European Midday Briefing: Shares Rally on Renewed U.S. Confidence

Adam

Summary:

European stocks rose after a U.S. rally driven by the Fed’s rate cut and dovish signals, while weak U.K. data fueled BOE cut expectations ahead of key ECB and inflation decisions.

MARKET WRAPS

Stocks:

European shares rose on the last day of the trading week following a rally in U.S. stocks on Thursday.

Stocks were boosted after the Federal Reserve cut interest rates by 25 basis points Wednesday and signaled further cuts.

Meanwhile, delayed data showed an unexpectedly sharp drop in the U.S. trade deficit for September, while weekly jobless claims picked up after a Thanksgiving lull.

Investors are bracing for a busy week next week, which will include a European Central Bank rate announcement and U.S. inflation data.

In contrast to the Fed, the ECB is expected to keep rates steady .

"ECB President Christine Lagarde will present a new forecast, which should be the first test of the current pricing of no further rate cuts, in line with our view," ING said.

Economic Insight

The U.K. economy unexpectedly contracted in October , with GDP falling 0.1% month-on-month, further boosting the prospect of another interest-rate cut next week. The Bank of England's decision is on December 18.

"Without a material upturn in momentum towards the end of the year , the economy will post a quarterly contraction in the fourth quarter for the first time in two years," Investec said.

The U.K. is expected to struggle for growth in the coming months after the budget measures announced in November offered little support, Quilter said. "This is in stark contrast to Europe where growth expectations are being raised at the same time as U.K. ones are lowered."

Shares on the Move

London's precious metal miners jumped as gold and silver prices continued to rally.

Hochschild Mining climbed over 8%, while Fresnillo rose 5.8%. Endeavour Mining was up 3.6%, while Pan African Resources gained 4%.

U.S. Markets:

Stock futures were mixed on Friday after the Dow and the S&P 500 ended at record highs the previous session supported by investors' optimism on the economy.

Shares of Nasdaq-100 component Broadcom skidded in offhours trading. The Nvidia rival reported fast growth in artificial-intelligence chip sales, but a disappointing outlook for higher-margin product lines.

Forex:

The euro traded close to a two-month high against the dollar, lifted by a divergence in Fed and ECB policy.

The dollar remained weak after reaching a nearly eight-week low in the previous session , dented by expectations for further interest rate cuts.

Sterling edged lower after weak U.K. GDP data .

Bonds:

Yields on eurozone government bonds rose, tracking moves in their U.S. counterparts. Treasury yields turned higher , reversing some of their falls the previous day following the Fed's interest rate cut decision.

There is a significant focus on the extent of eurozone government bond supply frontloading in 2026, according to Citi. The usual supply pattern is expected to persist in 2026 as well, whereby a significant volume of the annual bond issuance is completed in the first quarter.

Long-dated Treasury yields traded higher before European opening, with some Fed speakers lining up , including the dissenters of this week's interest-rate decision.

Barclays continues to be long in two-year U.S. Treasurys-- anticipating a fall in yields in this maturity .

Steeper Treasury curves should be cyclically driven by the Fed in the near term , Natixis said.

Energy:

Oil prices rose, but were poised for a significant weekly loss amid diplomatic efforts to end the war in Ukraine and overall bearish fundamentals pointing to an oversupplied market next year.

"This is a sharp reversal from outlooks earlier this year which pointed to tighter markets," ANZ said.

Metals:

Gold prices were on track for a weekly gain after the Federal Reserve delivered a much-anticipated quarter-point interest-rate cut this week and as investors hope for further easing next year.

"We expect gold to continue behaving as the more grounded barometer of macro sentiment , with upside likely capped in the near term unless the dollar weakens much further," Sucden Financial said.

Gold Chart

Comex gold futures' bullish momentum was growing stronger, based on the daily chart, RHB Retail Research said. The commodity now has a stronger position after clearing its consolidation range.

Copper

Copper prices were lower, weighed down by subdued demand. In the near term, supportive macro sentiment is colliding with bearish industry fundamentals , Baocheng Futures said.

Iron

Iron ore fell in early trade. Prices may be driven by macro sentiment in the short term, Nanhua Futures said.

EMEA HEADLINES

U.K. Economy Contracts Again, Likely Cementing BOE Rate Cut

The U.K. economy contracted for a second straight month in October, cementing expectations that the Bank of England will lower its key interest rate next week.

Economic activity dipped 0.1% on month in October, the Office for National Statistics said Friday, after a 0.1% fall in September. Economists polled by The Wall Street Journal expected a 0.1% increase.

