In This Article:
Donald Trump triggered a turbulent end to the week as stocks plunged after he called for a US government shutdown to “begin now” under Biden, rather than under his administration.
European stocks closed 0.8pc lower, cementing their biggest weekly decline in more than three months, after Mr Trump said: “If there is going to be a shutdown of government, let it begin now, under the Biden Administration, not after January 20th, under ‘TRUMP’.
“This is a Biden problem to solve, but if Republicans can help solve it, they will.”
The FTSE 100 fell as much as 1.3pc, the Cac 40 in Paris dropped by up to 1.4pc and the Dax in Frankfurt dropped as much as 1.6pc. They each closed down by 0.3pc, though the FTSE marked its worst week in more than a year.
The turbulence came after a spending Bill backed by Mr Trump failed in the US House of Representatives on Thursday as dozens of Republicans defied the president-elect.
The move leaves Congress with no clear plan to avert a fast-approaching government shutdown that could take effect from midnight and disrupt Christmas travel.
Wall Street’s main indices opened lower as the looming budget showdown combined with fears of high interest rates next year.
However, they have subsequently rebounded, with the S&P 500 up 1.7pc after the Federal Reserve’s preferred measure of inflation came in slightly lower last month than economists had expected.
This was an encouraging signal to traders following recent reports suggesting inflation may be tough to get all the way down to the Fed’s 2pc goal.
Earlier in the week the US Federal Reserve reduced its expectations for interest rate cuts next year. Policymakers forecast just two cuts in 2025, down from a prediction of four just three months ago.
Read the latest updates below.
05:57 PM GMT
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05:30 PM GMT
European shares see worst week in over three months
Europe’s Stoxx 600 has clocked its second weekly fall in a row, losing 2.6pc, amid comments by Donald Trump and a setback at Danish firm Novo Nordisk.
Investors are mulling the possibility of an American government shutdown after the Republican-led House rejected a temporary funding plan.
Meanwhile, Mr Trump said that the EU must purchase US oil and gas to make up for its “tremendous deficit” with the world’s largest economy, or face tariffs.
“Trump’s deeply flawed understanding of trade balances and drivers is being applied once again and to a degree this kind of thing was expected by the EU and others,” Scotiabank analysts wrote in a note.
The European Commission said it was ready to discuss with Trump how to strengthen what it described as an already strong relationship, including in the energy sector.
“Investors had already begun pricing in the potential risk, but the president-elect’s comments today will have focussed minds,” said Danni Hewson, head of financial analysis at AJ Bell.
The European markets were hit today with the healthcare sector leading losses after Danish firm Novo Nordisk tumbled on disappointing data from its next generation obesity drug trial.
The Stoxx 600 index closed 0.9pc lower, paring some losses after falling as much 2pc during the day. It was its worst week since early September.
Novo Nordisk plunged 20.8pc after the Danish drugmaker revealed disappointing results in a late-stage trial for its experimental next-generation obesity drug CagriSema.
05:00 PM GMT
UK and European stocks close down
UK and European stocks slid today after US President-elect Donald Trump’s comments about potential tariffs on the European Union spooked investors.
The FTSE 100 lost 0.3pc, while the Stoxx 600 index, which tracks stocks across the continent, fell 0.9pc.
France’s Cac 40 and Germany’s Dax each closed down 0.3pc.
04:58 PM GMT
Wall Street gains as investors face ‘choppy’ 2025
Wall Street’s main indexes are rising in volatile trading after a positive signal over interest rates.
Chris Larkin, of E*Trade, said: “The Fed’s preferred inflation gauge came in lower than expected, which may take some of the sting out of the market’s disappointment with the Fed’s interest rate announcement on Wednesday.
“Longer term, the Fed is still facing policy uncertainty from the incoming White House administration, so the odds still favour a pause on rate cuts in January.”
Latest data showed the personal consumption expenditure (PCE) index rose 2.4pc in November on an annual basis, below estimates of 2.5pc.
