EMEA Morning Briefing: U.S. Economy Defies Dire Predictions

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Opening Call:

European stock futures were mixed early Wednesday. Asian stock benchmarks strengthened; the dollar was down; Treasury yields were flat; while oil futures and gold rose.

Equities:

Stock futures point to a slightly stronger open in Europe on Wednesday, after fresh U.S. data sent the S&P 500 higher for a fourth consecutive session overnight.

The U.S. GDP report Tuesday said that the economy grew at a 4.3% annual pace in the three months through September, the fastest clip in two years. Growth came in considerably above the 3.2% rate economists polled by The Wall Street Journal had expected.

Strong growth and declining but elevated inflation looks like a good recipe for stocks, said Comerica Wealth Management chief investment officer Eric Teal. "The economy is demonstrating a goldilocks scenario," Teal said.

Forex:

The U.S. dollar weakened in holiday-thinned trading.

"While the Q3 GDP number says the U.S. economy was growing at a nice pace July to September this year, there are reasons to be concerned about what the growth rate will be like going forward," said Camelia Kuhnen, a finance professor at the University of North Carolina at Chapel Hill.

Ryan Sweet, chief U.S. economist at Oxford Economics, described the current picture as a jobless expansion, when GDP increases but the job market sags. "This leaves the economy vulnerable to shocks, because the labor market is the main firewall against a recession," Sweet said.

Bonds:

The bond market could have volatile moments early in the new year, but strategists expect yields to stay pretty much in the range they have been in during 2025 barring an economic shock or major geopolitical event.

Pimco expects the 10-year Treasury yield to stay between 3.75% and 4.75% in 2026. The 10-year is important since it influences lending rates, including for home mortgages. It is also closely watched by stock investors.

"It is probably a tale of two halves, as is much of the economic outlook, " said Tony Crescenzi, Pimco executive vice president and portfolio manager. The labor market could look weak in the beginning of the year, "but then a bunch of things will begin to lift the economy upward."

Energy:

Oil prices are likely to remain volatile, with moves dominated by geopolitical developments, said Konstantinos Chrysikos of Kudotrade. The main challenge for oil prices is the 2026 surplus narrative, with the International Energy Agency's December outlook pointing toward supply growth exceeding demand growth, leaving a large projected supply, Chrysikos said. This could keep the market under constant pressure, Chrysikos added.

Metals:

Gold topped $4,500 a troy ounce for the first time, as geopolitical tensions continue to rise. The U.S. has deployed large numbers of special-operations aircraft, troops and equipment to the Caribbean this week, providing Washington with additional options for possible military action in Venezuela, The WSJ reported, citing U.S. officials and open-source flight-tracking data.

Tensions between the U.S. and Venezuela have escalated further, Exness' Li Xing said. Also, friction between China and Japan remains elevated and risks in Eastern Europe continue to increase, the financial markets strategist added.

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Iron ore fell in early Asian trading. Both upside and downside forces are present for iron ore, and prices are expected to be rangebound, Nanhua Futures analysts said. Iron ore prices are facing pressure as shipments remain at a high level, the analysts said. However, demand might be supported by low steel mill inventories, they noted.

TODAY'S TOP HEADLINES

The U.S. Economy Keeps Powering Ahead, Defying Dire Predictions

The U.S. economy continues to power through the trade and immigration shocks of 2025, defying widespread expectations of a slowdown or even a recession and blowing past other developed countries.

One big reason: Americans continue to spend, despite their pessimistic outlook on the economy, their lingering anger about high prices and even a slowdown in the job market. Enormous business investment in the data centers and other scaffolding needed for the artificial intelligence race also helps explain the economy's growth.

China Is Worried AI Threatens Party Rule-and Is Trying to Tame It

Concerned that artificial intelligence could threaten Communist Party rule, Beijing is taking extraordinary steps to keep it under control.

Although China's government sees AI as crucial to the country's economic and military future, regulations and recent purges of online content show it also fears AI could destabilize society. Chatbots pose a particular problem: Their ability to think for themselves could generate responses that spur people to question party rule.

Mergers and Acquisitions Soared This Year. 2026 Could Be Even Bigger.

Mergers and acquisitions rose this year - and they can keep rising.

Total M&A dollars so far this year rose to $4.39 trillion, according to data from London Stock Exchange Group. That puts deal value on pace to hit $4.55 trillion for the full year, which would be 30% above last year's $3.5 trillion.

The U.S. Offered Putin's Closest Ally Sanctions Relief-and a Weight-Loss Drug

The U.S. envoy was deep into a vodka-drenched dinner negotiating sanctions relief with Alexander Lukashenko when the Belarusian strongman-Vladimir Putin's closest ally-turned to him with a personal question: Have you lost weight?

Yes, replied John P. Coale, a veteran litigator who represented Donald Trump in lawsuits against Meta and other social-media platforms. Coale credited his use of Zepbound, an injectable drug proven to help fight obesity, then handed over a brochure from the manufacturer, Eli Lilly, he recalled in an interview.

Christmas in Ukraine Approaches With Power Grid in Crisis

For four straight days this month, Oleksandra Mazur had no light, no heat and no running water. Russian strikes had left her Odesa neighborhood completely without electricity, knocking out other basic services in her apartment building.

"It's much worse than last year," said Mazur, 23. "We're not in any mood to celebrate. We don't know what Christmas and New Year will look like-whether we'll be able to cook a meal."

BP Nears Sale of Majority of Castrol Lubricants Unit to Stonepeak

BP is nearing a sale of a majority stake in its Castrol lubricants business to the investment firm Stonepeak, a deal that values the entire division at $10 billion, including debt, according to people familiar with the matter.

Bitcoin Miners Thrive Off a New Side Hustle: Retooling Their Data Centers for AI

It's harder than ever to mine bitcoin. And less profitable, too. But mining-company stocks are still flying, even with cryptocurrency prices in retreat.

That's because these firms have something in common with the hottest investment theme on the planet: the massive, electricity-hungry data centers expected to power the artificial-intelligence boom. Some companies are figuring out how to remake themselves as vital suppliers to Alphabet, Amazon, Meta, Microsoft and other "hyperscalers" bent on AI dominance.

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Expected Major Events for Wednesday

05:30/NED: 3Q GDP - 2nd estimate

15:59/UKR: Nov PPI

15:59/UKR: 3Q POSTPONED: Unemployment

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

(END) Dow Jones Newswires

December 24, 2025 00:32 ET (05:32 GMT)