Market Report.
📈 We started a new week having survived last week’s data and with some optimism. Nothing should spoil the plans for type cuts this week, right? Let’s see.
📉 The inflation published on Friday under PCE data, the favorite indicator of the Fed, was in line with expectations, even improving the data in some parameters. This paves the way for more Fed rate cuts.
📊 The September inflation report from the U.S. Commerce Department provided some positive news for the Federal Reserve. The core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, rose 0.2% monthly and 2.8% annually – both in line with expectations, but the annual rate was 0.1 percentage point lower than August.
🛒 The latest U.S. consumer spending data showed a moderate increase in September after three months of stronger gains. Consumer spending rose 0.3% in September, slower than the 0.5% gain in August, suggesting a loss of momentum in the economy. This could also give the Federal Reserve room to cut interest rates at its next meeting
🎬 Netflix has reached a deal to acquire pieces of Warner Bros. Discovery, including the film studio and streaming service HBO Max, in a transaction valued at $82.7 billion. The deal will bring together Netflix, the streaming giant, and the storied Warner Bros. film studio and its content library. Netflix’s initial bid for WBD’s studio and streaming assets was $27 per share, which trumped Paramount’s offer at the time.
💵 As part of the deal, WBD shareholders will receive $23.25 in cash and $4.50 in shares of Netflix common stock for each share of WBD. The deal could face regulatory scrutiny given the size of the combined streaming businesses, with Netflix having over 300 million global subscribers and WBD having 128 million.
⚖️ President Donald Trump has raised concerns about Netflix’s planned acquisition of Warner Bros. The transaction would combine the world’s largest streaming platform, Netflix, with the 4th largest service, HBO Max, which Trump believes could raise antitrust issues. Trump’s comments suggest the deal may face scrutiny from regulators, as the combined company would have significant market power in the streaming industry.
📉 The probability that Netflix will complete the acquisition by the end of 2026 is 23%, up from about 60% just before Trump’s comments, betting on prediction market Polymarket.
🏦 ECB board member Isabel Schnabel on interest rates and the outlook for the European economy: Schnabel is happy with market expectations that the ECB’s next policy move will be to raise interest rates, but not in the near future. She said risks to the economy and inflation were on the rise and suggested the ECB’s growth outlook could be revised upwards at its December meeting.
🇪🇺 Schnabel believes the European economy has been more resilient than expected in the face of trade disruptions, with solid expansion expected into year-end. Surprising considering the bad economic situation in Germany and France, the main axes of the euro. Schnabel declined to comment on analyst forecasts for the timing of the next ECB rate hike, saying it’s “not currently on our minds” and the central bank will “cross that bridge when we come to it.”
🇬🇧 UK: a weakening jobs market in the lead-up to the UK government’s budget, as employers hold back on hiring due to concerns over potential tax increases.
📉 The UK’s jobs market remained weak in the run-up to the November 26th budget, as employers worried about possible new tax increases. Permanent job placements shrank at the slowest rate since July 2024, but the reading was barely up from October.
⚛️ UK has now ambition to increase nuclear’s share to 25% of the UK’s power by 2050, driven by energy security concerns and the need for reliable, low-carbon baseload power. A Bank of England survey showed firms expected to reduce staff numbers, which some economists linked to tax hikes announced last year.
🔌 The UK was the birthplace of commercial nuclear energy, but now generates just 14% of its power from nuclear, trailing European peers like France. The country once had more nuclear power stations than the U.S., USSR and France — combined. It was a global producer until 1970. But now the UK faces “systemic failures” in its nuclear framework, including fragmented regulation, flawed legislation, and weak incentives that have caused it to fall behind.
🧑🔧 Other challenges are access to relevant nuclear engineering talent and secure a robust domestic supply chain, especially for critical inputs like uranium.
🚢 China’s exports topped forecasts in November, driven by a surge in shipments to non-U.S. markets as the country diversifies its export destinations. Exports to the EU, Australia, and Southeast Asia saw strong growth, offsetting a 29% drop in shipments to the U.S. amid high tariffs. China has ramped up efforts to deepen trade ties with other regions to offset the impact of U.S. tariffs imposed by the Trump administration.
