Author: Fiona Craig

The U.S. dollar was little changed on Tuesday as investors awaited the Federal Reserve’s final policy decision of the year, while the Australian dollar firmed after a more hawkish tone from the Reserve Bank of Australia.

At 04:00 ET (09:00 GMT), the Dollar Index — a measure of the greenback against six major peers — edged slightly lower to 99.042.

Markets brace for a potential “hawkish” cut

The Fed begins its two-day policy meeting later today, and markets broadly expect a 25-basis-point rate cut when Wednesday’s decision is released.

Fed funds futures put the likelihood of a reduction at just under 90%, according to CME’s FedWatch.

Still, significant uncertainty remains over what the Fed may signal regarding next year’s policy path, particularly with the announcement of a new Fed Chair expected soon.

As ING analysts noted, “There are now high expectations of a ’hawkish cut’ at Wednesday evening’s FOMC decision. With market pricing of further Fed easing still vulnerable, we suspect the dollar’s downside is limited into the Fed meeting.”

The JOLTS job-openings report, due later Tuesday, is unlikely to play a major role in the Fed’s current deliberations given its October reference period.

Euro picks up after German export surprise

The euro edged higher, with EUR/USD rising 0.1% to 1.1645, after Germany posted a small but unexpected increase in exports. Shipments grew 0.1% month-on-month in October, defying forecasts of a 0.5% decline.

The gain was driven by EU trade, while exports to China and the U.S. fell sharply. The data adds to signs that the eurozone’s largest economy may be stabilizing.

However, ING warned that “failure to pass a social security budget in the French parliament today would be greeted negatively by markets and could re-insert some political risk back into the euro.”

GBP/USD rose 0.2% to 1.3348 ahead of Friday’s GDP release and next week’s Bank of England meeting.

Aussie dollar climbs after RBA signals inflation risks

In Asia, the Australian dollar strengthened, with AUD/USD up 0.3% to 0.6638. The Reserve Bank of Australia held its cash rate at 3.60%, as widely anticipated, but delivered a firmer message on inflation.

The RBA said inflation risks had “tilted to the upside” and warned that stronger-than-expected domestic demand could add pressure on capacity — prompting policymakers to remain cautious and assess how persistent price pressures may be.

The central bank’s previous easing cycle now appears on hold for the time being, with core inflation still sticky.

Elsewhere, USD/CNY dipped slightly to 7.0702, while USD/JPY climbed 0.3% to 156.29 after a powerful 7.5-magnitude earthquake struck northeast Japan, triggering evacuations and initial tsunami warnings that were later downgraded.

U.S. stock futures were slightly positive early Tuesday, with investors preparing for what could become one of the Federal Reserve’s most debated decisions in recent years. At the same time, markets were absorbing a major escalation in the takeover battle for Warner Bros Discovery (NASDAQ:WBD), new clarity on Nvidia’s (NASDAQ:NVDA) export permissions, and a modest pullback in Bitcoin (COIN:BTCUSD).

Futures move marginally higher

Equity futures hovered just above unchanged as traders positioned themselves ahead of Wednesday’s Fed announcement.

As of 02:55 ET, Dow futures were up 26 points (0.1%), S&P 500 futures added 8 points (0.1%), and Nasdaq 100 futures gained 26 points (0.1%).

Monday’s session ended in the red across the major U.S. indices, weighed down by rising Treasury yields. The benchmark 10-year yield climbed further after a strong earthquake struck near Japan, adding to volatility.

Tech earnings also loom large this week, with Oracle (NYSE:ORCL) and Broadcom (NASDAQ:AVGO) set to report as investors digest concerns around heavy, often debt-funded AI investment.

Among individual movers, Confluent (NASDAQ:CFLT) surged after IBM (NYSE:IBM) announced plans to acquire the company, while Tesla (NASDAQ:TSLA) slipped 3% following a downbeat forecast from Morgan Stanley.

Paramount drops hostile $108.4B bid for Warner Bros Discovery

The effort to acquire Warner Bros Discovery has intensified dramatically.