After the data, traders raised their rate cut bets for 2025, now expecting the first one in March and then again by October. Before the data, traders saw an about 50pc chance of a second rate cut by December 2025.
“We are going to see a choppy, sideways grind higher next year [with] a 10pc to 20pc pull-back at some point along the way,” said Will McGough, director of investments at Prime Capital Financial.
Friday’s trading session also marks the simultaneous expiry of quarterly derivatives contracts tied to stocks, index options and futures, also known as “triple witching”, which could exacerbate volatility.
04:42 PM GMT
Wall Street rallies at end of rough week
US stocks are rallying this afternoon to trim their losses in what had been one of the market’s roughest weeks of the year.
The S&P 500 climbed 1.7pc and was on track for its best day in six weeks after erasing an early drop. The Dow Jones Industrial Average rose by a similar percentage and the Nasdaq Composite gained 1.8pc.
Eli Lilly was one of the strongest forces lifting the market after a rival, Novo Nordisk, gave an update on a potential weight-loss treatment that analysts said fell short of expectations. That could benefit Eli Lilly, whose Zepbound helps treat obesity, and its stock climbed 5.1pc.
But the biggest push upward came from superstar stock Nvidia, which rose with the broad market after a report said a measure of inflation the Federal Reserve likes to use was slightly lower last month than economists expected. It’s an encouraging signal following recent reports suggesting inflation may be tough to get all the way down to the Fed’s 2pc goal from its peak above 9pc.
The threat of higher inflation was one of the reasons Fed Chair Jerome Powell gave this week when the central bank hinted it may deliver fewer cuts to interest rates next year than it earlier expected.
“When optimism is rising and market multiples are expanding, it just takes a little fear to take the veneer off a market rally,” according to Brian Jacobsen, chief economist at Annex Wealth Management.
Friday’s better-than-expected inflation data pushed traders to trim their bets for zero cuts in 2025, which they collectively see just a 15pc chance of.
04:16 PM GMT
Europe on track for worst week in months
European shares were on course to post their worst week in three months on Friday, as Donald Trump’s comments about potential tariffs on the European Union further spooked investors already worried about the rate outlook.
The pan-European Stoxx 600, which includes some of Britain’s biggest companies, fell by more than 0.9pc. The FTSE 100 was down 0.6pc, while France’s Cac 40 lost 0.4pc and Germany’s Dax dropped 0.5pc.
Asian stock indexes closed down earlier today.
Wall Street stocks rebounded after opening in negative territory. The S&P 500, Nasdaq and Dow Jones are each up 1.2pc
04:07 PM GMT
Fed to cut rates a ‘fair bit more’, says rate-setter
The US Fed will cut interest rates a “fair bit more” over the next year and a half, the president of the Chicago Fed has said.
Austan Goolsbee told CNBC: “I’ve made the rate path a little bit more shallow in 2025, but I’ve been saying that the overall thread is that inflation is way down.
“I believe we’re on path to 2pc and over the next 12 to 18 months rates can still go down a fair amount.
He said that US rates were still “meaningfully restrictive”.
03:56 PM GMT
Investors take fright as Novo Nordisk shares plunge
Shares in Novo Nordisk have fallen by more than a quarter after the Ozempic maker revealed a set of underwhelming results in a trial for its next-generation obesity drug.
A drop of 29pc led to as much as 736bn Danish krone (£81bn) being wiped off the company’s valuation on Friday, which is equivalent to nearly a quarter of Denmark’s GDP.
Investors took fright after a late-stage trial for Novo’s CagriSema showed lower than expected weight loss, dealing a blow to the Danish company’s attempts to release a more effective successor to its Wegovy weight-loss jab.
The CagriSema trial showed the drug helped patients cut their overall weight by 22.7pc, which was below the 25pc that Novo Nordisk had expected. The effectiveness is similar to the 23pc reported for Zepbound, which is already on sale by rival Eli Lilly.
Simon Baker, a pharmaceuticals analyst at Redburn Atlantic, said: “They sought a superior result to Lilly and got one that is the same.”