🔄 The role of “trade rerouting” in offsetting the drag from U.S. tariffs appears to be increasing, as Chinese firms establish new production hubs for low-tariff access. However, China’s domestic demand remains soft due to a prolonged property downturn, as seen in a decline in imports of key materials like unwrought copper.
🇪🇺 The European bureaucrats who criticized Trump’s policies and his tariffs now seem to be preparing to copy and imitate those policies. Not only in the trade war, they also want the ECB to act like the Fed.
🛡️ French President Emmanuel Macron has warned that the European Union may need to take “strong measures” against China, including potential tariffs, if Beijing fails to address its widening trade surplus with the EU.
⚠️ Macron stated that China’s trade surplus with the EU is “unsustainable” and that Beijing is “killing its own clients” by not importing more from Europe. He said that if China does not address this imbalance, the EU will be “obliged to take strong measures and decouple, like the US, like for example tariffs on Chinese products.”
🇫🇷 Macron criticized the US approach to China as “inappropriate” and argued it has worsened Europe’s position by diverting Chinese goods toward the EU market. He said the European Central Bank also has a role to play, arguing its monetary policy should consider growth and jobs, not just inflation.
📉 Japan’s economy contracted faster than initially estimated in the third quarter of 2023, primarily due to revised data showing weaker capital spending. Gross domestic product (GDP) shrank an annualized 2.3%, faster than the initial estimate of 1.8% and the consensus forecast of 2.0%.
📊 On a quarter-on-quarter basis, GDP contracted 0.6%, compared to the initial 0.4% reading and the 0.5% forecast. The downward revision was mainly due to new data showing capital expenditure fell 0.2%, rather than the initial 1.0% rise.
🕊️ According to the outgoing U.S. envoy for Ukraine, Keith Kellogg, a deal to end the Ukraine war is “really close” and now depends on resolving two main outstanding issues: The future of Ukraine’s Donbas region, which has been the site of fighting between Russian-backed separatists and Ukrainian troops for 8 years. The status of the Zaporizhzhia nuclear power plant, which is currently under Russian control.
📞 Kellogg stated that if these two issues can be resolved, “the rest of the things will work out fairly well” and that the parties are “really, really close” to a deal. Russia currently controls 19.2% of Ukrainian territory, including Crimea and large swaths of the eastern and southern regions.
☎️ Ukrainian President Zelenskyy recently had a “long and substantive” call with former U.S. President Trump’s special envoy and son-in-law, indicating ongoing diplomatic efforts.
😕 However, Trump said he is “a little bit disappointed” that Zelenskyy has not yet read the US proposal, even though Zelenskyy’s “people love it.” Trump claimed that “Russia’s fine with it,” suggesting the proposal is favorable to Russia, in contrast with Zelenskyy’s stance.
🇪🇺 European leaders could once again try to prevent a peace agreement. Leaders of France, Germany and the UK plan to meet Zelenskyy in London to discuss the US efforts to reach a peace deal.
📈 Market View.
📊 Markets begin the week with a positive tone. S&P 500 futures are now aiming to break above the 6,900‑point level, while Nasdaq 100 futures are already trading above 25,800 points.
💵 The US Dollar Index (DXY) is attempting to recover the 99 level, currently trading near 98.89. This is limiting the upward momentum of pairs such as EUR/USD, which approached 1.1680 last week but is now trading around 1.1660.
🏛️ In Europe, DAX 40 futures have successfully broken above 24,000 points, currently trading near 24,050. Euro Stoxx 50 futures reached 5,755 last Friday and now trade around 5,725.
🛢️ Crude oil is strengthening again, with spot Brent approaching $64.
🥇 Gold futures remain firm. On Friday, prices neared $4,300 per ounce, though they have since pulled back to around $4,235.
🪙 Bitcoin saw declines over the weekend, including yesterday, dipping below $88,000. However, it started the week with a rebound and is currently trading near $91,540.