Just days after reports suggested Netflix (NASDAQ:NFLX) had secured a $72 billion equity deal for its TV, film, and streaming operations, Paramount Skydance revealed a hostile bid valued at $108.4 billion. The offer represents a 139% premium to WBD’s pre-negotiation valuation and seeks to acquire the entire company, including its cable networks.

Warner’s board said Monday it will evaluate Paramount’s proposal but reaffirmed its backing for the Netflix agreement, advising the company not to act on the rival offer at this stage.

Trump administration clears Nvidia to ship H200 chips to China

President Donald Trump said the U.S. will now allow Nvidia to export its H200 processors to China and collect a 25% fee on those sales.

The decision marks a softening of earlier export curbs that limited Nvidia to selling only the lower-tier H20 chip into China due to U.S. national-security concerns. The H200 is thought to be roughly six times more powerful than the H20, according to Reuters citing the Institute for Progress.

However, Beijing’s crackdown on domestic firms using U.S. technology could limit the commercial benefits of the policy shift.

Nvidia shares rose in after-hours trading, extending Monday’s 3% advance.

Fed begins two-day meeting with rate cut expected

Investor focus has now shifted firmly to the Fed’s latest two-day policy meeting, which is widely expected to conclude with a 25-basis-point rate cut.

The odds of such a move have strengthened following soft economic data showing job-market stress, a modest uptick in consumer spending, and persistent inflation. FedWatch currently places the probability near 89%.

Still, policymakers could choose to hold steady, especially as some officials have questioned whether delivering a third cut since September is appropriate given the lack of fresh economic data during the record-breaking government shutdown.

Analysts say this could become one of the most contentious Fed decisions in years.

Bitcoin softens ahead of Fed decision

Bitcoin edged lower as traders avoided making bold bets before Wednesday’s announcement.

Lower interest rates typically weaken the U.S. dollar and trim yields on cash and bonds, a dynamic that can make non-yielding assets such as Bitcoin more appealing. But 2025 has been marked by sharp price swings tied to debates over monetary policy, tariffs, and artificial intelligence.

These moves have reinforced the view that Bitcoin’s correlation with equity-market risk has strengthened significantly.

European equities moved mostly sideways on Tuesday as investors looked ahead to the start of the U.S. Federal Reserve’s two-day policy meeting later in the session.

By 08:02 GMT, Germany’s DAX was up 0.2%, France’s CAC 40 gained 0.1%, while the UK’s FTSE 100 slipped 0.1%.

Fed meeting in focus

Federal Reserve policymakers convene later today, with markets broadly expecting an interest rate cut on Wednesday. Since the move is largely priced in, attention is turning to Chair Jerome Powell’s guidance on the pace of potential easing in 2026.

Current market pricing implies 77 basis points of cuts through the end of next year, suggesting two reductions after December remain anticipated.

Analysts at Vital Knowledge said: “The Fed is widely expected to cut rates on Wednesday, but the forward guidance that day could pivot in a hawkish direction. In aggregate, monetary policy globally is shifting out of an easing phase with the Fed set to go on pause for (at least) the first few meetings of 2026.”

The decision will help set the tone for upcoming central bank announcements in Europe.
• The Swiss National Bank delivers its update Thursday.
• The Bank of England, European Central Bank, Norges Bank, and Riksbank follow next week.

Earlier Tuesday, the Reserve Bank of Australia held rates steady but issued a hawkish warning amid renewed domestic inflation pressures.

German exports edge up

Germany’s exports rose 0.1% in October from the previous month, according to federal statistics office data—defying expectations for a 0.5% decline.

Corporate highlights

Thyssenkrupp (TG:TKA) returned to profit in its fourth quarter after reporting a loss a year earlier.
However, the group still expects lower sales and a net loss in 2026, citing uncertainty around the global economy: “the future development of the global economy is still uncertain.”

Novartis (BIT:1NOVN) entered a partnership with Relation Therapeutics, a deal worth up to $1.7 billion, aimed at accelerating drug-target discovery for allergic diseases.

Renault (EU:RNO) formed a strategic alliance with Ford (NYSE:F) to develop affordable electric vehicles, with production expected to begin in 2028.

