MARKET WRAPS

Stocks:

European stocks were a few points higher on Wednesday despite the release of some downbeat economic data and a weak trading update from Shell.

Data showed manufacturing orders in Germany slumped again in November and that concerns around job cuts were hitting French household confidence .

Meantime, Shell warned of significantly lower earnings in its integrated gas division and said it faced a $1.3 billion hit to cashflow.

Stocks to Watch

Danone's 2025 performance is expected to bring disappointing sales and a margin miss, Jefferies said, cutting its earnings per share expectations for 2025 by 3%, and revenue by 2%.

The brokerage also cut the stock's rating to underperform from hold after a previous downgrade in September.

Nestle's FY 2024 earnings could bring a number of disappointments on both profit and dividends fronts , Jefferies said after downgrading the stock to underperform from hold.

The company is expected to provide details of its three-year cost-saving plan and guidance on its FY 2025 operating margin.

Remy Cointreau's third quarter is expected to be the weakest of its fiscal year to March 2025, hit by destocking and market uncertainty , AlphaValue said.

The distiller has expressed an optimistic long-term outlook, stating that performance in the Americas and the Asia-Pacific regions should reach their lowest point in 3Q, according to AlphaValue.

Market Insight

The consolidation of China's auto industry is set to accelerate rapidly this year, HSBC Global Research said.

The sales decline for internal combustion engine cars is hitting German and Japanese automakers and their domestic joint venture partners hard in China.

HSBC forecasts 2025 EV sales to rise 20% in China, while sales of ICE cars are projected to slide 24%.

U.S. Markets:

Stock futures rose sharply following Tuesday's selloff over fears that inflation could remain stubbornly high in 2025.

Attention now turns to the 1900 GMT publication of minutes from the Federal Reserve's last meeting of 2024, which is expected to shed light on the central bank's rate-cut path this year.

Forex:

The dollar rose after strong U.S. economic data Tuesday firmed expectations that the Fed will take a cautious approach to cutting interest rates.

U.S. job openings increased to a six-month high in November while the ISM services index rose more than forecast in December and showed a sharp rise in input prices.

The data reduced the market probability of a March rate cut by the Fed, ING said.

The minutes of the Fed's December meeting when it signalled a slower pace of rate cuts could "throw a bit more support behind the dollar."

The Swedish krona fell to a 12-day low against the euro after data showed Swedish inflation slowed more than expected.

Annual Swedish CPI fell to 0.8% in December, while CPI was flat on the month.

The data support the case for further Riksbank interest-rate cuts with two back-to-back reductions on January 29 and in March, ING said.

The yuan was under fresh pressure, touching 16-month lows versus the dollar as strong U.S. data lends support to USD and uncertainty about trade tariffs persists.

Bitcoin fell after failing to hold recent gains above the key $100,000 level.

Bonds:

Higher Treasury yields are driven by rising term premia rather than market expectations of Fed policy rates, Danske Bank Research said, and with Donald Trump's inauguration less than two weeks away, markets are focused on policies, tariffs and deficits.

"Long-end U.S. rates are rising due to a significant repricing of term premia. We attribute these movements to market supply concerns, likely linked to the fiscal outlook."

Danske expects the Fed to continue quarterly cuts in interest rates from March, forecasting modestly lower long-end yields in 2025.

Energy:

Oil rose, supported by a stronger physical market and concerns over Russian and Iranian flows.

A survey by The Wall Street Journal showed U.S. crude stockpiles are expected to have fallen by 1 million barrels last week, a positive sign on demand trends in the world's top oil consumer.

Meanwhile, OPEC production fell in December, according to Bloomberg and Reuters surveys.

Still, further price gains seem to be capped by prospects of an oversupplied market this year and uncertainties around global consumption.

"We are holding to our forecast for Brent crude to average $76/bbl in 2025, down from an average of $80/bbl in 2024," BMI said.

South Sudan

South Sudan has resumed exports of its Dar blend crude oil after neighbouring Sudan lifted a force majeure and the completion of repairs to a key export pipeline to the Red Sea. Oil Minister, Puot Kang Chol said exports resumed on January 8 after improved security measures.

Metals:

Gold rose as traders awaited more cues on the path of interest rates in the U.S.

Futures were supported by central-bank buying, uncertainties around U.S. tariff plans under Trump and geopolitical tensions.

