FTSE 100 : All eyes on CPI data

The FTSE 100 started Wednesday with a bit of a frown, down 0.2%, after a 0.9% slide on Tuesday. Across the Channel, European indices like the CAC 40 in Paris and the DAX 40 in Frankfurt are also slightly bearish. All eyes are on the US consumer price index (CPI) data, set to be unveiled later today. Economists are expecting prices to rise by 2.6% year-on-year in the overall version, and by 3.3% in the version stripped of the most volatile components (mainly energy and food). It is this second version that officials look to most closely for monetary policy. It is still a long way from the target of bringing price inflation down to around 2%. So there is still a shadow of a doubt over the Fed's ability to cut its key rates significantly next year. This data is the appetizer before the Federal Reserve's final rate decision of the year on December 18. Analysts are betting on a 25 basis point rate cut, driven more by labor market dynamics than inflationary pressures.

Other central banks are back in the spotlight. After Australia yesterday, it is the turn of the monetary authorities in Canada and Brazil to give their views today, before Switzerland and the eurozone tomorrow.

In corporate news, British American Tobacco is sticking to its 2024 targets, forecasting low-single-digit organic growth in revenue and adjusted profit from operations. The company expects second-half revenue growth to outshine the first half, fueled by increased sales in new-category and combustibles segments, and bolstered by US commercial investments. 

Volution Group has kicked off its financial year on a positive note, with a 1.3% uptick in revenue to about £123 million for the four months ending November 30.

The UK government is set to redefine "grey belt" land as part of its push to ramp up housing development, with a target of building 1.5 million homes. In Northern Ireland, the Stormont Assembly voted to extend post-Brexit trading arrangements for another four years, despite unionist opposition. 

Things to read today:

• The explosion of complex debt on Wall Street has reached its fastest pace since 2007 (Financial Times).
• While the media clicks, democracies go astray (Persuasion).
• How Syria broke the world and is now Iran's Achilles heel (Financial Times).
• Orban, Meloni and Macron fight to whisper in Trump's ear (Bloomberg).