So, it's Fed Day, which means the US central bank will deliver its verdict on interest rates. A crisp decision this evening, followed by a speech from Jerome Powell. The head of the Fed will likely explain why a rate cut has been enacted following the December 9–10 meeting, and more importantly, why no further cuts should be expected in the near term. That's the prevailing consensus among forecasters. The devil, however, lies in the details of what exactly is meant by "near term". Investors are hoping for something very brief indeed, but they fear an unpleasant surprise on that front.

They will also have access this evening to the Fed's updated projections and the "dot plot", revealing members' expectations for interest rates over the coming months and quarters. This is a valuable document at the best of times, and even more so now, following the disappearance of several key macroeconomic indicators, lost during the 43-day federal government shutdown this autumn.

In truth, a hawkish message from the Fed will not spell the end of the world for investors. But it would be an unwelcome development at a time when the market is hungry for catalysts, and the prospect of future rate cuts happens to be one of them. Still, beyond the short-term noise, the financial markets also prize stability, and value the central bank's ability to maintain control and avoid risky experimentation. Credibility remains the cornerstone of monetary policy. From this perspective, the recent uptick in bond market tensions is a sign that the Fed is under scrutiny.

White House economic adviser Kevin Hassett, widely tipped to succeed Jerome Powell when his term ends in late May, said yesterday that there remains significant scope to lower US rates substantially. His pronouncements have unnerved advocates of market stability, even as they delight his boss, President Donald Trump, who dreams of a Fed chair willing to serve as a conduit for his economic agenda, without asking too many questions.

Markets adopted a wait-and-see stance yesterday. The broad Stoxx Europe 600 index slipped 0.1%, marking its ninth consecutive session with a move of less than 0.5%. The S&P 500 also shed 0.1%, its sixth straight day of similar muted volatility. While Fed days are statistically good days for equities, today's decision carries higher stakes than usual, thereby increasing the level of uncertainty.

Elsewhere, the French government narrowly cleared a major budgetary hurdle yesterday, improving its chances of survival and narrowing the spread with German debt to 71 basis points. In China, inflation picked up in November, slightly above expectations. The announcement had little impact on local markets, as it reduces the likelihood of further monetary easing from the People's Bank of China. Producer prices, however, remain depressed, another sign that economic recovery remains elusive.

Among standout assets, crude oil continued its decline on fears of oversupply at a time when demand remains uncertain. Meanwhile, silver breached the symbolic $60 mark for the first time in history, buoyed both by investor appetite for precious metals and its role in electric vehicles and data centres: it is, after all, an excellent conductor for electronic applications.

Asia-Pacific markets are mirroring the US's cautious tone from last night. Japan, China, Hong Kong, Australia, South Korea and India are all trading slightly lower. European markets are expected to open in the red.

Today's economic highlights:

On the agenda today: PPI in Japan and CPI in China; in the United States, CPI, wholesale inventories, DOE crude oil inventories, the federal budget balance, and the FOMC rate decision (lower and upper bound). See the full calendar here.

  • GBP / USD: US$1.33
  • Gold: US$4,207.72
  • Crude Oil (BRENT): US$62.06
  • United States 10 years: 4.18%
  • BITCOIN: US$92,151.03

In corporate news:

  •  Shell faces multiple challenges, including Venture Global's denial of fraud claims, shutdown of Gulf of Mexico platforms, and pending approval of the Aphrodite gas project in Trinidad. 
  •  Diageo workers at the Belfast site voted to strike over pay disparity, with no expected impact on Guinness supply during Christmas.
  •  TT Electronics is considering a takeover bid from DBAY Advisors and a revised 150p offer from Cicor.
  •  Comet Pension Scheme has fully bought in its liabilities, valued at £330 million.
  •  Polytec Holding AG sold its UK operational business to focus on strategic priorities.
  •  Ineos Acetyls Investments divested its entire stake of 7.5 million shares in Accsys.
  •  Mike Ashley secured a loan from HSBC, pledging £670 million worth of Frasers shares as collateral.
  •  Anglo American shareholders approved a $50 billion merger with Teck Resources.
  •  Clas Ohlson AB reported Q2 2025 earnings exceeding expectations with robust revenue growth.
  •  Husqvarna announced ambitious financial and sustainability targets for 2030.
  •  BICO Group AB appointed Ewa Linsäter as the new CFO, effective March 1, 2026.
  •  Enel announced the purchase of 14 million of its own shares for about EUR 123.9 million.
  •  Nvidia introduced location verification technology for AI chips, including the H200 model, approved for sale to China.
  •  Amazon plans to invest over $35 billion in India by 2030 to enhance AI capabilities and logistics.
  •  Microsoft is investing $23 billion in AI in India and Canada.
  •  GE Vernova secured 80 GW of combinedcycle gas turbine contracts, anticipating increased revenues through 2026.
  •  Paramount is considering enhancing its bid for Warner Bros. Discovery amidst antitrust concerns.

See more news from UK listed companies here

Analyst Recommendations:

  • Rio Tinto Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 4900 to GBX 5900.
  • Glencore Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 320 to GBX 430.
  • Molten Ventures Vct Plc: RBC Capital maintains its outperform rating and raises the target price from GBX 3500 to GBX 4700.
  • Fresnillo Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 1900 to GBX 3000.
  • Pearson Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 1495 to GBX 1400.
  • Diageo Plc: Goodbody maintains its buy recommendation and reduces the target price from GBP 24.50 to GBP 22.
  • Firstgroup Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 235 to GBX 245.
  • J Sainsbury Plc: Deutsche Bank upgrades to buy from hold and raises the target price from GBX 310 to GBX 350.
  • B&M European Value Retail S.a.: Deutsche Bank downgrades to hold from buy and reduces the target price from GBX 235 to GBX 180.
  • Kingfisher Plc: Deutsche Bank downgrades to sell from hold and reduces the target price from GBX 285 to GBX 255.
  • Tesco Plc: Deutsche Bank maintains its buy recommendation and raises the target price from GBX 495 to GBX 500.
  • Mony Group Plc: Berenberg maintains its buy recommendation and reduces the target price from GBX 300 to GBX 275.
  • Bunzl Plc: Goldman Sachs maintains its neutral recommendation and reduces the target price from GBX 2510 to GBX 2470.
  • Mondi Plc: ABSA Bank Limited maintains its underweight recommendation and reduces the target price from ZAR 276 to ZAR 207.