EMEA Morning Briefing : U.S. PCE Data in Focus

MARKET WRAPS

Watch For:

EU GDP; Germany manufacturing orders; France industrial production; no major corporate trading updates expected

Opening Call:

European stock futures traded higher early Friday. Asian stock benchmarks fell; the dollar and Treasury yields were little changed; oil futures fell; while gold was flat.

Equities:

Stock futures pointed to a slightly higher open in Europe on Friday, as traders await the release of U.S. inflation data later in the day.

The Federal Reserve's preferred inflation gauge-the personal consumption expenditures price index-comes at a crucial time for investors.

"Investors are now paying more attention to [Friday's PCE] because soft data has been so inaccurate," said Mark Hackett, chief market strategist at Nationwide. "There's this confusion that the data that we're getting is either lagged or incomplete, so the PCE starts filling in the blanks because we need something to guide us, and relying on some of these soft data measures has been problematic for investors."

Forex:

Global forex implied volatility spiked sharply during the Liberation Day tariff escalation in April, weighing on the U.S. dollar and risk-sensitive currencies, Commonwealth Bank of Australia said. Forex implied volatility has since receded, reflecting a stabilization in macro and geopolitical conditions.

However, unexpected geopolitical shocks or a sharp correction in AI-related stocks could reignite volatility, CBA added.

Bonds:

Bond markets are likely to be significantly less influenced by external factors next year, such as central bank decisions or tariff policy, M.M. Warburg & Co said.

U.S. trade policy has lost much of its initial shock value through numerous renegotiations and transitional arrangements. At the same time, the European Central Bank is benefiting from the fact that the inflation rate is now close to its 2% target. Warburg expects consumer prices to stabilize at this level in 2026 as well. "Accordingly, we do not anticipate any further monetary policy stimulus in the euro area," it added.

Energy:

Macquarie softened its outlook for liquefied natural gas prices as the addition of new output capacity loosens gas markets globally. Macquarie now sees spot LNG at US$10.50/mmBtu in 1Q 2026, down from a prior forecast of US$12.00/mmBtu. It also pares forecasts for spot LNG prices by between 8.5% and 13% over subsequent quarters of next year.

"We believe an underweight position in oil & gas is warranted, given our still bearish oil and LNG outlooks," said Macquarie.

Metals:

Gold should remain relatively stable into next week's Fed meeting, supported by cautious positioning and a still-soft dollar, Sucden Financial said.

"Silver, by contrast, is likely to experience greater two-way volatility, with any renewed weakness in yields offering a quick rebound opportunity but a firmer dollar posing downside risk," it added.

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Copper has gained more than 7% since the start of November and is up 30% since 2025 began, likely on ongoing supply disruptions, ANZ said. A huge withdrawal of metal from LME warehouses earlier this week fueled speculation of a supply squeeze, the bank said.

Still, ANZ noted that recent weak economic data in China could suggest the market shortage isn't as large as expected.

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Iron ore prices fell, weighed by weak demand and strong supply. Demand is getting more subdued while supply remains at high, pressuring prices, Baocheng Futures said.

TODAY'S TOP HEADLINES

Why investors see Friday's inflation report as a gut check of vibes on the economy

U.S. stocks have clawed their way back to the doorstep of record territory after a volatile month on Wall Street, but persistent inflation worries and souring consumer sentiment are keeping investors uneasy ahead of the Federal Reserve's last policy meeting of the year.

That's why Friday's release of the September report for the Fed's preferred inflation gauge - the personal consumption expenditures price index - comes at a crucial time for investors. The hope is that the new PCE report, while delayed, will provide a hard-data reality check that will either confirm the downbeat economic mood or prove, once again, that the vibes are all wrong.

Is anybody hiring? A weakening U.S. job market may push the Fed to cut rates again.

Condition red isn't flashing for the U.S. job market, but its vital signs have deteriorated ahead of a pivotal vote by the Federal Reserve on whether to reduce interest rates again.

A barrage of mostly negative news in the past week has convinced Wall Street investors that a third straight rate cut is on the way. The website FedWatch shows that 89% of investors believe the Fed will reduce borrowing costs again at its Dec. 9-10 meeting.

European Leaders Warn Zelensky to Be Wary in U.S. High-Speed Push for Peace

BERLIN-In recent days, European leaders have delivered a stark warning to Ukrainian President Volodymyr Zelensky: Don't give in to Russian demands without ironclad security commitments from the U.S.

The message reflects European leaders' growing wariness of Washington's high-speed effort to reach a peace deal that has left them on the sidelines.

Warner Bros. Discovery and Netflix Enter Exclusive Deal Negotiations

Warner Bros. Discovery has entered exclusive negotiations for a deal to sell its studios and HBO Max streaming business to Netflix, a move that would dramatically reshape the entertainment and media industry, according to people familiar with the matter.

Warner's move to exclusive talks with Netflix comes after the latest round of bids for the media company that owns Superman and HBO Max. Paramount and Comcast also have been pursuing Warner Discovery.

Apple Departures Point to Challenges for iPhone's Dominance

Apple is facing a wave of executive departures as the company continues a period of transition, not only among its leadership but, if rivals have their way, for its business as well.

On Thursday, the company announced that its general counsel and head of policy will both retire next year. On Wednesday, a top designer left for Meta Platforms. On Monday, Apple said its head of artificial-intelligence strategy would retire. Its chief operating officer announced his retirement in July, and its chief financial officer transitioned to a new role late last year.

Meta Plans to Shift Spending Away From the Metaverse

Meta Platforms is planning cuts to the metaverse, an arena Chief Executive Mark Zuckerberg once called the future of the company.

The proposed changes are part of Meta's annual budget planning for 2026, and the company plans to shift spending from the metaverse to artificial-intelligence wearables, according to a person familiar with the matter. Several tech companies including Apple are working on wearable devices they believe might become the next major computing platform.

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Expected Major Events for Friday

00:01/UK: Nov BRC-Sensormatic IQ Footfall Monitor

06:00/ROM: Oct Retail trade

07:00/GER: Oct Manufacturing orders

07:00/GER: Oct Manufacturing turnover

07:00/NOR: Oct Industrial Production Index

07:00/ROM: 3Q GDP

07:00/UK: Nov Halifax House Price Index

07:30/HUN: Oct Preliminary Industrial Production

07:45/FRA: Oct Industrial production index

07:45/FRA: Oct Foreign trade

07:45/FRA: Oct Balance of payments

08:00/SVK: 3Q GDP

08:00/SPN: Oct Industrial Production

08:00/SPN: 3Q Housing Price Index

08:00/AUT: Nov Wholesale Price Index

08:00/CZE: Oct Retail trade

08:00/SWI: Nov SNB foreign currency reserves

08:00/AUT: Sep Foreign Trade

09:00/ITA: Oct Retail Sales

09:00/BUL: 3Q GDP - preliminary data

09:30/UK: 3Q Bank of England external business statistics

10:00/GRE: 3Q Provisional GDP

10:00/EU: 3Q GDP and Main Aggregates Estimate

10:00/EU: 3Q Employment

10:00/LUX: 3Q GDP

11:00/IRL: Nov Irish Live Register latest monthly figures

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

12-05-25 0018ET