robust demand for artificial intelligence (AI), which fuelled a rally in technology stocks.
The tech-heavy Nasdaq led the rally, climbing 1.38 per cent, followed by the S&P 500, which rose 0.79 per cent, and the Dow Jones closed with a modest gain of 0.14 per cent.
Asian Stock Markets
Asian equities traded higher in early trade, tracking tech-stock rally on Wall Street, and after BoJ hiked interest rates.
Japan's Nikkei 225 rose 1.28 per cent, China's CSI 300 was up around 0.40 per cent, the Hong Kong-based Hang Seng was up by 0.75 per cent, and South Korea's Kospi, too, traded higher by 1 per cent.
Rupee Weakens Against Dollar
Rupee weakened against the US dollar in early session today after strengthening for two consecutive sessions after the Reserve bank of India's (RBI) intervention, during which the central bank sold US dollars aggressively to support the local currency. The USD/INR pair opened at 90.189 against previous close of 90.247, and as of the time of writing, traded at 90.425, down by 0.20 per cent.
