Weak UK GDP reinforces BoE rate cut next week

EU mid-market update: Weak UK GDP reinforces BOE rate cut next week; GPT-5.2 drops with three variants: Instant, Thinking and Pro.

Notes/observations

- European bourses are higher, supported by positive US session and strength in Asia. Seeing sector rotation into small caps, materials and financials (Russel2K closed +1.2% while NQ100 -0.3%). AI enthusiasm continues to fade, despite Broadcom’s earnings beat providing some support.

- UK Oct GDP contracted at -0.1%, analysts noting the Jaguar/Land Rover production halt due to a cyberattack played a large part. It does raise risk of Q4 GDP contraction and strengthens case for BOE rate cut next week (expected 25bps). However, gilts little changed.

- EU banking stocks lifted on rising yields across Euro zone, while market remains reassured on Fed rate cuts.

- OpenAI released latest model of GPT5.2 yesterday, performance analysis still under review.

- Euro is around 2-month highs ~$1.174 on Fed-ECB policy divergence. Oil edges up but headed for weekly losses on oversupply concerns and Ukraine diplomacy hopes, despite IEA/OPEC outlooks this week providing differing outlooks.

- Asia closed higher with Nikkei225 outperforming +1.4%. EU indices +0.3-0.8%. US futures +0.2% to -0.5%. Gold +0.8%, DXY +0.1%; Commodity: Brent -0.2%, WTI -0.2%; Crypto: BTC +2.5%, ETH +1.7%.

Asia

- South Korea Nov Export Price Index M/M: 2.6% v 4.1% prior; Y/Y: 7.0% v 4.8% prior.

- South Korea Nov Import Price Index M/M: 2.6% v 1.9% prior; Y/Y: 2.2% v 0.5% prior.

- New Zealand Nov Manufacturing PMI: 51.4 v 51.2 prior.

- New Zealand Nov Total Card Spending M/M: 1.9% v 0.2% prior; Retail Card Spending M/M: 1.2% v 0.2% prior.

- Japan Oct Final Industrial Production M/M: 1.5% v 1.4% prelim; Y/Y: -1.4% v 1.5% prelim.

Global conflict/tensions

- Ukraine said to have offered to withdraw troops from Eastern Donbas regions under the peace deal as long as Russia does the same.

- Pres Trump: Thought we were close to a deal on Ukraine; There's a meeting on Sat, we'll attend if there's a good chance a peace deal could be made.

Americas

- Pres Trump via Exec Order confirmed a US AI national standards framework designed to supersede the patchwork quilt of AI standards mushrooming up around the US.

- Fed Board of Governors unanimously reapproved all 11 continuing regional presidents (except retiring Atlanta’s Bostic) for new five-year terms starting March 2026.

- Canada Conservative MP Michael Ma said to move to Liberal party; Carney is now 1 seat short of a majority.

Trade

- China reportedly imposes export license on some steel products, effective Jan 1st 2026.

Speakers/fixed income/fx/commodities/erratum

Equities

Indices [Stoxx600 +0.5% at 584, FTSE +0.3% at 9734, DAX +0.7% at 24435, CAC-40 +0.8% at 8151, IBEX-35 +0.9% at 17033, FTSE MIB +0.6% at 4301, SMI +0.5% at 12981, S&P 500 Futures -0.2%].

Market focal points/key themes: European indices open higher across the board and remained upbeat through the early part of the session; returning interest in tech following Broadcom’s earnings seen supporting risk appetite; among sectors leading the way higher are financial services and industrials; lagging sectors include health care and energy; 1Spatial receives takeover offer from VertiGIS; abdrn acquires Closed Earth Funds from MFS; no major earnings expected in the upcoming US session.

Equities

- Consumer staples: Card Factory [CARD.UK] -22.0% (trading update).

- Industrials: Capita [CPI.UK] +2.5% (trading update; transition agreement), Maersk [MARSKB.DK] -0.5% (new CFO).

- Technology: ASML [ASML.NL] +0.5% (Broadcom results and conf call comments).

Speakers

- Turkey Central Bank (CBRT) Gov Karahan reiterated pledge to maintain tight monetary policy.

- Russia Govt aide Ushakov stated that it had not received adjusted US peace plan on Ukraine. Russia might not like the adjusted peace plan.

- BOJ would likely maintain a pledge next week to keep raising interest rates, but stress the pace of further hikes to depend on how the economy reacted to each increase.

- (CN) China Vice Premier vowed to crack down on illegal financial activities and prevent risks from property firms.

Currencies/Fixed income

- USD put in a mixed price action during a quiet EU session. Overall the greenback consolidating some of its recent weakness in the post-Fed rate decision environment.

- GBP/USD could not break above the 1.34 level as UK Monthly GDP data contracted. Currently dealers see 60bps of cuts by the BOE through –end 2026. The central bank meets next week.

- EUR/USD hovering at 1.1730 area and in the middle of its long contained 1.15-1.20 trading corridor. Euro has been aided by more hawkish speak from ECB members this week.

- USD/JPY drifted higher ahead of next week’s BOJ decision. Markets currently pricing approx. 90% change of a rate hike. Yen currency being hampered by concerns over Japan debt levels.

- India RBI seen selling dollars to support Rupee (peak intraday low of 90.71 a fresh record low vs USD).

Economic data

- (NL) Netherlands Oct Trade Balance: €12.5B v €12.4B prior; Exports Y/Y: 5.6% v 2.9% prior; Imports Y/Y: 0.6% v 1.0% prior.

- (FI) Finland Oct Current Account: -€0.2B v +€0.1B prior.

- (UK) Oct Monthly GDP M/M: -0.1% v +0.1%e; 3M/3M: -0.1% v 0.0%e.