Meanwhile, the Chinese central bank added to its gold reserves for a second month in a row in December.

"Gold ETFs have become less important for the gold price trend," Commerzbank Research said.

"Gold purchases by central banks have become much more influential over the past three years."

Markets are now waiting for the release of the Fed's meeting minutes later on Wednesday and Friday's jobs report.

Base metal prices were firmer, with copper and aluminum both up.

"The base metals complex edged higher as prices tested the robust support levels, suggesting a lack of selling pressure and a likely continuation of sideways price moves," Sucden Financial said.

According to market watchers, industrial metals have had a broadly muted start to 2025 amid uncertainties around the path of China's economic recovery, persistent geopolitical tensions and the threat of U.S. tariffs on Chinese goods looming on the market's outlook.

Aluminum, Alumina Outlook

The path ahead for alumina and aluminum is expected to diverge following the Lunar New Year holiday that begins end-January, HSBC said.

Aluminum and alumina futures have slumped since the start of 2025 as a supply shortage eases, with demand falling in the traditional off-season before the Lunar New Year and as new capacity ramps up. Going forward, aluminum should rebound, with demand-supply dynamics staying favorable.

The alumina supply situation should continue to improve, however, weighing on prices that remain much higher than the average over recent years.


EMEA HEADLINES

What Trump's Denmark Tariff Threat Means for Ozempic Drugmaker Novo Nordisk

President-elect Donald Trump's vow to "tariff Denmark at a very high level" if the nation does not hand sovereignty over Greenland to the U.S. will create new uncertainties for the Danish drugmaker Novo Nordisk, the largest European Union company by market capitalization.

Novo Nordisk, which sells the weight loss drug Wegovy and the type 2 diabetes medicine Ozempic, among a long list of other medicines, depends heavily on the U.S. market, where it earned 60% of its revenues in the third quarter of last year.


GLOBAL NEWS

Fed Meeting Minutes to Shed Light on Rate-Cut Path in 2025

The minutes from the Federal Reserve's last meeting of 2024 will add further context to officials' thinking about the paths of the economy, interest rates, and inflation in the coming years. Policymakers lowered their interest-rate target after their Dec. 17-18 confab, while signaling a slow and gradual pace of rate cuts ahead.

Minutes from the meeting will be published at 2 p.m. Eastern on Wednesday. The Federal Open Market Committee-the Fed's policymaking committee-last month voted to lower the federal-funds rate target range by a quarter of a percentage point, to 4.25% to 4.5%, for their third-straight cut.


China Expands Consumer Subsidies to Boost Spending as Tariff Risk Looms

China is widening the scope of its consumer goods trade-in program this year, as Beijing intensifies efforts to convince cautious households to spend as rising external uncertainties threaten exports' ability to prop up economic growth.

The National Development and Reform Commission, China's top economic planner, said Wednesday that the government will include more products in its home appliance trade-in program in 2025, extending state subsidies to microwave ovens, water purifiers, dishwasher and rice cookers.


Trump Ratchets Up Campaign to Gain Control of Greenland, Panama Canal

PALM BEACH, Fla.-President-elect Donald Trump declined to rule out using military or economic coercion to gain control of Greenland and the Panama Canal, ratcheting up his campaign to expand America's global footprint.

"I'm not going to commit to that now. It might be that you'll have to do something," Trump said during a news conference on Tuesday. He was responding to a question about whether he could offer reassurances that he wouldn't leverage U.S. military and economic might to get his way.


Xi Jinping Muzzles Chinese Economist Who Dared to Doubt GDP Numbers

At a Washington forum last month, a prominent Chinese economist raised doubts about Beijing's economic management and said China's economy might have grown at less than half the roughly 5% pace flaunted by authorities.

When Xi Jinping found out, he was furious.


Trump Imagines New Sphere of U.S. Influence Stretching From Panama to Greenland

WASHINGTON-President-elect Donald Trump's calls to take control of Greenland, Canada and the Panama Canal reflect his fascination with a 21st-century version of an old idea-that great powers should carve out spheres of influence and defend their economic and security interests by imposing their will on smaller neighbors.

In a press conference Tuesday, Trump outlined a second-term foreign policy agenda that rests not on global alliances and free trade but on economic coercion and unilateral military might, even against allies.


Write to gareth.mcpherson@wsj.com

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01-08-25 0531ET