Author: Fiona Craig

The U.S. dollar slipped slightly on Monday as the new trading week kicked off, with investors bracing for a pivotal Federal Reserve meeting that is widely expected to bring easier monetary policy.

By 04:15 ET (09:15 GMT), the Dollar Index — which measures the greenback against six major currencies — edged down 0.1% to 98.940, keeping it close to its lowest level in more than a month.

Fed anticipation keeps the dollar on the back foot

Most traders see a rate cut as the likely outcome when the Fed wraps up its two-day gathering on Wednesday. The case for easing strengthened after Friday’s delayed core PCE inflation reading came in softer than anticipated. Futures markets tracked by CME’s FedWatch tool now imply an 88% probability of a cut.

With little U.S. data scheduled for Monday, attention is shifting to Tuesday’s JOLTS job openings report — which may carry extra weight given that the monthly nonfarm payrolls release will arrive only after the Fed has already delivered its decision.

Analysts at ING wrote: “The Fed could be a positive event risk for the dollar in that it seems hard for the Fed to validate the 90bp of easing priced into Fed Funds futures by early 2027.”

They continued: “However, the potential formal nomination of Kevin Hassett as Fed Chair over the coming months and the seasonal factors keeping the dollar weak into year-end should limit the dollar’s upside.”

Euro climbs as ECB signals shift and German output beats forecasts

EUR/USD rose 0.1% to 1.1654 after Germany posted a surprisingly strong industrial production increase of 1.8% in October, far above the forecast 0.4%.

The euro also drew support from comments by ECB policymaker Isabel Schnabel, who told Bloomberg News that the central bank’s next step could be a rate hike — challenging expectations from those still looking for another cut.

As ING noted: “These remarks probably need to be seen in the context of her hawkish background and perhaps as a foil to those at the ECB still favoring one last rate cut.”

The firm added that Schnabel has hinted the ECB could upgrade its growth projections in its next forecast round.

The British pound backed off slightly, with GBP/USD slipping 0.1% to 1.3325 as traders adjusted positions ahead of next week’s Bank of England rate meeting.

Yen softens after Japan’s GDP revised lower

USD/JPY edged up 0.1% to 155.44 after new figures confirmed that Japan’s economy shrank more sharply in the third quarter than first estimated, pressured by weak investment and sluggish exports.

Even so, the revision did little to change expectations that the Bank of Japan is still likely to raise rates next week, with market focus turning to upcoming labor and inflation indicators.

China’s trade surplus expands; Australian dollar pulls back

USD/CNY ticked higher to 7.0714 despite data showing that China’s trade surplus widened in November, supported by a 5.9% surge in exports year over year, while imports grew only modestly.

AUD/USD slipped 0.1% to 0.6636, easing after last week’s strong performance driven by signs of improving domestic economic momentum.

U.S. stock futures ticked higher on Monday as traders prepared for the Federal Reserve’s final policy decision of the year. Markets were also weighing the ramifications of Netflix’s proposed takeover of Warner Bros Discovery’s entertainment assets. In Asia, Japan reported a deeper-than-expected economic contraction, while China posted a strong rebound in exports despite a sharp drop in shipments to the United States.

U.S. futures climb as markets await the Fed

U.S. equity futures saw modest gains early Monday, extending last week’s upward momentum.

As of 02:40 ET:

• S&P 500 futures were up 0.2%
• Nasdaq 100 futures advanced 0.3%
• Dow futures added 0.1%

All three major U.S. indices finished last week in positive territory for a second consecutive week, with the S&P 500 and Nasdaq achieving four-session winning streaks. Optimism is being supported by expectations that the Fed will cut interest rates on Wednesday following Friday’s softer-than-expected core PCE reading. According to CME’s FedWatch tool, traders currently assign an 88% probability to a rate cut.

Netflix’s $72B bid for Warner Bros Discovery sets the stage for regulatory fights

Netflix (NASDAQ:NFLX) confirmed plans to acquire the TV, film, and streaming arms of Warner Bros Discovery (NASDAQ:WBD) in a blockbuster $72 billion deal. But the streaming giant is likely to face a lengthy gauntlet of regulatory reviews.

Anthony Saglimbene of Ameriprise Financial noted: “The largest factor of a deal of this size and complexity is the potential regulatory hurdles that these two companies are going to have to go through.”

He continued: “Both companies probably expect that they may need to sell assets to close the deal. And I think there’s more than enough room for them to do that.”

Hollywood unions and cinema groups have already voiced concerns that the merger could lead to layoffs, consolidate too much industry power, and reduce theatrical releases.