- (UK) Oct Industrial Production M/M: 1.1% v +1.0%e; Y/Y:-0.8 % v -1.2%e.

- (UK) Oct Manufacturing Production M/M: 0.5% v 1.1%e; Y/Y: -0.8% v -0.2%e.

- (UK) Oct Construction Output M/M: -0.6% v -0.1%e; Y/Y: 0.9% v 1.5%e.

- (UK) Oct Index of Services M/M: -0.3% v 0.0%e; 3M/3M: 0.0% v 0.1%e.

- (UK) Oct Visible Trade Balance: -£22.5B v -£19.1Be; Overall Trade Balance: -£2.2B v -£1.2Be.

- (DE) Germany Nov Final CPI M/M: -0.2% v -0.2% prelim; Y/Y: 2.3% v 2.3% prelim.

- (DE) Germany Nov Final CPI EU Harmonized M/M: -0.5% v -0.5% prelim; Y/Y: 2.6% v 2.6% prelim.

- (SE) Sweden Nov Unemployment Rate: 8.2% v 8.9% prior; Unemployment Rate (seasonally adj): 9.1% v 8.8%e; Trend Unemployment Rate: 9.0% v 9.0% prior.

- (RO) Romania Nov CPI M/M: 0.4% v 0.4%e; Y/Y: 9.8% v 9.6%e.

- (TR) Turkey Oct Current Account Balance: $0.5B v $0.2Be.

- (TR) Turkey Central Bank (TCMB) Dec Inflation Expectation Survey: Expected Inflation Next 12 Months: 23.4% v 23.5% prior.

- 02:30 (CN) Weekly Shanghai Copper Inventories (SHFE): K v 101.6K tons prior.

- (TH) Thailand May Foreign Reserves w/e Dec 5th: $275.8B v $274.7B prior.

- (FR) France Nov Final CPI M/M: -0.2% v -0.1% prelim; Y/Y: 0.9% v 0.9% prelim.

- (FR) France Nov Final CPI EU Harmonized M/M: -0.2% v -0.2% prelim; Y/Y: 0.8% v 0.8% prelim; CPI (Ex-Tobacco) Index: 119.67 v 119.71e.

- (FR) France Q3 Final Wages Q/Q: 0.3% v 0.3% prelim.

- (ES) Spain Nov Final CPI M/M: 0.2% v 0.2% prelim; Y/Y: 3.0% v 3.0% prelim.

- (ES) Spain Nov Final CPI EU Harmonized M/M: 0.0% v 0.0% prelim; Y/Y: 3.1% v 3.1% prelim.

- (ES) Spain Nov CPI Core M/M: 0.1% v 0.5% prior; Y/Y: (final) 2.6% v 2.6% prelim.

- (ZA) South Africa Q4 BER Inflation Expectations: 3.7% v 3.8% prior.

- (RU) Russia Narrow Money Supply w/e Dec 5th (RUB): 19.16T v 19.07T prior.

- (CN) China Nov YTD New Yuan Loans (CNY): 15.36T v 15.418Te.

- (CN) China Nov YTD Aggregate Financing (CNY): 33.390T v 33.010Te.

- (CN) China Nov M2 Money Supply Y/Y: 8.0% v 8.2%e v 8.2% prior.

- (UK) BoE/Ipsos Quarterly Inflation Attitude Survey (Next 12 Mths): 3.5% v 3.6% prior.

Fixed income issuance

- (IN) India sold total INR280B vs.INR280B indicated in 2040 and 2065 bonds.

- (ZA) South Africa sold total ZAR1.0B vs. ZAR1.0B indicated in 2031, 2038 and 2050 I/L bonds.

Looking ahead

- (DE) Germany Oct Current Account Balance: No est v €18.6B prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (IN) India Nov CPI Y/Y: 0.7%e v 0.3% prior.

- 06:00 (PT) Portugal Nov Final CPI M/M: No est v -0.3% prelim; Y/Y: No est v 2.2% prelim.

- 06:00 (PT) Portugal Nov Final CPI EU Harmonized M/M: No est v -0.9% prelim; Y/Y: No est v 2.1% prelim.

- 06:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£1.0B, 2.0£B and £3.0B respectively).

- 06:30 (IN) India Forex Reserve w/e Dec 5th: No est v $686.0B prior.

- 07:00 (BR) Brazil Oct IBGE Services Volume M/M: 0.3%e v 0.6% prior; Y/Y: 2.8%e v 4.1% prior.

- 07:00 (MX) Mexico Oct Industrial Production M/M: +0.1%e v -0.4% prior; Y/Y: -2.0%e v -2.4% prior; Manufacturing Production Y/Y: -0.9%e v -0.8% prior.

- 08:00 (RU) Russia Oct Trade Balance: No est v $13.6B prior; Exports: No est v $38.6B prior; Imports: No est v $25.0B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (US) Fed’s Paulson.

- 08:00 (IN) India announces upcoming bill issuance (held on Wed).

- 08:30 (CA) Canada Oct Wholesale Sales (ex-petroleum) M/M: -0.1%e v +0.6% prior.

- 08:30 (CA) Canada Q3 Capacity Utilization Rate: 79.5%e v 79.3% prior.

- 08:30 (US) Fed’s Hammack.

- (DE) Germany Oct Current Account Balance: No est v €18.6B prior.

- 11:00 (RU) Russia Q3 Preliminary GDP (2nd of 3 readings) Y/Y: 0.6%e v 0.6% advance.

- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Finland; Fitch on EFSF and ESM facilities.

- 13:00 (US) Weekly Baker Hughes Rig Count data.