Tech Selloff Spreads, Sensex Roars, and Fed Returns to QE Amid Record Global Debt
Wall Street’s AI revolution faced its reality check on December 12, 2025, as Broadcom’s earnings beat failed to impress investors, triggering a sharp rotation from technology stocks into value plays while Indian markets staged a dramatic comeback and the Federal Reserve quietly resumed quantitative easing. The global debt mountain reached a staggering $346 trillion, setting the stage for a more cautious investment landscape as central banks navigate divergent monetary paths.
The Tech Reckoning
Broadcom became the day’s cautionary tale, with shares plummeting despite beating earnings expectations as investors questioned whether massive AI capital spending would deliver adequate returns. The disappointment rippled through US indices, leaving the Nasdaq down over 1% while the Dow Jones Industrial Average managed a fresh record at 48,704.01, powered by value stocks and financials. Oracle’s decline highlighted how concentrated AI bets could sway entire sectors, while Lululemon provided a bright spot, surging 9%+ on strong quarterly results and a $1 billion stock buyback increase.
The Federal Reserve’s actions added complexity to the narrative. While cutting rates to 3.65% for the third time in 2025, the central bank simultaneously announced it would resume net asset purchases at $40 billion monthly to address overnight lending market pressures—a move that blurred the line between easing and technical adjustments. Chicago Fed President Austan Goolsbee warned against further cuts after three consecutive reductions, suggesting the easing cycle might be nearing its end.
India’s Resilient Rally
Indian markets demonstrated remarkable resilience, with the Sensex surging 449 points to reverse a three-day losing streak and the Nifty decisively reclaiming the 26,000 level. Metal stocks led the charge, with Tata Steel and Hindustan Zinc gaining up to 4% on strong global cues, while PSU insurance stocks jumped as much as 8% after the Cabinet approved 100% FDI in the insurance sector.
The Reserve Bank of India cut its repo rate to 5.25% and announced plans to inject ₹1 lakh crore through OMO purchases, while also clearing a $7 billion FX backlog and unifying exchange windows. Yet the rupee touched a historic low of 90.56 against the US dollar, reflecting persistent importer demand and foreign portfolio outflows.
Silver’s ascent added to the metal mania, with MCX futures breaching ₹2 lakh per kg for the first time, while gold reached seven-week highs.
Europe’s Cautious Optimism
European markets showed measured strength, with the Stoxx 600 rising 0.5% to 581.17 as value rotation offset tech weakness. The European Central Bank prepared to quiz 110 banks on various oversight matters, while the UK’s Nationwide faced a $59 million fine for financial crime control failings. Switzerland’s SNB held rates at 0%, diverging from the global easing trend, and the Euro50 index gained 0.18% to 5,769 points.
European shares benefited from the Fed’s dovish tilt, with financials and cyclicals outperforming as investors questioned the sustainability of US tech valuations.
Asia-Pacific Divergence
The region showed mixed signals. Japan’s Nikkei 225 gained 1.37% as yen weakness boosted exporters, while China’s CSI 1000 rose 1.52% on policy support. However, South Korea’s Kospi and Taiwan’s tech-heavy indices faced pressure from the global semiconductor slump.
Australia’s central bank maintained its pause as inflation showed stickiness, while New Zealand’s dollar strengthened on commodity support. Singapore benefited from capital flows seeking stability, and Hong Kong’s Hang Seng showed resilience despite mainland tech concerns.
Emerging Markets & Commodities
Latin American assets rallied strongly, with regional currencies gaining 1.2% and stocks climbing 2.4% following the Fed cut. Brazil’s real led gains as the country secured $879 million in venture funding, far outpacing Nigeria’s $186 million. Brazil-Mexico free trade negotiations advanced after Mercosur authorization.
In the Middle East, UAE markets eased as oil prices slipped to $61.80 amid profit-taking, while Iraq faced an $11 billion decline in crude export revenues. African markets showed reform momentum, with Nigeria’s central bank clearing FX backlogs and Uganda rolling out market liberalization measures.
The Debt Supercycle & Alternatives
The International Institute of Finance reported that global debt reached a record near $346 trillion in Q3 2025, approximately 310% of world GDP, raising concerns about leverage across both advanced and emerging economies. This backdrop fueled demand for alternative assets, with silver’s market cap briefly exceeding $3.5 trillion to surpass Microsoft as the world’s fifth-largest asset.
Bitcoin traded around $90,000 after dipping below that level on AI-related risk concerns, while gold futures climbed to seven-and-a-half-week highs. The US Dollar Index fell for a third consecutive week, hitting multi-week lows and providing tailwinds for emerging market assets.
Market Outlook
As trading desks wound down for the year, the narrative was clear: the AI trade faces scrutiny, value is making a comeback, and central banks are approaching inflection points. With global debt at unprecedented levels and interest rate trajectories diverging, investors are reassessing risk across regions and sectors. The coming weeks will test whether this rotation represents a healthy rebalancing or a precursor to deeper market adjustments.
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