03:52 PM GMT
US rate-setter points to new ‘uncertainty’ for inflation
The battle against inflation is going well but that changes to US government policy next tyear will create “uncertainty”, according to a US central banker.
John Williams, New York Fed president, told CNBC: “What we’re seeing is encouraging news [after] a bit of a bumpy kind of a journey.”
He added: “In my own personal forecast, I have incorporated some thinking about where fiscal policy may be, immigration and other policies, because those are important drivers to thinking about the economic outlook.
“But I would just emphasise that there is a lot of uncertainty about what those effects will be.”
He said: “I think the disinflationary process hopefully will continue. There is a lot of uncertainty now for a number of reasons, including uncertainty around some of the policies that may happen next year. But right now, I think we’re in a really good place.”
Oren Klachkin, an analyst at US insurer Nationwide, also struck a positive note: “We can break for the holidays with the comfort that the economy’s growth engine is humming along.”
03:31 PM GMT
US stocks on track for worst week in a year amid interest rate fears
The biggest companies on Wall Street were poised for their worst week in more than a year after the US Federal Reserve reduced its expectations for interest rate cuts next year.
The Dow Jones Industrial Average was on track for its sharpest weekly fall since March 2023 after policymakers forecast just two cuts in 2025, down from a prediction of four just three months ago.
The S&P 500 was on pace for its worst week since September, while the Nasdaq Composite was set to fall for the first time in five weeks.
Wall Street was jolted this week after the Fed forecast only two rate reductions in 2025 and raised its inflation estimate, in a nod to the economy’s continued resilience and still-high inflation.
Yet today, the Federal Reserve’s preferred measure of inflation - the personal consumption expenditure (PCE) index - rose 2.4pc in November, which was below estimates of 2.5pc.
Following the data, traders raised their rate cut bets for 2025, now expecting a rate cut first in March and then again by October.
Before the figures, there was about 50pc chance of a second rate cut by December 2025.
With that, I’ll thank you for following today’s updates so far and hand you over to Alex Singleton who will guide you through to the weekend.
03:15 PM GMT
Truth Social owner falls as Trump transfers stake into trust
Trump Media & Technology’s shares fell about 6pc today after the US president-elect moved the stake he owns in the social media company to a revocable trust.
The move comes after Donald Trump said in November that he had no intention of selling his shares in the company, which owns the Truth Social media platform.
Trump transferred 114.75 million shares, or 53pc of Trump Media & Technology Group’s outstanding stock, to the revocable trust of which he is the sole beneficiary, according to securities filings.
His stake in the company was valued at more than $4bn based on the stock’s last closing price of $35.41.
02:55 PM GMT
Wall Street giving up all Trump gains
The US stock market has already lost almost all of its gain since Donald Trump’s election win in November.
The president-elect had raised hopes for faster economic growth and more lax regulations on companies, which would boost corporate profits.
However, worries have also risen that Mr Trump’s preference for tariffs and other policies could lead to higher inflation, a bigger US government debt and difficulties for global trade.
Carl B Weinberg of High Frequency Economics said: “Next year will be a time of huge challenges to the world economy. We do not look forward to these changes.”
02:43 PM GMT
Stocks plunge as Trump pushes for US shutdown under Biden
Global stocks were lower as Donald Trump said a US government shutdown should happen under Joe Biden’s watch rather than under his administration.
Wall Street’s main indexes dropped at the open amid fears over high interest rates next year, although a cooler-than-expected inflation report for November stymied losses.
European stocks were also lower amid the threat of tariffs from the US president-elect, who has created more uncertainty today after suggesting a stalemate over the US budget should lead to a shutdown now rather than later.
A spending Bill backed by Mr Trump failed in the US House of Representatives on Thursday as dozens of Republicans defied the president-elect.
The move leaves Congress with no clear plan to avert a fast-approaching government shutdown that could take effect from midnight and disrupt Christmas travel.
Mr Trump said: “If there is going to be a shutdown of government, let it begin now, under the Biden Administration, not after January 20th, under “TRUMP.”
