European Midday Briefing: Shares Steady as Investors Weigh Economic Data

MARKET WRAPS

Stocks

European shares remained steady on the last day of the week as investors processed a sweep of economic data.

U.S. November inflation came in significantly lower than expected on Thursday and became an early Christmas present to the market, SEB said. The data supports the case for further Federal Reserve interest rate cuts.

However, investors are reassessing the big drop , as it might have to do with data challenges caused by the government shutdown, rather than with changes in the economy.

On Friday, the Bank of Japan raised interest rates by 25 basis points to a 30-year high of 0.75%. EFG said there is room for further rate increases next year.

Rate rises in Japan ripple through global markets and might even push up the cost of borrowing in the U.S.

In Germany, economic uncertainty and a jump in the desire to save rather than spend drove sentiment to a 21-month low.

Following the Bank of England's rate cut yesterday, public sector finances data showed above forecast borrowing in November , raising concerns about the U.K.'s fiscal sustainability.

Meanwhile, U.K. households' willingness to spend continues to be dragged by weak employment and wage growth, Capital Economics said.

U.S. Markets:

Stock futures edged up after a cooler-than-expected inflation reading sparked a rally on Wall Street Thursday.

Investors are hoping the positive reaction to inflation data sets the stage for the traditional Santa rally at the end of the year.

Forex:

The dollar recovered after a knee-jerk decline in reaction to Thursday's inflation data .

Sterling fell against a stronger dollar but was little changed against the euro after weaker-than-expected U.K. retail sales data.

The currency looks vulnerable due to the prospect of further BOE interest rate cuts , Convera said.

Bonds:

Eurozone government bond yields rose. "Spillovers from Japanese government bonds to the BOJ announcements could put the range in 10-year Bund yields to the test this morning," said Commerzbank.

Citi said eurozone periphery bond yield spreads could widen as 2026 issuance looms . "This [risk] looks especially significant given the richness of periphery spreads on our FV [fair value] model."

The spread between 10-year OATs and Bunds had settled at 75 bps despite the political turmoil in France , Ofi Invest Asset Management said.

Treasury yields rose across maturities.

Energy:

Oil prices were headed for a weekly loss of more than 2% as concerns over a looming supply surplus outweighed geopolitical risks.

Gas

European natural-gas prices rose in early trading, driven by forecasts for colder weather later in the month and higher LNG imports in China.

Metals:

Gold prices slipped in early trading on a firmer dollar, but remained on track for a weekly gain.

Nickel

Nickel climbed, extending the previous session's gains. The metal likely rose after reports that Indonesia, the world's top nickel producer, plans to reduce production to 250 million metric tons next year to support prices, Sucden Financial said.

Iron

Iron ore edged higher. Overall market sentiment has been relatively upbeat this week, though there's been a broad period of fluctuation, Galaxy Futures said.

EMEA HEADLINES

EU Delays Mercosur Deal Sign-Off to January

The European Union pushed back its own deadline to sign off on a long-awaited free trade deal with Latin American countries as EU leaders convened in Brussels to hash out a plan to finance Ukraine's war effort for the next two years.

"We have reached out to our Mercosur partners and agreed to postpone slightly the signature," Commission president Ursula von der Leyen said early on Friday morning. She said the deal with Argentina, Brazil, Paraguay and Uruguay-which would create one of the world's largest free trade areas-is crucially important for Europe.

U.K. Government Borrowing Fell, But Challenges Ahead

The U.K. government borrowed less in November than a year earlier, a sign that it may be making progress in its effort to contain a rise in debt that has worried bond investors and prompted a fresh round of tax rises.

The Office for National Statistics on Friday said the government borrowed 11.7 billion pounds ($15.66 billion) in November, 1.9 billion pounds less than in the same month a year earlier. It was the lowest total for a November since 2021.

BBVA to Launch $4.6 Billion Buyback After Failed Takeover Bid for Sabadell

BBVA said it is launching share buybacks of up to 3.96 billion euros ($4.64 billion), as the bank moves to boost returns to shareholders after its bid to take over smaller rival Banco de Sabadell fell through.

The Spanish lender said Friday that it received authorization for the European Central Bank for the buyback. BBVA's board signed off on a buyback in several phases, it added.

GLOBAL NEWS

The Bank of Japan Raised Rates. Here's Why You Should Care.

TOKYO-In 1995, O.J. Simpson was acquitted of murder charges, Coolio's "Gangsta's Paradise" topped the charts, and the first Toy Story movie hit the theaters. It was also the last time the Bank of Japan's benchmark interest rate was as high as 0.75%.

The BOJ raised its policy rate target to its highest level in 30 years on Friday, another small step back from the world's longest and biggest experiment with ultra-expansionary monetary policy.

U.S. Clamps Down on Investment in Chinese Tech Companies

WASHINGTON-President Trump signed into law new powers to screen and restrict U.S. investment in Chinese technology firms, marking the most significant effort yet to police how American capital flows into businesses that bolster Beijing's military and surveillance state.

Lawmakers in both parties have grown increasingly concerned that U.S. money and expertise are accelerating China's advances in cutting-edge technologies.

Brown and MIT Shooting Suspect Found Dead in New Hampshire

The man suspected of killing two Brown University students and later an MIT professor was found dead in a storage unit in New Hampshire on Thursday night after a six-day manhunt, officials said.

The alleged gunman, identified as 48-year-old Portuguese national and former Brown student Claudio Neves Valente, fatally shot himself in the storage unit, authorities said Thursday night.

Military Welcomes $1,776 'Warrior Dividends'

One Army staff sergeant said he planned on putting his $1,776 check from the federal government into his retirement fund. A longtime infantryman said he would invest the money in the stock market. A military spouse said she intends to pay down credit-card debt her family has incurred from basic expenses like food and baby supplies.

"It may not seem like a lot to normal Americans, but it's like getting an extra paycheck for us," said Meghan Holliday, whose husband is an Army staff sergeant. "Especially during the holidays, it gives us a sense of relief. We won't have to stretch as much as we usually have to."

Wisconsin Judge Convicted of Obstructing Immigration Agents in Courthouse

A Wisconsin state judge was convicted Thursday for her role in helping a defendant in her courtroom avoid immigration agents, in a closely watched case that highlighted tensions surrounding the Trump administration's aggressive deportation drive.

After six hours of deliberations, jurors in Milwaukee found Judge Hannah Dugan guilty of obstructing law enforcement, a felony that carries a maximum sentence of up to five years in prison, but acquitted her on a charge of concealing a man wanted by immigration authorities, in an unusual federal criminal prosecution of a sitting state-court judge.

New York Mayor Adams Moves to Block Zohran Mamdani's 2026 Rent Freeze

New York City's departing mayor is launching a last-ditch effort to thwart Mayor-elect Zohran Mamdani's plan to freeze rents next year.

Mayor Eric Adams, who has opposed a rent freeze, is appointing two new members and reappointing two current members to the Rent Guidelines Board, according to the mayor's office.

Write to priscila.barrera@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

December 19, 2025 05:18 ET (10:18 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.