(Alliance News) - The FTSE 100 was called lower on Friday morning, ahead of eurozone GDP and unemployment readings, while in France President Macron has resisted calls to resign despite the prime minister's downfall.
"There is a high risk that on the back of Trump, France and Germany, eurozone growth will come in much weaker than the [European Central Bank's] projections will show," wrote ING's Carsten Brzeski. "The only problem for the ECB to preemptively react to the current political woes is that it could be seen as intervening in national politics on the behalf of France. This is speculation the ECB would clearly rather avoid."
On potential interest rate changes, Brzeski said: "We think that the ECB will be hesitant to really walk the walk on getting ahead of the curve and will cut rates by 25bp next week. To bring a bit more dovishness and to signal that the ECB is not getting cold feet in its quest to get ahead of the curve, we expect the ECB to communicate that it will continue bringing rates towards neutral levels and that it no longer rules out bringing rates into easing territory."
Investors are also waiting for US nonfarm payroll data on Friday afternoon, which could provide further guidance on monetary policy.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 16.5 points, 0.2%, at 8,332.88
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Hang Seng: up 1.5% at 19,846.61
Nikkei 225: down 0.8% at 39,091.17
S&P/ASX 200: down 0.6% at 8,420.90
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DJIA: closed down 248.33 points, 0.6%, at 44,765.71
S&P 500: closed down 0.2% at 6,075.11
Nasdaq Composite: closed down 0.2% at 19,700.26
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EUR: up at USD1.0571 (USD1.0568)
GBP: down at USD1.2750 (USD1.2753)
USD: down at JPY150.15 (JPY150.17)
Gold: up at USD2,636.61 per ounce (USD2,635.39)
(Brent): down at USD71.68 a barrel (USD72.22)
(changes since previous London equities close)
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ECONOMICS
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Friday's key economic events still to come:
11:00 CET eurozone GDP
11:00 CET eurozone unemployment
08:45 CET France current account
08:45 CET France trade balance
08:00 CET Germany industrial production
10:00 CET Italy retail sales
08:30 EST US average weekly hours
08:30 EST US nonfarm payrolls
10:00 EST US Michigan consumer sentiment index
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The UK prime minister insisted he was sticking to his missions as he set out "ambitious" targets for Whitehall, despite claims he was "watering down" promises. In a speech at Pinewood Studios on Thursday, Keir Starmer sought to strike an optimistic note after a challenging five months in power, saying Britain was "broken, but not beyond repair" and could still "do great things". Arguing his government had taken action to "fix the foundations", Starmer set out six "milestones" that he said would allow the public to "hold our feet to the fire" on the missions he set for himself before the election. Chief among them was a promise to deliver higher living standards by the next election, saying growth must be "felt by everyone, everywhere", while insisting his long-term aim was still to make the UK the fastest-growing G7 economy.
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French President Emmanuel Macron vowed to name a new prime minister "in the coming days" after the resignation of Michel Barnier, whose government was toppled by a no-confidence vote in parliament. In an address to the nation, Macron rejected calls from opponents to resign, saying he would remain president "fully" until the end of his tenure in 2027. He also lashed out at the French far right and hard left for uniting in an "anti-republican front" to bring down the government. "I will appoint a prime minister in the coming days," he said, adding this person would be charged with forming a "government of general interest" with a priority of passing a budget. Defiantly rejecting resignation calls, he added: "The mandate that you gave to me democratically [in the 2022 elections] is a five-year mandate and I will exercise it fully, right up to the end."
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US President-elect Donald Trump on Thursday said the right-wing venture capitalist David Sacks would become "the White House AI & Crypto Czar," a post on his social media platform Truth Social showed. Sacks is a confidant of Elon Musk. Trump called artificial intelligence and cryptocurrency "two areas critical to the future of American competitiveness." He also said that Sacks "will safeguard Free Speech online, and steer us away from Big Tech bias and censorship." Sacks will also be charged with creating a legal framework for the crypto industry so "it has the clarity it has been asking for and can thrive in the US". The multi-billionaire Sacks will also head the future president's advisory board on science and technology. Since Trump's election victory on November 5, bitcoin investors have been celebrating, as the currency has soared from USD70,000 before the US election in November to a high of more than USD100,000 this week.
