Is it the beginning of Santa Rally, or is it something more “silly”?

And just like that… December has arrived.

The situation has been unstable since November, with major US indexes underperforming, dragged down by the sharp decline in the Nasdaq. Europe’s Stoxx 600 index managed to maintain its gains, with November marking the fifth straight month of positive results. But tech stocks also fell as concerns over AI valuations and spending plans spread to global stock markets.

So what does this mean for December? Could stocks trigger a seasonal Santa rally, or will things get even more “ridiculous” in the final trading month of the year?

Fidelity International reviewed the numbers. The FTSE 100 has delivered positive returns in December in 24 of the past 30 years. Celebrations could be in the UK this year, with markets pricing in a 90% chance of the Bank of England cutting interest rates in December after the Budget was seen as avoiding any serious measures to tackle inflation.

The situation is different for the European Central Bank, where markets see no chance of a rate cut, but it is also seen as a positive sign after the board said in its last set of minutes that policy was in a “good position”. European and Asian stocks have followed U.S. gains as expectations for the next Federal Reserve rate cut in December increase, with markets currently expecting a nearly 83% chance of a rate cut, according to CME FedWatch.

Central banks could help add to the festive spirit this December.

But market forces could cause bulls to find a lump of coal in their socks. The factors behind November’s volatility haven’t magically disappeared, with some investors and market watchers still expressing concerns about the pace of AI hyperscalers’ spending. Even the ECB made the usual move this week to warn that valuations for US tech companies are inflated due to investor FOMO (fear of missing out). The central bank warned of “sharp correlated price corrections” as a key risk for AI-driven stocks.

Cryptocurrencies could also be a drag in the final months of the year. As CNBC reported last week, Compass Point predicts that Bitcoin will continue to fall as new investors sell the token and related exchange-traded funds. Compass also hinted that long-term holders may sell their holdings due to a “halving” schedule that occurs every four years and “programmatically cuts in half the amount of rewards that individuals can earn for mining new tokens on the Bitcoin blockchain.”

Why pressure on Bitcoin could last until the end of the year

Whether you believe Santarally or not, December capped off an interesting year for asset classes around the world, and it will be difficult to determine the predictions for 2026.

December 10th: Federal Reserve Board Policy Decisions

December 11: Swiss National Bank policy decision

December 18: Bank of England policy decision

December 18: European Central Bank policy decision

December 19: European Summit in Brussels