For now, the weekly scenario is unfolding more or less as expected. You may recall that, in recent days, we've discussed the paradox of rising US bond yields even though the Fed is likely to cut rates tomorrow evening. The phenomenon intensified yesterday, with the 10-year US Treasury yielding 4.178%, its highest level since September. I won’t revisit in detail the reasons I covered yesterday. What matters is that investors believe there will be fewer further rate cuts next year, or perhaps none at all. The consensus has shifted from three to two additional cuts in 2026 in the United States, but some professionals already see the Fed stuck in a prolonged period of unchanged rates.

Another point worth bearing in mind is that rate cuts appeal to financiers who gain access to cheaper and more plentiful capital. Therefore, when the trend reverses, their mood sours. This less favourable movement is visible in the United States, but also elsewhere in the world. In Japan, the central bank could raise its rates as early as next week (Friday the 19th). This morning, the Australian central bank held rates unchanged as expected, while warning that a resurgence of inflation might prompt monetary tightening in 2026. In Europe the debate is ongoing. The very orthodox Isabel Schnabel, representing the hard-line tradition inherited from the Bundesbank at the ECB, predicted yesterday that the central bank’s next move will be an interest-rate rise. Even if she conceded that this will not happen anytime soon, Schnabel added weight to the view that inflation might force monetary authorities to adopt or maintain restrictive policies.

Yesterday, Wall Street lost a little ground (-0.35 % for the S&P 500), aided only by a small rebound among tech stocks. The other nine sectors all ended in the red. Europe, meanwhile, moved within narrow bounds: -0.07 % for the Stoxx Europe 600 and changes under 0.3 % across most markets, except in Switzerland where the SMI fared slightly better, driven by the strong performance of its largest market-cap group Roche, which gained 18 % in a month - enabling it to leapfrog SAP SE and climb back to third place among European heavyweights.

The fall on Wall Street came despite the fact that a massive corporate showdown is in full swing, an event that would normally energise markets. For the record, Warner Bros sought a buyer and attracted three major suitors. Netflix ultimately clinched the deal with an offer close to 83 billion dollars. But Paramount, the unsuccessful bidder, opted to submit a rival bid valuing Warner at 108.4 billion dollars, arguing at the same time that it had been snubbed by Warner’s management. This is known as a hostile bid because it is launched without the target’s management support, which complicates any potential integration and therefore increases the risk surrounding the merger. It is relatively rare, especially for deals of this magnitude. The financial world is riveted by this battle, all the more so because it involves the Ellison family, close to the seat of power, and Donald Trump, who has voiced concern over Netflix’s dominant position in entertainment. All the ingredients of a captivating stock-market story are in place. Particularly given that Warner is somewhat of a cursed asset.

To speak of a time the under-20s cannot know, the merger between Time and Warner in the late 1980s failed to ignite. As did the acquisition of Time Warner by AOL in 2000, described by some as one of the greatest fiascos in US M&A history. At the time AOL was perhaps the world’s largest internet service provider, and merging content with infrastructure must have seemed a bold idea. But the deal was poorly executed and possibly too avant-garde. A repeat attempt came in 2018 when AT&T acquired Time Warner, aiming similarly to create a media giant owning both content and network. The experiment proved no more successful than AOL’s, though it was shorter and somewhat less value-destroying. The telecom operator eventually divested its unwieldy media diversification by merging Warner with Discovery, whose share price initially collapsed. The moral is that a Warner curse may indeed hang over its buyers. Netflix has, in fact, just endured four sessions of losses, perhaps the market hasn’t forgotten history so quickly. The CEO of the world’s most famous streaming platform, however, reminded investors that unlike previous acquirers, his company actually operates in the same business as Warner and understands what it is buying. In any event, the share-price battle is on.

Elsewhere in current affairs, Europe is seeking to assert itself in the negotiations between the United States and Russia over the end of the war in Ukraine. Yesterday’s meeting in London built a united front alongside the Ukrainian president. In France, a crucial budget vote is expected to add fresh tension. In Germany, the authorities are set to approve 52 billion euros in military orders, a move likely to fuel the positive narrative around the defence sector, despite ongoing peace talks in Ukraine.

In the Asia-Pacific region, red dominates, mainland China, Hong Kong, South Korea, Taiwan, Australia and India all in the red. Only Japan manages, albeit barely, to cling to gains. Leading indicators in Europe are slightly negative.

Today's economic highlights:

Today: in the United States, non-farm productivity and unit labor costs will be released. See the full calendar here.

  • GBP / USD: US$1.33
  • Gold: US$4,184.54
  • Crude Oil (BRENT): US$62.39
  • United States 10 years: 4.17%
  • BITCOIN: US$90,314.5

In corporate news:

  • Unilever plans a share consolidation amidst UK stock market influences such as consumer spending and inflation outlook.
  • Relation Therapeutics has sold a drug target to Novartis for $1.7 billion, enhancing its pipeline.
  • Victorian House Window Group has been acquired by Inwido for 60 million GBP.
  • Novartis expanded its pipeline by acquiring a drug target from UK biotech firm Relation Therapeutics for $1.7 billion.
  • Inwido acquired UK-based Victorian House Window Group for 60 million GBP.
  • Spie SA expanded its cybersecurity portfolio by acquiring German firm Cyqueo.
  • Siemens Energy sees Ananym Capital acquiring a stake and advocating for a wind division spin-off.
  • Roche received European Commission approval for Gazyva for lupus nephritis and launched a new diagnostic test.
  • Warner Bros. Discovery faces a $108.4 billion hostile takeover bid from Paramount Skydance.
  • PepsiCo plans to review its North American supply chain and reduce product offerings by 20%.
  • Google is set to launch AI glasses next year and faces a trademark defense from Tachyum.

See more news from UK listed companies here

Analyst Recommendations:

  • Relx Plc: Deutsche Bank upgrades to buy from hold and reduces the target price from GBX 4072 to GBX 3700.
  • Ocado Group Plc: Deutsche Bank maintains its buy recommendation and reduces the target price from GBX 370 to GBX 310.
  • Aj Bell Plc: Investec maintains its hold recommendation and reduces the target price from GBX 575 to GBX 510.
  • Trustpilot Group Plc: Goodbody upgrades to buy from hold with a price target raised from GBP 2.15 to GBP 2.50.
  • Computacenter Plc: Rothschild & Co Redburn maintains its buy recommendation and raises the target price from GBX 2780 to GBX 3350.
  • Land Securities Group Plc: Peel Hunt maintains its buy recommendation and reduces the target price from GBP 7.60 to GBP 7.50.
  • Integrafin Holdings Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 430 to GBX 440.
  • Rathbones Group Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 2050 to GBX 2100.
  • Quilter Plc: RBC Capital maintains its outperform recommendation and raises the target price from GBX 210 to GBX 220.
  • St. James's Place Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 1200 to GBX 1300.
  • Astrazeneca Plc: TD Cowen maintains its buy recommendation and raises the target price from GBX 14860 to GBX 15815.
  • Ninety One Plc: JP Morgan maintains its neutral recommendation and reduces the target price from GBP 2.22 to GBP 2.09.