Adding to the drama, U.S. President Donald Trump said on Sunday: “I’ll be involved in that decision,”
and warned that the market influence of a merged company could be problematic: “That’s going to be for some economists to tell…. But it is a big market share. There’s no question it could be a problem.”

Japan’s GDP drops more sharply than anticipated

Updated figures released Monday show Japan’s economy contracted at an annualized 2.3% in the third quarter — worse than the initial estimate of -1.8%. Quarter-over-quarter GDP also declined by 0.6%, reflecting deeper economic strain.

The weakness sheds light on Prime Minister Sanae Takaichi’s recently announced stimulus plan, the largest new spending effort since the pandemic, which the government expects will boost GDP by about 1.4 percentage points annually over the next three years.

Despite this contraction, the Bank of Japan is still widely expected to raise interest rates at its Dec. 18–19 meeting, given that inflation has remained at or above 2% for more than three and a half years.

China’s trade surplus widens as exports rebound

Chinese exports staged an unexpected recovery in November, rising 5.9% year-on-year, while imports climbed 1.9%. This pushed China’s monthly trade surplus to $111.68 billion, well above economists’ projections.

The surge was driven largely by stronger exports to Europe, Australia, and Asian markets, offsetting a 29% plunge in shipments to the United States as companies adapt to the impact of President Trump’s tariffs.

Oil prices hover near recent highs

Crude prices moved slightly higher Monday, continuing to trade near two-week highs on expectations that a Fed rate cut could boost economic activity and energy demand.

• Brent crude: $63.85 (+0.2%)
• WTI: $60.20 (+0.2%)

Both benchmarks closed Friday at their highest levels since Nov. 18.

Meanwhile, Reuters reported that the G7 and European Union are considering replacing the Russian oil price cap with a full ban on maritime services for Russian crude — a move that could further tighten global supply.

European equities started the week on a subdued note Monday, with traders reluctant to make bold moves ahead of the Federal Reserve’s closely watched policy announcement later this week.

By 08:25 GMT, Germany’s DAX was down 0.1%, France’s CAC 40 slipped 0.3%, while the U.K.’s FTSE 100 posted a modest 0.1% gain.

Fed decision takes center stage

The Fed is widely expected to cut interest rates on Wednesday, especially after last week’s delayed release of September’s core PCE index showed weaker-than-expected inflation. Futures markets tracked by CME’s FedWatch tool indicate an 88% probability of a rate cut.

Still, the outlook for future policy remains uncertain. Fed officials appear divided over how persistent inflation risks are and how resilient the U.S. economy remains, leaving the central bank’s forward guidance in focus.

A busy week for central banks globally

The Fed is just one of several monetary authorities meeting in the coming days. Markets will also hear from the Swiss National Bank, the Reserve Bank of Australia, and the Bank of Canada this week.

Next week, attention shifts to the Bank of England, the European Central Bank, and the Bank of Japan as they deliver their latest policy assessments.

German industrial output surprises to the upside

Fresh data released Monday showed German industrial production jumping 1.8% in October from the previous month—far above expectations for a 0.4% rise. The stronger reading offers a glimmer of optimism for the eurozone’s largest economy as the year winds down.

Still, Germany’s recovery is expected to remain muted. The German Economic Institute (IW) recently projected GDP growth of just 0.1% for 2025 after two years of contraction, before an acceleration to 0.9% in 2026.

Unilever completes ice cream business spin-off

In corporate news, shares of Unilever (LSE:ULVR) slipped after the company confirmed the separation of its ice cream division. The newly independent Magnum Ice Cream Company—now the largest standalone ice cream business globally and owner of brands such as Wall’s, Ben & Jerry’s, and Cornetto—has secured a primary listing on Amsterdam’s Euronext exchange, with secondary listings in London and New York to follow.

Oil holds near two-week highs

Crude prices edged up Monday, staying close to their highest levels in two weeks as expectations for a Fed rate cut bolstered hopes of stronger economic activity and energy demand. Brent futures rose 0.3% to $63.92 per barrel, while U.S. West Texas Intermediate futures gained 0.3% to $60.28 per barrel. Both benchmarks ended Friday at their strongest close since November 18.

Beyond monetary policy, geopolitical developments continue to influence oil markets. With progress toward peace in Ukraine still limited, Reuters reports that the G7 and European Union are considering replacing the price cap on Russian oil with a full maritime services ban — a move that could further restrict supplies from the world’s second-largest oil exporter.

BNP Paribas Group (EU:BNP) has reached an agreement to sell its 25% shareholding in AG Insurance to Ageas for €1.9 billion, while simultaneously reinforcing a long-term partnership focused on bancassurance activities in Belgium.