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"The conditions are not in place" to sign the EU trade agreement with South America's Mercosur bloc, Italian government sources said, denting proponents' hopes that a deal could be imminent. Italy joined France in opposing the trade pact just as European Commission President Ursula von der Leyen landed in Montevideo to meet with South American leaders at a summit of Mercosur, which groups Argentina, Brazil, Paraguay and Uruguay. "The Italian government considers that the conditions are not met to sign up to the current text," said the sources, calling for greater protection for the farming sector.
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Spanish Prime Minister Pedro Sanchez unveiled a new three-year strategic plan to boost Madrid's economic and diplomatic ties with Africa and develop "legal channels" for migration. The move comes as Spain is struggling to curb a surge in irregular migrant arrivals by boat in Spain's Canary Islands in the Atlantic, mainly from Western Africa. "Our country wants to enter a new era in its relationship with the African continent, on an equal footing," Sanchez said after meeting Mauritania's President Mohamed Ould Cheikh El Ghazouani in Madrid. "Africa is already a key partner for Spain, and its importance will continue to grow in the years to come," he added, saying the volume of Spain's trade with Africa now exceeds that of the country with Latin America.
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Taiwan President Lai Ching-te said Friday he was "confident" of deeper cooperation with the next Donald Trump administration. "Taiwan is confident that it will continue to deepen cooperation with the new government to resist authoritarian expansion, and create prosperity and development for both countries while making more contributions to regional stability and peace," Lai told reporters in Palau. Lai arrived in the tiny Pacific island nation on Thursday after visiting the American territory of Guam where he spoke with US Republican House Speaker Mike Johnson – the highest-level US contact the Taiwanese leader has had during his week-long trip. During Friday's press conference, Lai also urged democracies to be "more united" to counter growing authoritarianism.
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South Korea's ruling party chief says it is necessary to suspend the constitutional powers of President Yoon Suk Yeol. The comments by People Power Party leader Han Dong-hun on Friday suggest that his party would change its earlier opposition to the impeachment of President Yoon over his imposition of martial law this week. The main opposition Democratic Party and other small opposition parties submitted a joint motion to impeach President Yoon on Wednesday over his martial law declaration the previous night. Martial law lasted about six hours, as the National Assembly quickly voted to overrule the president, forcing his cabinet to lift it before daybreak on Wednesday.
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BROKER RATING CHANGES
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JPMorgan raises Halma to 'neutral' (underweight) - price target 2,600 (2,350) pence
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Berenberg cuts Energean to 'hold' (buy) - price target 1,045 (1,175) pence
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JPMorgan cuts Bank of Ireland price target to 8.20 (8.90) EUR - 'underweight'
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COMPANIES - FTSE 100
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FTSE 250-listed Direct Line Insurance has agreed to a takeover bid from Aviva in cash and shares. The proposal is worth 275 pence per Direct Line share, consisting of 129.7p cash and 0.2867 of an Aviva share. Direct Line shareholders will also get dividend payments worth up to 5p per share. The offer is a 73% premium to Direct Line's share price on November 27, and 16% above its closing price of 237.80p on Thursday which gave the insurer a market capitalisation of GBP3.12 billion. At this stage the takeover bid is a proposal, with December 25 set as the put-up-or-shut-up deadline for Aviva to make a firm offer.
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OTHER COMPANIES
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Wheaton Precious Metals has agreed to acquire a gold stream from Allied Gold Corp, "to advance the construction" of Allied's Kurmuk project in Ethiopia. "This fully permitted, high-quality development project offers significant exploration potential, supported by a team at Allied with a proven operating track record," comments Wheaton CEO Randy Smallwood. "We are excited to partner with Allied to unlock opportunities that empower the local communities and help drive the growth of Ethiopia's emerging metals and mining sector." Wheaton will pay USD175 million cash upfront in four equal instalments during construction and will buy 6.7% of the payable gold until 220,000 ounces has been delivered. Subsequently, it will buy 4.8% for the mine's lifetime. It expects the gold stream to produce on average 16,000 ounces of gold per year for the first decade, with the first production expected in mid-2026.
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By Emma Curzon, Alliance News reporter
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