Oil Prices Ease

Crude prices extended their decline on Tuesday as traders monitored diplomatic efforts to end the war in Ukraine.

• Brent crude fell 0.1% to $62.44 per barrel
• WTI slipped 0.1% to $58.81 per barrel

Both benchmarks lost about 2% on Monday after Iraq restored output at the West Qurna-2 field, a key source of national exports.

Ukraine, meanwhile, signaled it will deliver a revised peace proposal to the U.S. following talks in London between President Volodymyr Zelenskiy and leaders of France, Germany, and the UK. Any progress toward a negotiated resolution could reduce some of the geopolitical risk premium currently baked into oil prices.

UK equities dipped slightly on Tuesday, even as the pound moved higher against the dollar, while most major European indices traded firmly in positive territory.

By 08:27 GMT, the FTSE 100 was down 0.08%. Sterling strengthened, with GBP/USD up 0.07% at 1.33. Germany’s DAX gained 0.4%, and France’s CAC 40 added 0.2%.

UK market highlights

Ashtead Group PLC (LSE:AHT) reported modest top-line growth for the half-year ending 31 October and reiterated its full-year guidance. Group revenue rose 1% to $5.76 billion, while rental revenue increased 2%. Adjusted EBITDA fell 2% to $2.66 billion and adjusted operating profit declined 5% to $1.47 billion, reflecting a 3% rise in depreciation compared with last year.

Moonpig Group PLC (LSE:MOON) jumped more than 6% after announcing adjusted EPS of 6.9 pence for the first half, up 13.1% year-on-year. Adjusted EBITDA climbed 7.7% to £45 million, driven by improved trading, operating leverage, and a £30 million share buyback programme.

Moonpig also disclosed changes in leadership: CEO Nickyl Raithatha will step down on 31 December, with Catherine Faiers assuming the role on 2 March 2026. The board said Raithatha leaves “the business in excellent shape and well positioned to continue to deliver against its strategic objectives.”

British American Tobacco PLC (LSE:BATS) reaffirmed its 2026 growth ambitions but warned that performance is likely to fall at the lower end of its 3%–5% revenue growth target. For 2025, BAT anticipates roughly 2% revenue and adjusted profit growth, alongside an acceleration to double-digit gains in its New Category segment in the second half.

Chemring Group PLC (LSE:CHG) declined 2.2% after disclosing higher-than-forecast costs connected to its Norwegian expansion. Even so, full-year results remained solid: revenue for the year to 31 October rose 1.9% to £497.5 million, while underlying operating profit increased 6% to £73.5 million.

In pharmaceuticals, Novartis AG (BIT:1NOVN) announced a partnership with UK-based Relation Therapeutics Ltd. worth up to $1.7 billion. The collaboration aims to accelerate the discovery of drug targets for allergic diseases by combining Novartis’s immuno-dermatology expertise with Relation’s AI-powered platform, which interprets patient-derived data to uncover genetic disease drivers. Relation CEO David Roblin said the partnership will enhance their ability to translate biological insights into breakthrough therapies.

The Magnum Ice Cream Company (LSE:MICC) made its debut as an independent, publicly traded company following its separation from Unilever. J.P. Morgan initiated coverage with a “neutral” rating and set a €14 price target for December 2027. The stock finished at €12.84 on December 8, 2025.

J.P. Morgan analysts said the newly listed group offers a solid medium- to long-term earnings growth story, but they cautioned that transition-related cost pressures could weigh on results through 2025 and 2026 as the business adjusts to operating on a standalone basis.

The brokerage projects 6% compound annual EPS growth from 2025 to 2029, supported by a global ice cream category that historically expands by 3% to 4% annually.

Analysts expect Magnum Ice Cream Co. to stay within its own guidance of 3%–5% like-for-like sales growth and annual EBITDA margin expansion of 40–60 basis points through 2026–2030. However, short-term profitability is likely to dip as the company absorbs costs from technology transition agreements and consolidates its India operations.