“This is a Biden problem to solve, but if Republicans can help solve it, they will.”
The FTSE 100 was down 1.2pc, the Cac 40 in Paris was down 1.1pc and the Dax in Frankfurt had fallen 1.3pc.
The Dow Jones Industrial Average fell 0.1pc the at the opening bell, the S&P 500 dropped 0.1pc and the Nasdaq Composite was down 0.6pc.
02:23 PM GMT
Dollar pulls back from two-year high after inflation slowdown
The US dollar retreated from a two-year high after data showed inflation was weaker than expected two days after the Federal Reserve delivered a cut to interest rates.
The dollar was down 0.4pc against a basket of six other major currencies - including the pound.
However, it was still heading for its third consecutive week of gains, having earlier rose as high as 108.54 - its highest level since November 2022.
The US personal consumption expenditures (PCE) price index - which is the Fed’s preferred inflation gauge - advanced 2.4pc in November compared with a 2.3pc increase in October and 2.1pc in September.
02:07 PM GMT
UK borrowing costs fall after weaker-than-expected consumer spending figures
Bond markets have rallied, sending the cost of government borrowing lower, after closely watched US consumer spending figures were weaker than expected.
The yield on 10-year UK gilts - an indicator of government borrowing costs - fell by three basis points to 5.07pc in the wake of the US PCE figures.
The Fed’s preferred measure of inflation rose to 2.4pc in November, which was less than markets had expected.
Paul Ashworth of Capital Economics, said: “Overall, this is just what the Fed ordered – US economic strength continues, but with muted price pressures.”
01:41 PM GMT
Wall Street poised for losses after US inflation data
US stock indexes were still down - but slightly less - after the cooler-than-expected inflation figures, which calmed some investor concerns over fewer rate cuts next year.
A Commerce Department report showed the Personal Consumption Expenditure (PCE) index, the Fed’s preferred inflation measure, rose 2.4pc in November, compared with estimates of 2.5pc.
In premarket trading, the Dow Jones Industrial Average was down 116 points, or 0.3pc, the S&P 500 was down 31 points, or 0.5pc and Nasdaq 100 was down 192.5 points, or 0.9pc.
01:34 PM GMT
US consumer spending edges higher
The Federal Reserve’s preferred measure of inflation edged higher last month, official figures showed.
The US personal consumption expenditures (PCE) index rose from 2.3pc in October to 2.4pc in November.
The increase was less than analyst forecasts of a jump to 2.5pc.
Core PCE, which strips out volatile food and energy prices, was unchanged at 2.8pc, having been expected to rise to 2.9pc.
01:16 PM GMT
Pound edges up ahead of US inflation data
The pound was on track for its second consecutive weekly drop against the dollar ahead of closely watched US consumer spending figures.
Sterling was up 0.1pc to $1.252 a day after slipping to a one-month low of $1.248.
It is on track for a decline of 0.8pc this week after the US Federal Reserve indicated it may only cut rates twice next year, strengthening the dollar.
The pound has dropped nearly 4pc since the election of Donald Trump, who is expected to impose tax rises and tariffs which risk stoking inflation.
The next big move could come from US personal consumption expenditures (PCE) figures out shortly, which are the Federal Reserve’s preferred measure of the pace of price rises.
Meanwhile, sterling was 0.1pc lower on the day against the euro, which is worth just under 83p.
Sterling is trading at around its highest against the euro since early 2022, and striking distance of levels seen in June 2016 before the Brexit vote.
The European Central Bank is expected to announce a series of interest rate cuts next year to support Europe’s struggling economy.
12:56 PM GMT
UK borrowing costs near highest level in 26 years amid inflation fears
Long-term government borrowing costs are close to their highest level in 26 years amid rising inflation and doubts over interest rate cuts next year.
The yield on 30-year UK bonds - the return the Government promises to buyers of its debt - climbed as high as 5.16pc in the wake of figures this week showing inflation rose to 2.6pc in November.
The yield on the long-term bond - known as a gilt - has risen for seven consecutive trading days, putting it on track for its highest close since 1998.
