Will there be a Christmas rally in the stock markets this year?
15 DEC, 2025
By Joanna Piwko from RankiaPro Europe
With the calendar approaching its final stretch, investors are once again asking one of the most recurring questions of the stock market year: Will the traditional Christmas rally arrive or will the market break the pattern? After a year conditioned by the evolution of inflation, the decisions of central banks and a still fragile macroeconomic context, expectations for the last weeks of the year are torn between optimism and caution.
To shed light on this scenario, two voices from the sector analyze the keys that can shape the behavior of the stock markets in the short term. Christian Rouquerol, Co-Head and Head of Sales Europe & Latin America at Tikehau Capital, and François Rimeu, senior strategist at Crédit Mutuel Asset Management, share their vision on the positioning of the markets, the factors that can favor —or frustrate— a year-end rally and the opportunities that can still arise for investors before the year ends.
Christian Rouquerol, Co-Head and Head of Sales Europe & Latin America at Tikehau Capital
The current environment is especially difficult to predict, given geopolitical uncertainty and the rise of artificial intelligence. That being said, we maintain a constructive view towards the end of the year for the following reasons:
Midterm elections: President Trump could be incentivized to push a consumer-friendly and economy-boosting agenda before the elections, in order to maintain a fully Republican Congress. Early polls show a slight advantage for the Democrats.
Appointment of the new Fed president, expected in early 2026: Kevin Hassett is widely expected to be nominated, and would likely promote a dovish Fed orientation, which would favor the markets.
De-escalation of the tariff war: The trade agreement between the U.S. and China on November 1, 2025, could have marked a turning point in bilateral relations. At the end of November, President Xi requested a call with President Trump (something unusual enough to highlight). This conversation was surprisingly well received, judging by Trump's subsequent posts on social media. In addition, the U.S. Supreme Court is expected to rule on tariffs under the IEEPA law, which could result in a total annulment of them.
Solid business fundamentals: The third quarter profits of 2025 exceeded expectations in Europe and the U.S., with especially strong growth in the U.S. (+13% year-on-year in the S&P 500 as of 07/11/2025 – source: FactSet Earnings Insight, S&P 500 Earnings Season Update).
Cleaner positioning after October and November sales: Volatility and loss of trend would have led systematic investors to reduce their leverage.
European stock markets could be especially supported by investors who reorient their portfolios towards areas of lower valuation. The German fiscal stimulus reinforces this thesis. Despite our constructive view, it is worth considering possible sources of volatility in December: central bank meetings, publication of pending economic data in the U.S., and Oracle's results on December 10, 2025.
François Rimeu, senior strategist at Crédit Mutuel AM
After a period of nervousness marked by a slight correction in the stock markets, these have resumed their upward trend and are again near their annual highs. The uncertainty surrounding the closure of the U.S. government has already been partially left behind and concerns related to AI, although still present, have not prevented the recovery of the markets.
This last point is especially noteworthy, as the S&P 500 closed November with a rise of 0.13%, while the technology sector as a whole recorded a drop of 4.36%. Nvidia, the company that has recorded the highest returns within the sector over the last three years, closed with a drop of 12.59%, while Google rose more than 13%. After a period of continuous growth for the vast majority of companies, we may be entering a more pronounced era of differentiation within the technology sector itself.
Historically, the companies that dominated the phases of technological innovation were not necessarily the first to market their products. Competition exists in the United States, but also abroad, especially in China, where Deepseek offers results comparable to the best at a significantly lower cost. Europe is also in the fray with the announcements of Mistral and the launch of its Mistral 3 models. This competition extends beyond software to hardware, with Amazon, Meta and Google developing chips to rival Nvidia's.
The rebound has also been supported by the accommodative signals from the Federal Reserve. But, beyond the interest rate cuts in December, it will be interesting to analyze the disagreements within the committee before the announcement of the new central bank president early next year. Currently, Kevin Hassett seems to be the favorite to replace Jerome Powell. Loyal to Trump, a defender from the beginning of a faster rate cut and credible in the eyes of the markets thanks to his Republican experience (with Bush and McCain) and his PhD in Economics, he meets all the requirements that Trump needs. Although the Fed president only represents one vote, this possible appointment has also contributed to the drop in US debt yields.
Against this backdrop and, after the slight correction in November, we will take the opportunity to increase our exposure to equities, both in the United States and in the eurozone.