J.P. Morgan forecasts EBITDA margins of 16.4% in 2025 (down 50 bps from 2024) and 16.8% in 2026 (up 40 bps). On revenue, analysts expect 5% like-for-like growth in 2025, slowing to 2.9% in 2026 due to weaker pricing power, tougher comparisons, and softer consumer spending. They also warned that broader use of GLP-1 weight-loss drugs could dampen category demand.

Shares currently trade at 11.3× estimated 2027 earnings and 7.4× 2027 EV/EBITDA, roughly in line with European food and beverage peers. J.P. Morgan said the valuation reflects a company still proving itself as a standalone listed operator, with exposure to a single product category and meaningful seasonal fluctuations.

The analysts highlighted significant longer-term margin potential if the company can close the gap with competitor Froneri by achieving €500 million in targeted gross supply-chain efficiencies. Froneri’s EBITDA margin rose from 12.7% in 2017 to 21.5% in 2024, while Magnum posted 16.9% in 2024.

J.P. Morgan’s €14 December 2027 price target is based on a discounted cash flow model that assumes 1.5% terminal growth and a 10% WACC.

Henry Boot PLC (LSE:BOOT) announced Tuesday that its Hallam Land division has finalized the sale of 329 residential plots through two separate transactions.

In the first deal, 156 plots in Hambleton, North Yorkshire, were sold to Barratt Redrow. The second involved the sale of 173 plots in Haverhill, Suffolk, to Bloor Homes. According to the company, both disposals generated strong returns, with ungeared IRRs of 66% for Hambleton and 45% for Haverhill.

Henry Boot had been promoting the Hambleton land since 2022, and the site secured outline planning permission in January 2025 after a successful appeal. The project includes 10% affordable housing and delivers a 19.5% biodiversity net gain.

The Haverhill plots form part of a broader development of 2,500 homes that received planning consent in 2018. The masterplan also includes schools, local centres, and green space. Hallam Land still holds 627 additional plots at the site for future disposal.

With these transactions, Henry Boot’s plot sales for 2025 now total 3,591, underscoring continued demand from housebuilders for consented land.

Tim Roberts, CEO at Henry Boot, said: “Hallam Land’s strength lies in its ability to create value by securing planning consent for complex sites that might otherwise be difficult to unlock for new homes. These transactions take the total plot sales for the year to 3,591, and demonstrates that housebuilders remain keen to acquire well located, consented land. It gives us reason for optimism as we look ahead to 2026.”

Pensana Plc (LSE:PRE) announced Tuesday that it has secured a $100 million strategic investment to accelerate its Mine-to-Magnet supply chain plans in the United States.

The investor participating in the deal has agreed to subscribe for 95 million new ordinary shares, subject to confirmatory due diligence on the Longonjo project and shareholder approval. In addition, institutional backers will contribute another $3 million through the purchase of 2.85 million new ordinary shares at £0.80 each.

Proceeds will be used to keep development of the Longonjo mine on track ahead of the 2027 U.S. ban on Chinese-origin rare earth magnets used in defence systems. The funding is also intended to help Pensana position itself as an alternative supplier of NdPr for civilian markets as the U.S. prepares to impose a 25% tariff on Chinese rare earths beginning in 2026.

Paul Atherley, Chairman of Pensana, said: “We are delighted with the $100 million strategic investment from an investor which is highly supportive of our plans to establish a major U.S. Mine-to-Magnet supply chain.”

Pensana plans to deploy the capital to extend Longonjo’s mine life through expanded drilling, develop additional co-product streams including heavy rare earth oxides, and progress toward a planned Nasdaq listing in 2026.

Construction at Longonjo continues to advance, supported by the recent release of the remaining tranche of a $25 million facility from Angola’s sovereign wealth fund, FSDEA. Once in operation from 2027, Longonjo is expected to rank among the world’s largest sources of both light and heavy rare earth elements, with capacity to support production of more than 10,000 tonnes of permanent rare earth magnets.

ABG Sundal Collier served as Pensana’s financial adviser on the transaction. Following the admission of the new shares, the company’s issued share capital will total 310,141,435 ordinary shares.