It comes as money markets priced in just two interest rate cuts by the Bank of England next year, compared to a possibility of four at the end of last week, amid concerns about persistent inflation.
Guillaume Derrien, senior economist at BNP Paribas, said: “This week, which has had a wealth of economic indicators in the UK, will certainly have shifted the lines, between rising inflation in November and heightened fears that an overly restrictive monetary policy could derail the economic recovery.”
12:31 PM GMT
European stocks fall as Trump threatens tariffs
European shares came under pressure after Donald Trump threatened to impose tariffs if consumers did not increase their purchases of US oil and gas.
The Cac 40 in Paris was down 1.2pc while the Dax in Frankfurt fell 1.5pc after the warning from the president-elect.
Mr Trump, who assumes the US presidency in January, has issued stark warnings to America’s major trading partners to address their trade surpluses with the world’s largest economy or be subject to hefty duties on their imports.
“I told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas,” he said in a post on Truth Social on Friday.
“Otherwise, it is TARIFFS all the way!!!,” he added.
12:14 PM GMT
Bonds waver ahead of US inflation data
Bond markets were mixed ahead of the crucial US inflation data later today, which could provide further clues about the Federal Reserve’s next move on interest rates.
The yield on 10-year UK bonds - known as gilts - eased slightly to 4.56pc following a surge in recent days after the Fed predicted it would make fewer rate cuts next year.
Meanwhile, Germany’s 10-year bond yield, the benchmark for the eurozone, was little changed at 2.3pc, although it was on track for its third straight weekly rise.
Bond yields - the return government’s promise to buyers of their debt - have risen after the Federal Reserve on Wednesday indicated that further rate cuts hinge on more progress in lowering stubbornly high inflation.
Tiffany Wilding, economist at bond trader Pimco, said: “A return to hikes is a low probability event, but the Fed will want to see further progress on inflation or an increase in the unemployment rate before resuming the easing cycle.
“The Fed believes the current rate, at 4.3pc and change, is still restrictive and therefore maintained a cutting bias.”
11:58 AM GMT
Russia keeps interest rates on hold despite soaring inflation
On a major week of interest rate announcements, the Russian central bank shocked markets as it kept its key figure on hold at 21pc a day after Vladimir Putin called for a “balanced” decision.
Analaysts had expected a two percentage point increase but the Bank of Russia said recent tightening of monetary policy had created conditions for inflation to fall towards its target.
The decision came a day after Mr Putin publicly called for a “balanced” decision in a nationwide phone-in.
Inflation stands at 9.5pc, far above the 4pc target but powerful business leaders had complained that soaring interest rates were stifling investment.
“Given the notable increase in interest rates for borrowers and the cooling of credit activity, the achieved tightness of monetary conditions creates the necessary prerequisites for resuming disinflation processes and returning inflation to target,” the central bank said in a statement.
11:35 AM GMT
Wall Street poised to fall ahead of inflation figures
US stock indexes fell in premarket trading ahead of the publication of a key inflation report in the wake of the Federal Reserve’s more pessimistic view on interest rate cuts.
The Nasdaq was set to fall for the first time in five weeks and the S&P 500 was on pace for its worst week since September. The Dow was on track for its sharpest weekly fall since March 2023.
All of the major equity markets on Wall Street were in the red as investors also grappled with the possibility of a government shutdown.
The Commerce Department’s personal consumption expenditure (PCE) report, which is the Fed’s preferred measure of inflation, is expected to show US consumer spending rose by 2.5pc in the year to November, compared to 2.3pc the previous month.
Traders expect fewer than two US rate cuts by the end of next year after the central bank lowered rates by a quarter point as expected this week.
Meanwhile, dozens of Republicans defied president-elect Donald Trump’s spending bill on Wednesday, leaving Congress with no clear plan before government funding expires at midnight. Failure to extend the deadline could disrupt holiday travel.
In premarket trading, the Dow Jones Industrial Average was down 0.5pc, the S&P 500 was down 0.8pc and the Nasdaq 100 had fallen 1.3pc.
