Some mornings are harder than others when it comes to finding something worthwhile to report. It was around 5:18am when I began scanning the latest financial developments, and close to 6:45am when I thought to myself: "OK, I have a problem." Once again, I would have to talk about the Fed's anticipated rate cut in six days' time to justify the latest rally, with a dash of AI and a sprinkle of risk appetite.

But none of it felt particularly satisfying, no compelling narrative on the horizon. So I delved into the movements of US-listed companies in search of a discernible trend. And then i thought: "When the Dow Jones gains 0.8% while the Nasdaq 100 stalls at 0.2%, there's usually something to it."

The usual conclusion in such a scenario is that old-economy stocks are staging a comeback against their new-economy counterparts. That was somewhat the case yesterday. The day's top risers - UnitedHealth, McDonald's, and Goldman Sachs - had an unmistakable scent of 20th-century America.

Yet, the real eye-catcher was the breakdown of gains and losses within the Nasdaq. A significant portion of the semiconductor sector surged. Microchip, having raised its guidance, and ON Semi both climbed over 10%, while Marvell rose 8% following its quarterly earnings. The rally was so robust it even crossed the Atlantic. STMicroelectronics, for instance, jumped nearly 6%, likely prompting some shareholders to light candles in the nearest church in gratitude for the miracle. I'm only slightly exaggerating.

The twist is that the index heavyweights were not invited to the party. Aside from Alphabet, the market's newfound AI darling, which rose 1.2%, Nvidia, Apple, Amazon, Broadcom and Meta all fell between 0.3% and 1.1%. Microsoft dropped significantly more (-2.5%) after The Information reported disappointing sales of AI tools. The Redmond giant issued a firm denial, to no avail. For once, the Street chose to believe the press rather than the company's PR department.

Why mention all this? Because it illustrates the growing confusion surrounding the AI theme. The bloc no longer moves as one. The logic that emerged at the start of the November correction - to offload the most outrageously valued stocks - no longer seems relevant. Many semiconductor firms now trade at significantly higher valuations than hyperscalers like Amazon, Alphabet or Microsoft, despite having far more erratic long-term profitability.

There was, however, one clear winner beyond the semiconductor fever: mid-cap stocks. The Russell 2000 index, which tracks them, gained 1.9%. This suggests that the Fed rate-cut narrative is gaining traction. Not only is a 25-basis-point cut likely on 10 December, but Kevin Hassett, the leading contender to chair the Fed in six months' time, could well introduce a monetary easing programme in line with Donald Trump's vision. Despite the optimism sparked by Trump’s presidential win 13 months ago, the index has underperformed its peers, rising just 13% since the November 2024 election, compared with 20% for the S&P 500 and 28% for the Nasdaq 100. In a market growing wary of its headline names, investors are, quite logically, looking elsewhere. If the Fed Put is indeed about to be activated, mid-caps are far from the worst idea.

In Europe, markets continue to drift sideways. The Stoxx Europe 600 has seen closing moves ranging between +0.25% and -0.20% over the past five sessions, with only one decline in eight trading days. Investors have come to terms with the idea that the ECB is unlikely to cut rates again, following a slight uptick in inflation in November. This has led to a sell-off in property stocks and, to a lesser extent, banks. Beyond that, not much to report on the Continent, where many indices are now within 2% of record highs.

Elsewhere, Scott Bessent, the US Treasury Secretary, remains the central economic figure in the Trump administration, to the delight of financiers who see him as the adult in the room. According to Bloomberg, he may resume his role as presidential adviser if Kevin Hassett moves to the Fed. Bessent yesterday helped defuse one of the market's potential landmines by assuring investors that the administration has an immediately actionable Plan B, should US courts challenge the legality of tariffs come January.

In Asia-Pacific, Japanese equities were buoyed by a strong reception for a bond issue, dispelling recent concerns and lifting the Nikkei 225 by 2.1%. Other markets traded within relatively narrow ranges, with modest declines in South Korea and Taiwan, and small gains in Australia, India, and China. Europe is expected to open slightly higher.

Today's economic highlights:

On today's agenda: the unemployment rate in Switzerland; retail orders in Germany; in the United States, Challenger layoffs, new jobless claims, and the trade balance. See the full calendar here.

  • GBP / USD: US$1.33
  • Gold: US$4,187.43
  • Crude Oil (BRENT): US$63
  • United States 10 years: 4.05%
  • BITCOIN: US$93,553.6

In corporate news:

  • Tesla saw a 19% drop in UK car registrations and new car sales in November 2025 due to increased competition and negative market sentiment.
  • Edinburgh Worldwide faced a call for an AGM by Saba Capital to address specific concerns or proposals.
  • FTSE 100 experienced a slight decline of 0.1% due to a drop in financial stocks, despite gains in mining and energy sectors.
  • Glencore announced job cuts, a restart of copper production in Argentina, and collaborations with CODELCO to expand smelting capacity in Chile.
  • BNP Paribas completed an accelerated bookbuilding for the secondary placement of 3.58% of CIE Automotive's share capital.
  • Plenitude (Eni's low-carbon unit) is acquiring ACEA Energia for up to €587 million, gaining over 1.4 million Italian retail customers.
  • Systemair reported higher-than-expected Q2 earnings driven by strong organic sales growth.
  • Skanska secured a multi-million dollar contract for constructing a data center in the United States.
  • Fincantieri is involved in a memorandum with ASRY for naval collaboration and shipbuilding projects in Bahrain.
  • Rio Tinto projects consolidated copper production to reach 800-870 kt by 2026, setting production and financial goals for 2025-2030.
  • J.P. Morgan completed an accelerated bookbuilding for the secondary placement of 3.58% of CIE Automotive's share capital.
  • Boeing elected Bradley D. Tilden to its board as the FTC approved its merger with Spirit AeroSystems, requiring asset divestitures to address antitrust concerns.
  • Charles Schwab plans further mergers and acquisitions, integrating new acquisitions, offering Bitcoin and Ethereum to clients, and exploring various opportunities.
  • Chevron plans to allocate up to $19 billion in 2023 for operations in the U.S. and Guyana, including a $17 billion budget for upstream operations.

See more news from UK listed companies here

Analyst Recommendations:

  • Antofagasta Plc: William O'Neil & Co Incorporated maintains its buy recommendation.
  • Unite Group Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 930 to GBX 860.
  • British Land Company Plc: Goldman Sachs maintains its buy recommendation and raises the target price from GBX 450 to GBX 470.
  • Derwent London Plc: Goldman Sachs maintains its buy recommendation and reduces the target price from GBX 2460 to GBX 2450.
  • Unite Group Plc: Morgan Stanley maintains its overweight recommendation and reduces the target price from GBX 960 to GBX 700.
  • Burberry Group Plc: HSBC maintains its buy recommendation and raises the target price from GBP 15.15 to GBP 15.25.
  • Lloyds Banking Group Plc: Goldman Sachs maintains its buy recommendation and raises the target price from GBX 105 to GBX 110.
  • Bodycote Plc: JP Morgan maintains its neutral recommendation and raises the target price from GBP 6 to GBP 6.70.
  • Genuit Group Plc: JP Morgan maintains its overweight recommendation and raises the target price from GBP 4.55 to GBP 4.65.