British American Tobacco (LSE:BATS) saw its shares fall more than 4% on Tuesday after the company cautioned that its 2026 growth is likely to come in at the bottom of its previously guided 3%–5% revenue range. The update pointed to softer trends in parts of its heated-tobacco portfolio and uneven performance across regions.

For the current year, BAT expects revenue and adjusted profit to increase by roughly 2%—figures broadly in line with Jefferies’ forecasts of around 2% organic revenue growth and 1.5%–2.5% adjusted operating profit expansion.

Jefferies noted that the company’s update supports existing full-year guidance for mid–single-digit growth in New Category revenue, slightly below the 7.5% analyst consensus. BAT said the New Category segment—covering heated-tobacco devices, vapour products, and nicotine pouches—is poised to accelerate to double-digit growth in the second half.

Jefferies added that performance in U.S. e-vapor improved thanks to “improved regulatory enforcement on illicit products.”

Chief executive Tadeu Marroco said the group remains “focused on establishing glo Hilo as a premium offering in the largest Heated Products profit pools,” referencing launches in Japan in September and Poland in October, with broader expansion anticipated in 2026.

Despite this, BAT reported that glo’s volume share in key markets slipped by 1.2 percentage points, including a 60-basis-point decline in the Americas excluding the United States.

The company’s U.S. business was a bright spot, recording its strongest performance with a 20-basis-point increase in value share and stable volume share. BAT highlighted rapid momentum from its Velo Plus nicotine pouch, which delivered a 920-basis-point jump in Modern Oral volume share in the U.S., where New Category operations remain on track for full-year profitability. Globally, Velo reached 15.9% volume share of Total Oral products and 31.8% in Modern Oral, rising 460 and 590 basis points respectively.

BAT also reported that its Vuse vape brand retained global leadership in tracked channels, with value share in top markets up 10 basis points. Full-year Vuse revenue is now expected to decline at a high-single-digit rate—an improvement from the 13% drop posted in the first half—supported by a strengthening U.S. e-vape market.

Performance varied sharply by region. The Americas excluding the U.S. delivered robust results, led by Brazil, Turkey and Mexico. Meanwhile, Asia-Pacific, the Middle East and Africa continued to face regulatory and fiscal pressures, particularly in Bangladesh and Pakistan. Jefferies described combustible-product sales as resilient in Europe and the Americas, though challenges persist in APMEA.

BAT expects a 3% foreign-exchange translation drag on adjusted operating profit, matching Jefferies’ projected 3% EBIT impact. Net finance costs are forecast at about £1.8 billion, and global cigarette volumes are expected to fall around 2% in 2025.

The company also announced plans for £1.3 billion in share buybacks for fiscal 2026, up from £1.1 billion previously.

BHP Group (LSE:BHP) has reached an agreement to divest a 49% interest in the inland power network that supports its Western Australia iron ore operations, with BlackRock’s Global Infrastructure Partners set to acquire the stake for $2 billion.

As part of the deal, a new trust structure will be created to house the power assets, while BHP will keep a 51% controlling interest. The miner will pay the trust a tariff tied to its share of Western Australia Iron Ore’s (WAIO) power usage over a 25-year term.

Chief Executive Mike Henry said the transaction “enables BHP to access capital and maintain operational and strategic control of a critical part of WAIO’s infrastructure.”

The move comes as the world’s largest mining company by market value looks to unlock capital to support increased investment in copper growth projects and its expansion into potash.

BHP’s WAIO division—of which the company owns 85%—is among the top global producers of iron ore, a vital raw material for steelmaking.

The agreement remains subject to regulatory approval and is expected to close toward the end of BHP’s 2026 fiscal year, which ends on June 30, 2026.

European regulators have opened a new antitrust case targeting Google, owned by Alphabet (NASDAQ:GOOG), amid concerns that the company’s artificial intelligence practices may be undermining fair competition.

In a statement issued Tuesday, the European Commission said it is investigating whether Google has been imposing “unfair conditions” on publishers and digital creators, potentially restricting their commercial freedom.

The probe will also examine accusations that Google may be granting its own services preferential access to online content—an action that could give its AI models and tools a competitive edge over rival offerings.