11:19 AM GMT
FTSE 100 poised for worst week in more than a year
The FTSE 100 has touched a one-month low at the end of a week marked by a raft of interest rate decisions.
Britain’s flagship stock market is on track for its sharpest weekly drop since August 2023 after warnings that there would be fewer reductions in borrowing costs next year.
The FTSE 100 was last down 1pc to 8,028.72 with personal goods, banks and defence stocks shedding over 1pc.
The midcap FTSE 250 was down 0.7pc at one-month low of 20,251.93.
The Federal Reserve’s outlook on Wednesday rocked global financial markets as it predicted just two rate cuts next year, while interest-rate holds by the Bank of England and Bank of Japan were also major events.
In this year’s final policy meetings, Britain, Japan, Norway and Australia held firm, while Switzerland, Europe, Sweden and Canada implemented rate cuts.
Shares of water suppliers Severn Trent and United Utilities were the biggest fallers on the FTSE 100, declining 2.6pc each a day after climbing on news of a rise in water bills.
11:01 AM GMT
Good morning
Thanks for joining me. The FTSE 100 has dropped sharply amid doubts over the persistence of inflation in the UK and the US.
Officials at the Bank of England and the US Federal Reserve have raised concerns over how quickly interest rates can be cut amid rising prices.
As a result, bond yields have surged higher - with 30-year gilt coupons close to their highest level since 1998 - putting stock markets under pressure.
5 things to start your day
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Majority of Britons receive more in benefits than they pay in taxes | Starmer faces surging welfare bill as more than half of country are classed as net recipients
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Tesla sales crash as drivers snub Trump supporter Elon Musk | Tariffs on Chinese-made cars and the marque’s ageing lineup are also undermining demand in Europe
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Telegraph trapped in ‘auction from hell’ as bidder struggles to raise cash | Newspaper faces ongoing stalemate after Dovid Efune fails to meet financing deadline
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The epidemic of parcel thefts that threatens to ruin Christmas | Online shoppers are facing a porch piracy epidemic – and a security camera won’t stop them
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Matthew Henderson: Britain must resist China’s global ambitions or become a vassal state | Beijing aims to weaponise its economic power against the interests of Britain and its Western allies
What happened overnight
Global shares were mostly lower as markets awaited US personal spending data for November.
The FTSE 100 lost as much as 1.1pc and the Cac 40 in Paris fell as much as 1.4pc. Germany’s DAX was down as much as 1.3pc.
Tokyo’s Nikkei 225 index dropped 0.3pc to 38,701.90 after the release of November inflation data on Friday. Japan’s core inflation rate, which excludes fresh food prices, rose 2.7% year-on-year, surpassing expectations.
The data followed the Bank of Japan’s decision on Thursday to keep its benchmark rate at 0.25pc, which pushed the dollar higher against the Japanese yen.
The dollar was trading at 156.86 yen on Friday, down from 157.43 yen but still higher than the average of 150 yen earlier this month.
The Hang Seng in Hong Kong added 0.2pc to 19,720.70 while the Shanghai Composite index edged 0.1pc lower to 3,368.07 after China’s central bank kept its loan prime rates unchanged on Friday.
The one-year lending rate, which affects corporate and most household loans, remained at 3.1pc, while the five-year rate, used as a benchmark for mortgage rates, stayed at 3.6pc.
Australia’s S&P/ASX 200 dipped 1.2pc to 8,067.00. South Korea’s Kospi lost 1.3pc to 2,404.15.
Wall Street stumbled to its close Thursday, ending nearly flat after an earlier rally ran out of steam late in the day.
The Dow Jones Industrial Average rose was stagnant at 42,342.24, the S&P 500 fell 0.1pc, to 5,867.08, and the Nasdaq Composite fell 0.1pc, to 19,372.77.
In the bond market, benchmark US Treasury yields hit their highest level since May. The yield on 10-year notes rose to 4.57pc, from 4.498pc late on Wednesday.