The framework agreement, signed on Sunday, renews the exclusive cooperation between AG Insurance and BNP Paribas Fortis and sets the stage for accelerated growth — particularly in digital offerings. The renewed partnership spans savings products, protection solutions, and property & casualty insurance.

As part of the broader deal, BNP Paribas Cardif — which currently owns 14.9% of Ageas — will provide a €1.1 billion capital contribution to Ageas. Using the agreed valuation of €60 per share, BNP Paribas Cardif’s stake would rise to 22.5% once the transaction closes.

Completion is expected in the second quarter of 2026, subject to regulatory validation. BNP Paribas forecasts a post-tax capital gain of €820 million in 2026 and anticipates a 5-basis-point uplift to its CET1 ratio after distribution. The group also expects an annual recurring boost of €40 million to its net income.

In addition, AG Insurance and BNP Paribas Asset Management will establish a long-term investment partnership across select asset classes, leveraging the asset manager’s expanded platform for insurers and pension funds following its recent integration with AXA IM.

Jean-Laurent Bonnafé, CEO of BNP Paribas, stated: “We see significant potential in the growth prospects of BNP Paribas Fortis’ bancassurance business through the partnership with AG Insurance, as well as the deployment of our new asset management platform’s expertise created through the combination of BNP Paribas AM and AXA IM.”

Hans De Cuyper, CEO of Ageas, said that acquiring full ownership of AG will strengthen the group’s Belgian operations while reinforcing the renewed bancassurance relationship with BNP Paribas Fortis. He noted that this deal represents the second time Ageas has increased its financial ambitions under its Elevate27 strategy.

L’Oréal SA (EU:OR) announced Monday that it will acquire a further 10% interest in Galderma Group AG (BIT:1GALD), doubling its ownership to 20% as the company deepens its presence in the medical aesthetics sector. The added shares are being purchased from a consortium led by EQT, which includes Sunshine SwissCo GmbH, the Abu Dhabi Investment Authority, and Auba Investment Pte. Ltd.

Financial details of the deal were not disclosed.

With the expanded holding, Galderma’s board is expected to consider nominating two non-independent directors from L’Oréal to replace EQT consortium representatives at the 2026 Annual General Meeting.

“Aesthetics is a key adjacency to our core beauty business that we are keen to continue to explore. Our initial strategic investment made in 2024 in Galderma has proven very successful and therefore we are eager to solidify and extend the partnership further,” said Nicolas Hieronimus, Chief Executive Officer of L’Oréal.

The transaction will be executed via an off-market block trade with the EQT-led group. L’Oréal intends to finance the acquisition through available cash and credit facilities, with completion targeted for the first quarter of 2026 pending regulatory approval.

L’Oréal noted that it remains committed to supporting Galderma’s long-term strategy and operational independence under CEO Flemming Ørnskov, adding that it does not plan to increase its stake beyond 20%. Both companies will also explore expanding their scientific collaboration to build on shared expertise.

After closing, L’Oréal will account for its Galderma stake using the equity method, and the existing shareholder agreement between L’Oréal and SSCO will be dissolved.

TotalEnergies SE (EU:TTE) has reached an agreement to combine its U.K. upstream operations with those of Repsol (TG: REP) and Hitec, forming what will become the largest independent oil and gas producer in the United Kingdom. Under the terms of the deal, TotalEnergies will take a 47.5% stake in the newly formed entity, NEO NEXT+, making it the largest shareholder. HitecVision will hold 28.875%, while Repsol will own 23.625%.

The transaction, subject to regulatory approval, is slated to close in the first half of 2026. Analysts at RBC noted that the move “reflects a continuation of the trend we’ve seen in recent years from the majors in the UK North Sea,” following Repsol’s earlier deal in March and the 2024 agreement between Shell and Equinor to merge their U.K. offshore portfolios. However, RBC also cautioned that HMRC may see diminished tax receipts, as the merged entity is expected to pay less in taxes than the companies would have individually.

The combined company is expected to produce around 250,000 barrels of oil equivalent per day in 2026, with a portfolio spanning fields such as Penguin, Mariner, Shearwater, and stakes in the Elgin/Franklin complex and Alwyn North. As part of the agreement, TotalEnergies will retain up to $2.3 billion in decommissioning liabilities tied to legacy assets, and it expects the transaction to be immediately accretive to the joint venture’s cash flow.

This deal follows March’s announcement of NEO Energy’s merger with Repsol, which similarly involved Repsol keeping $1.8 billion of funding commitments — representing 40% of decommissioning liabilities — for its legacy portfolio. Before this latest agreement, Hitec and Repsol had forecast that their joint venture would produce roughly 130,000 barrels of oil equivalent per day in 2025.

