EMEA Morning Briefing : Fed on Course for Rate Cut Next Week

MARKET WRAPS

Watch For:

EU industrial production; Germany foreign trade; UK GDP, trade, index of production

Opening Call:

European stock futures were trading lower as Asian benchmarks fell amid disappointment over a lack of details from an economic conference in China. The dollar edged higher; Treasury yields and gold were little changed; while oil strengthened slightly.

Equities:

Stock futures pointed to a lower open in Europe on Friday. U.S. producer-price data was a little above analysts' expectations but not enough to shake investors' confidence that Federal Reserve officials will trim borrowing costs when they meet next week.

Trading was otherwise lackluster and suggested that investors are making minor moves to rebalance their holdings ahead of the new year, said Zachary Hill, head of portfolio management at Horizon Investments.

"Selling the winners and buying some of the year-to-date laggards would be the general theme that could bleed through in price action over the next few weeks," he said.

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The mood among U.K. consumers is just a little sunnier this month, suggesting household spending won't offer a major boost to growth at the end of the year. Research group GfK's measure of consumer confidence climbed to minus 17 in December's survey from minus 18 in November.

"Consumers are still thinking twice about big-ticket purchases and whether they will bring Christmas cheer," GfK's Neil Bellamy said.

Forex:

U.S. inflation met market expectations, leading traders to price in a Fed rate cut next week. However, the rate cut itself is unlikely to spark significant market movements, Kenanga IB said.

The main focus will be the updated Fed dot plot, which may indicate a slower pace of rate cuts in 2025, it said. In other central-bank moves, the BOJ's expected hold could support the dollar but the BOE's anticipated pause could moderate gains, Kenanga added.

Bonds:

Bonds could be better than stocks for investors moving money-market savings into more profitable options, Ameriprise's Russell Price said. He said there still is much money parked in cash-like investments that were paying attractive yields before the Fed started to cut interest rates. As rates keep falling, "a lot of that money will look elsewhere" for higher returns, Price said.

He expects equities to do well in 2025, but valuations are already high and he doesn't see them going much higher. "Moving money into more stable fixed-income and getting 5% or 6%, maybe 7% at some corporate bonds would be a good trade-off."

Energy:

Oil futures edged lower early Friday. Traders are digesting the IEA monthly report. It said that "while the market is closely assessing ongoing geopolitical tensions and evolving OPEC+ supply dynamics, the bigger question for 2025 remains global oil demand."

The IEA lowered its global oil-demand growth estimate for this year and said the market looks "comfortably supplied" for 2025.

Metals:

Gold was little changed in Asia, but may be weighed by possible easing in Middle East tensions. Hamas has yielded to two of Israel's key demands for a cease-fire deal in Gaza, Arab mediators said, raising hopes of an agreement that could release some hostages within days.

Also, U.S. PPI data overnight was hotter than expected, which might contribute to a slower pace of Fed rate cuts and damp appetite for the precious metal.

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India should remain a major growth market for steel with increases in production and consumption in 2025, Fitch Ratings said, adding that it expects a slight recovery in the global steel industry and that it has a neutral outlook to the sector.

Fitch also said the market is expected to recover in Brazil next year, while steel production in China will continue declining by low single digits, and demand will be almost flat. Fitch added that "a large-scale tariff increase on Chinese goods from the U.S. would add pressure to steel consumption in China and lead to spillover effects across global markets."

TODAY'S TOP HEADLINES

Trump Advisers Seek to Shrink or Eliminate Bank Regulators

The Trump transition team has started to explore pathways to dramatically shrink, consolidate or even eliminate the top bank watchdogs in Washington.

In recent interviews with potential nominees to lead bank regulatory agencies, Trump advisers and officials from his newfound Department of Government Efficiency have, for example, asked whether the president-elect could abolish the Federal Deposit Insurance Corp., people familiar with the matter said.

China Officials Vow They Have Economy's Back-but Still Don't Say How

After a bout of optimism earlier in the week that Chinese officials would offer more concrete plans to steady the economy, a readout from China's annual Central Economic Work Conference left investors wanting.

The readout from the meeting-which sets China's economic policy stance for the following year-offered another round of strong language about helping the economy but lacked detail on any plans. Chinese stocks returned about half of the gains logged on Monday in anticipation of bigger stimulus, and were roughly flat on Thursday, with the iShares MSCI China up just 0.05% to $48.87.

Economic Gloom Dims Britain's Christmas Cheer

The mood among U.K. consumers is just a little sunnier this month, suggesting household spending won't offer a major boost to growth at the end of the year.

Research group GfK's measure of consumer confidence climbed to minus 17 in December's survey from minus 18 in November.

Novo Nordisk's Ozempic Gets EU Regulator Endorsement to Reduce Kidney Risks

Novo Nordisk said the European Union's drug regulator supports a label expansion of its Ozempic diabetes drug to reflect its potential to lower the risk of conditions related to kidney disease in adults with Type 2 diabetes.

The European Medicines Agency's backing comes after a trial earlier this year showed that Ozempic slows the progression of chronic kidney disease and cuts the risk of kidney failure, heart attack, stroke and death in patients with Type 2 diabetes.

Deutsche Bank Taps New Risk Chief

Deutsche Bank is replacing its chief risk officer, a move that follows tumult in the German lender's commercial loans portfolio and regulatory threats over its money laundering controls.

Marcus Chromik, who served for eight years as chief risk officer at German rival Commerzbank, will succeed Olivier Vigneron on May 20, 2025, Deutsche Bank said Thursday. Vigneron recently informed the bank he wouldn't seek an extension of his contract when it ends on May 19, 2025.

Jeff Bezos' Amazon Plans to Donate $1 Million to Trump's Inauguration

Amazon.com is planning a $1 million donation to President-elect Donald Trump's inaugural fund, as founder Jeff Bezos and other tech leaders shore up ties with the incoming administration.

The donation is being prepared as Bezos, Amazon's executive chairman, is slated to visit Trump next week at his Mar-a-Lago club in Palm Beach, Fla., according to people familiar with the matter.

Nvidia Stock Falls. Microsoft's Market Value Overtakes the Chip Maker.

And just like that, Nvidia has fallen from second-most valuable company to third. As recently as November, it was No. 1.

Now the gold and silver belong to Apple and Microsoft, respectively.

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Expected Major Events for Friday

00:01/UK: Dec UK Consumer Confidence Survey

06:00/FIN: Oct Balance of Payments

06:00/FIN: Nov CPI

07:00/GER: Oct Foreign Trade

07:00/GER: Nov WPI

07:00/UK: Oct Index of production

07:00/UK: Oct UK trade

07:00/UK: Oct Index of services

07:00/UK: Oct Monthly GDP estimates

07:00/ROM: Oct Industrial production

07:00/SWE: Nov Labour Force Survey

07:00/ROM: 3Q Employment and unemployment

07:30/HUN: Oct Construction

07:45/FRA: Nov CPI

08:00/SVK: Nov CPI

08:00/SVK: Nov Core & net inflation development

08:00/SPN: Nov CPI

09:00/CZE: 3Q Quarterly Balance of Payments

09:00/CZE: Oct Monthly Balance of Payments

09:00/POL: Nov CPI

09:00/POL: Oct Merchandise trade

09:30/UK: Nov Bank of England/Ipsos Inflation Attitudes Survey

09:30/UK: Nov NIESR Monthly GDP Tracker

10:00/EU: Oct Industrial Production

13:00/POL: Oct Balance of payments

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

12-13-24 0016ET