Market On Open, Friday 19 December
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The End Is Nigh
by Alex King, CEO, Cestrian Capital Research, Inc
Almost 2026 now. A storied year in markets, from hesitancy in January and February despite a very pro-business Administration taking power, followed by a typical correction in March and then a yo-yo in April which set equities up for a big run up into year end. The S&P on an annual basis will look like a normal kind of year vs. recent history, but that disguises the rollercoaster that anyone paying attention has been on all year. If the volatility served you well, congratulations. If it hurt you, dust yourself off, learn why it hurt you and what you could have done differently, and get ready to enter 2026 with a clear head to go again.
Two event risks have lingered this last week or two. Firstly the pending Bank of Japan rate rise and associated commentary - that came in overnight at 75bps (as expected) with seemingly more dovish commentary than was anticipated by the market. I will tell you that our own macro service (YX Insights, here) was clearly of the view that the BOJ would not wreck the bulls’ party; today that view was vindicated. Secondly, today is quarterly options expiry which means re-hedging flows will be afoot all day and into Monday & Tuesday next week. SpotGamma say that the quarter is slightly call-heavy; I would expect that a lot of those calls will expire underwater given recent market weakness, all to the benefit of the market-makers who sold the options - plenty of premium for them to keep!
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Alex King
OK. Let’s get to work with our daily market check-in.