Magnum Ice Cream (LSE:MICC) began trading publicly for the first time on Monday, listing on both the Amsterdam and London exchanges. Shares opened at €12.20 in Amsterdam, coming in under the €12.80 technical reference price issued last Friday. Even so, the stock trended higher as early trading progressed.

Parent company Unilever (LSE:ULVR) also saw a modest boost following the debut, with its London-listed shares rising 0.9%.

Smith & Nephew PLC (LSE:SN.) has unveiled a new set of mid-term performance goals, outlining revenue compound annual growth of 6–7% through 2028 — well above the current analyst consensus of 5.2%. The targets were presented during the company’s Capital Markets Day in London, where management detailed its “RISE” strategy aimed at accelerating both top-line and profitability metrics over the next several years.

Under this plan, Smith+Nephew is aiming for a 9–10% trading profit CAGR, more than $1 billion in free cash flow, and a return on invested capital (ROIC) of 12–13% by 2028. For 2025, the company reaffirmed its expectation of roughly 5% revenue growth and raised its trading margin forecast to at least 19.5%. It also lifted its free cash flow target to around $800 million, citing improvements in working capital management and operational efficiency.

Management projects post-tax ROIC above 9% for 2025, excluding any effects from portfolio rationalisation. As part of its optimisation initiatives, the company believes it can reduce gross inventory by $500 million and will recognise a $200 million non-cash charge in its 2025 accounts.

Looking toward 2026, Smith+Nephew anticipates around 6% underlying revenue growth, with profits expected to grow at a faster pace due to margin expansion from operating leverage. The company also projects approximately $800 million in free cash flow for the year and ROIC above 10%.

UK equities opened the week on a firmer footing Monday, even as the pound slipped and European markets delivered a mixed start. By 08:38 GMT, the FTSE 100 was up 0.1%, while GBP/USD dipped 0.05% but stayed above 1.33. Elsewhere in Europe, Germany’s DAX gained 0.08%, whereas France’s CAC 40 eased 0.2%.

UK market highlights

Magnum Ice Cream (LSE:MICC) began trading for the first time in Amsterdam and London, opening at €12.20 on the Dutch exchange. The debut price landed below Friday’s €12.80 technical reference point, though shares later pushed higher in early dealings.

Smith & Nephew PLC (LSE:SN.) unveiled new mid-term ambitions that outpace analyst expectations, targeting a 6–7% compound annual revenue growth rate through 2028 compared with the current 5.2% consensus. At its Capital Markets Day in London, the medtech group introduced its “RISE” strategy, aiming for a 9–10% trading profit CAGR, over $1 billion in free cash flow, and a 12–13% return on invested capital by 2028. For 2025, the firm maintained its revenue growth outlook of roughly 5% but raised guidance for trading margins to at least 19.5%. Free cash flow expectations were also lifted to about $800 million, up from $750 million, supported by better working capital and operational improvements.

In corporate governance developments, Anglo American PLC (LSE:AAL) said it has withdrawn a resolution scheduled for its upcoming General Meeting that sought to amend executive incentive plans, following shareholder pushback. Resolution 2, which would have altered the Long-Term Incentive Plan Awards for 2024 and 2025, will not be put to a vote on Tuesday.

In executive news, Oxford Nanopore Technologies Ltd (LSE:ONT) appointed Francis Van Parys as its next Chief Executive Officer, effective 2 March 2026. Van Parys — currently President and CEO of Radiometer, part of Danaher Corporation — will take over from founding chief Gordon Sanghera. His career spans more than two decades across life science leadership roles at Radiometer, Cytiva, and GE Healthcare in Europe, Asia, and North America.

Wishbone Gold Plc (LSE:WSBN) has provided an update on its Red Setter Gold Dome Project, announcing that it has applied for approval to construct a new 30-kilometre access road designed to lower logistical costs and boost operational efficiency. The improved access route will connect directly to infrastructure near the Nifty Copper Mine, enhancing mobility for equipment and personnel and supporting more effective exploration activities. During the 2025 drilling campaign, Wishbone completed seven Reverse Circulation holes and six Diamond Drill holes, with assay results still pending. The company expects the new road to accelerate upcoming fieldwork and enable a broader drilling programme in 2026, with the anticipated assay results guiding the next phase of exploration.

More about Wishbone Gold

Wishbone Gold Plc is a mining exploration company focused primarily on gold assets. Its flagship project, the Red Setter Gold Dome in Western Australia, sits close to major regional operations including Greatland Gold’s Telfer mine and Cyprium Metals’ Nifty Copper Mine, providing strategic advantages for ongoing exploration and development activities.