- European markets tap into risk-on sentiment
- UK GDP growth comes in soft
- Whitbread battles on in a tough hotel market
- Cooler economic data helps US markets out of a trough
- Deal activity gives US banks a major boost
- Oil continues its climb
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“European markets are waking up with a spring in their step, thanks to cooling US core inflation and upbeat bank earnings fuelling risk-on sentiment. The FTSE 100 is joining the party, up 0.6% in early trading, despite UK GDP data for November that showed growth of a meagre 0.1%. Although this was shy of expectations it still signals some resilience, with services and construction pulling their weight despite a manufacturing slump. With inflation easing and sluggish economic growth, a 25bps rate cut by the Bank of England in February seems increasingly likely. UK government bond yields have felt an immediate impact, pulling back yesterday from multi-decade highs, offering some relief to risk-on investors and borrowers alike.
Hotel giant Whitbread checked in with a mixed third quarter update, showing a 3% dip in UK revenue but hints of recovery as hotel performance steadied. Premier Inn continues to shine as the group’s flagship, but challenges loom with weak UK hotel prices and a sluggish German economy potentially slowing expansion plans. While resilience is evident, Whitbread will need to keep Premier Inn leading the pack to weather an uncertain market.
US markets put risk back on the table last night, powered by cooler inflation data and a strong start to earnings season. Financial heavyweights lit up the scoreboard, while falling US government bond yields signalled hopes for rate cuts are back in play. Despite the optimism, regulatory headwinds and looming geopolitical uncertainties remind investors that 2025 won’t be a walk in the park.
US banks started earnings season with a bang, delivering big profit beats thanks to a rebound in dealmaking that gave investment banking divisions a boost. Loan growth held steady, credit loss provisions eased, and deal activity provided the cherry on top, signalling cautious optimism despite a mixed economic backdrop. The read-across for UK banks, particularly names like Barclays, is promising, as investors eye similar strength from their investment banking arms.
Brent crude oil climbed past $82 per barrel, fuelled by fresh supply concerns and the longest streak of US inventory declines since 2021, with stocks now at six-year seasonal lows. The IEA predicts a tighter oil market ahead, with added pressure from US sanctions on Russia and Iran, while OPEC sticks to its bullish demand outlook for 2026. In the Middle East, a ceasefire between Israel and Hamas reduces some regional supply risks, but oil’s rally seems more pumped by global fundamentals than geopolitics.”
