European Midday Briefing: Stocks Mostly Higher As Investors Bet on Fed Rate Cuts

MARKET WRAPS

Stocks:

European indexes mostly rose Monday, as investors hoped a slew of delayed economic data due this week would bolster the chances of the Federal Reserve cutting interest rates next month.

However the FTSE was down, amid lower oil prices on prospects of a Ukraine-Russia peace deal after the White House hailed what it called constructive talks with Ukraine and ahead of the U.K. autumn budget Wednesday.

On Friday, New York Fed President John Williams said another near-term rate cut could be warranted, though other policymakers have suggested otherwise.

But, as Société Générale's strategist Albert Edwards points out, the Fed isn't the only factor affecting liquidity conditions and what is happening in Japan could also have far-reaching consequences for markets.

"Western politicians in particular should quiver with fear as Japan turns off the liquidity tap that has, in effect, suppressed Western bond yields below levels that their bloated fiscal deficits justify."

The clearest sign of such a move would be action to halt the slide in the yen's exchange rate-edging closer to the psychological USD/JPY 160 level-which would involve selling dollars, with the Bank of Japan unloading some of its Treasury holdings.

This would tighten dollar liquidity, reversing the process of injecting funds into the global system.

Market Insight

Wall Street is straining to absorb a flood of new bonds from tech companies funding their AI investments , and prices of newly-issued bonds have slid.

Growing concerns about the worsening credit metrics of the businesses have added to investor anxiety about the valuations of AI businesses.

U.S. Markets:

Dow, S&P 500 and Nasdaq futures pointed to a firmer start early, but bitcoin remained under pressure as a shortened trading week kicks off.

With many investors taking an extended vacation before the Thanksgiving holiday Thursday, the upcoming week could see lighter, but potentially volatile, trading.

All eyes will be on consumer spending as another batch of retailers report this week, and the holiday shopping season kicks off later this week with Black Friday sales.

Forex:

The dollar was steady amid uncertainty over whether the Fed will cut rates again in December.

Comments show policymakers are divided over the December decision and last week's data also failed to provide any clear signals for the rate path.

The Swiss franc fell to a two-and-a-half-week low against the euro and the dollar as hopes for a Ukraine peace deal reduced demand for safe-haven assets.

Sterling was flat against the dollar and the euro as investors looked ahead to Wednesday's U.K. autumn budget.

"U.K. government bonds and sterling will be sensitive to how an inevitable fiscal tightening looks and whether the fiscal gap is plugged sufficiently," Danske Bank said.

XTB said if the budget fails to restore investors' confidence, U.K. assets--especially bonds and the pound--would likely face increased volatility.

Sterling could also perform poorly in the lead-up , it added.

The yen could face further near-term weakness , RBC Wealth Management Asia said, after Prime Minister Sanae Takaichi's economic stimulus package raised concerns additional bond issuance will be required.

"This has exacerbated weakness in Japanese government bonds and the yen, with longer-dated bond yields jumping to their highest levels since 1999, while the yen edged closer to the psychological USD/JPY 160 level."

Bonds:

Treasury yields traded steady.

Moody's upgraded Italy , boosting it to Baa2 and revising its outlook to stable from positive.

Energy:

Oil prices slipped as investors assessed prospects of a Ukraine-Russia peace deal.

"Developments related to a potential peace agreement are important for the oil market, particularly amid significant uncertainty about the impact of recently imposed sanctions on Russia's Rosneft and Lukoil," ING said.

"A peace deal increases the likelihood that sanctions will be lifted, or at least not enforced strictly."

Progress on talks to end the war have also eased concerns over disruptions to Russian diesel exports, with middle distillate cracks softening since last week.

Metals:

Gold prices slipped as investors assess prospects of further U.S. rate cuts in December amid mixed signals and a significant data gap due to the government shutdown.

EMEA HEADLINES

Rheinmetall Turns to Former Auto Workers to Fuel Hiring Spree

Germany's largest arms manufacturer, Rheinmetall, expects its sales will be five times as much as they were last year by the end of the decade. A big factor underpinning its confidence-it is being flooded by job applications.

The company is now looking to draw from a pool of workers laid off by the car industry and other big employers to fill the roles needed for its expansion plans, its head of human resources operations said.

Tech Investor Prosus Posts Higher Profit, Driven by Tencent Holding

Prosus, Tencent Holdings' largest shareholder, reported a rise in net profit for its fiscal first half, driven by its investment in the Chinese tech giant and the sale of a portion of its stake.

Net profit for the six months through Sept. 30 rose to $5.63 billion from $4.59 billion in the year-earlier period, the Amsterdam-listed technology investor said Monday. This compared with consensus expectations of $6.11 billion, according to estimates provided by Visible Alpha.

Bayer Sees Positive Results in Study for Asundexian as Stroke Treatment

Bayer said it had positive results in late-stage clinical trials for a drug preventing stroke, after a previous study with the same drug failed to reduce blood-clot formation.

The German pharmaceutical company said Sunday that the once-daily 50mg asundexian medication, when combined with antiplatelet therapy, lowered the risk of stroke in patients during the study. It did so without causing major bleeding, a side effect of other blood thinning medications, Bayer said.

BHP Abandons Bid for Anglo American Following New Talks

BHP Group said it wouldn't pursue a takeover of Anglo American following new talks, shutting the door on a deal that could have turbocharged its copper business and helping to clear the way for its U.K. rival to close a merger with Teck Resources.

Melbourne, Australia-based BHP first approached London-listed Anglo American about a possible takeover in April last year, arguing that a combination of the companies' prized copper mines and other operations would have significant benefits.

GLOBAL NEWS

German Business Sentiment Weakens on More Pessimistic Outlook

Confidence among German firms worsened in November, a result of a gloomier business outlook for the coming months.

The Munich-based Ifo Institute said Monday that its business-climate index, based on around 9,000 monthly responses from businesses, edged down to 88.1 in November from 88.4 in October. Economists polled by The Wall Street Journal expected a small uptick to 88.5.

Japan's New Leader Infuriated Beijing. She Isn't Backing Down.

TOKYO-Sanae Takaichi has been Japan's first female prime minister for barely a month and already she has made an impression on the world's two most powerful men.

First, it was President Trump, who gushed on an October trip to Tokyo that she would prove to be one of Japan's greatest leaders.

South America Is Turning More Right-Wing-and Getting Trumpier

Chile is poised to elect as president a conservative who has proposed digging ditches to keep out immigrants. In Bolivia, voters recently kicked out the socialists who governed for nearly 20 years. And in Argentina, even the poorest voters have backed President Javier Milei's efforts to shrink the state.

Ruled several years ago by a cohort of leftists, many of them opposed to the U.S., South America is seeing its political pendulum shift to the right. It couldn't come at a better time for President Trump.

Write to clare.kinloch@wsj.com

Write to us at newsletters@dowjones.com

We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.

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

(END) Dow Jones Newswires

November 24, 2025 05:16 ET (10:16 GMT)