Australia Pledges Deal to Keep Giant Rio Tinto Aluminum Smelter Open

Australian federal and state governments will work with Rio Tinto's Tomago Aluminium to keep the country's largest aluminum smelter open after its current electricity contract ends in 2028, Prime Minister Anthony Albanese said.

Tomago Aluminium, in which Rio Tinto holds a roughly 52% stake, said in October that it might need to shut the 42-year-old smelter once its power-supply contract with Australian utility AGL Energy ends. It said it had been searching since 2022 for "an economically viable energy solution" beyond then, but hadn't found an option that would allow the operation to continue.

BNP Paribas in Talks to Sell Its Stake in Moroccan Bank BMCI

BNP Paribas said it has begun exclusive talks with Holmarcom Group to potentially sell its stake in Moroccan subsidiary BMCI.

The French financial services group said Friday that it was in discussions to sell its 67% stake in BMCI to Holmarcom, which already is a shareholder in the Moroccan bank.

Rheinmetall to Supply Air Defence Systems to the Netherlands

The Dutch Defense department has tapped Rheinmetall to supply air defense systems for its armed forces, for an order in the three-digit million euro range, the company said Friday.

Rheinmetall said the ministry commissioned a two-digit number of its Skyranger 30 air defense systems, to be delivered between the end of 2028 and 2029.

The Big Fight Over a 'Fish Disco' at a British Power Plant

LONDON-The aim at first was simple: prevent murder on the seafloor.

Over a decade ago, Britain's environmental regulator approved a new coastal nuclear power station on the proviso its cooling system wouldn't suck in millions of fish from the Bristol Channel.

GLOBAL NEWS

Global Markets Rise on Renewed U.S Confidence

Global markets rose on the back of a broad rally in U.S. stocks Thursday, with major indexes climbing in Asia and Europe. The Federal Reserve's interest rate cuts Wednesday, and language suggesting a more dovish approach than expected going into 2026, sparked gains for the S&P 500 and Dow Jones Industrial Index which fed through into global markets. A wobble in U.S. tech stocks wasn't enough to throw off the gains, though the tech-heavy Nasdaq traded down premarket.

-The Dow Jones Industrial Average and S&P 500 look set to extend their Thursday rally, with the indexes climbing 0.3% and 0.05% premarket respectively after hitting new highs Thursday. Futures for the Nasdaq trade down 0.14%, extending its fall from Thursday.

Hope for More Rate Cuts Is Tempting Buyers Back to Bonds

Investors are warming to bonds again, underscoring how hopes for further interest-rate cuts have boosted Wall Street's outlook.

Signs this week that the Federal Reserve remains open to reducing rates in 2026 have been welcomed by investors, who had been prepared for the central bank to deliver a "hawkish cut"-lowering its benchmark federal-funds rate but signaling strong reluctance to make further adjustments. Stocks have rallied alongside bonds, with the Dow Jones Industrial Average on Thursday climbing almost 650 points, or 1.3%, to a new record.

How the Stock Market's Rally Can Keep Going in 2026-and Where to Invest

The big debate for 2026 is whether artificial intelligence will keep the markets happy. We can't settle that question, but we do see bargains below the AI surface and building blocks for another good year for stocks and bonds.

Adding to 2025's market performance might seem like a tall order. The S&P 500 index is on track to gain more than 17%, following up on two years of returns above 20%. International markets like Europe and China are cruising, up 30%. Even more dazzling have been gold and silver, up 60% and 100%, respectively.

Trump Says Ukraine Is Losing the War. Officers on the Front Line Disagree.

KYIV, Ukraine-President Trump says Ukraine is losing the war against Russia. That's not what it looks like to Ukrainian Army Maj. Oleh Hlushko, a battalion commander whose men repelled another assault on their part of the southeastern front this week.

"Occasionally, they manage to raise their flags and claim that a position has been taken, but we then conduct clearing operations, remove the symbols, and the position remains under our control," said Hlushko, of the Separate Presidential Brigade.

Seizure of Venezuelan Oil Strikes at the Heart of Maduro's Grip on Power

The Trump administration's seizure of a tanker full of Venezuelan crude hits Nicolás Maduro much harder than airstrikes on alleged drug boats. It raises an existential crisis for a regime that runs on oil revenue.

Source: morningstar

To stay updated on all economic events of today, please check out our Economic calendar

News, historical chart data, and fundamental company data are provided by FastBull Ltd.

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.