MARKET WRAPS
Stocks:
European indexes were mostly lower, tracking moves in U.S. and Asian equities, as uncertainty over Trump's policies at home and overseas weighed.
The U.S. president's comments Wednesday about defense companies and the housing market shook investors, while labor and payroll data failed to boost expectations for another near-term interest rate cut.
On the continent, defense stocks were one green spot Thursday, after Trump called for U.S. defense spending to hit $1.5 trillion.
Jefferies said the news was particularly good for BAE Systems and Leonardo , as the U.S. defense department is an important customer of both.
Energy stocks were lower and Shell led the sector's fallers in Europe, after an update pointed to a weaker-than-expected end to the year.
In London, the majority of miners fell in opening trade as commodity prices slipped.
On Thursday's agenda, weekly jobless claims data at 1330 GMT are in focus.
Stocks to Watch
EssilorLuxottica's deal to produce Meta's AI smartglasses might not offer such a great advantage after all, Baader Helvea said as it cut its rating on Essilor stock to reduce from add, and lowered its price target to 282 euros from 319 euros.
Meta is pausing the planned rollout of the Ray-Ban Display smartglasses to countries outside the U.S., citing high demand and short supply, which Baader said suggests the companies were unable to produce the smartglasses at scale.
RBC Capital Markets said the smartglasses collaboration would weigh on EssilorLuxottica's profit margins , and trimmed its target price on the stock to 320 euros from 340 euros.
U.S. Markets:
Stock futures inched lower as investors tracked updates on Trump's incursion in Venezuela and his proposed intervention in homebuilding.
Forex:
The dollar rose after U.S. economic data gave markets little impetus to bet on another near-term Fed rate cut.
Sterling's recent strengthening on positive risk sentiment and reduced U.K. fiscal concerns looked overdone, Danske Bank said, adding that the pound was likely to fall against the euro from here.
"The U.K. economy remains on a weak footing, and we think this can trigger more easing from the Bank of England."
Bonds:
Treasury yields were mixed with yields on short- and medium-term notes falling, while yields on maturities of 10 years and longer were little changed.
"Data-wise, the focus remains on the U.S. jobs market," ING said.
Eurozone government bond yields rose slightly, showing limited negative reaction ahead of sizeable bond supply during the day.
Commerzbank said, with the data calendar thinning out, issuance was expected to be the key driver of eurozone government bond markets Thursday.
Duration could see a more friendly session in the afternoon once the supply has been digested, it added.
Goldman Sachs said multi-asset portfolios might get a negative input from bond performance in the first half of the year.
Bonds were unlikely to provide a large buffer in equity drawdowns, it added, saying it was looking for alternative diversifiers and hedges to improve the risk-reward.
Energy:
Oil prices continued to trade sideways.
Traders were digesting the latest U.S. actions on Venezuela, including a plan to dominate the Venezuelan oil industry and the seizure of two tankers.
" While geopolitical risk is preventing a deeper sell-off for now, the prospect of higher Venezuelan exports has already weighed on Canadian crude prices and risks adding barrels to a market that is already grappling with ample supply," Saxo said.
Julius Baer expected oil prices to trade in the high $50s for much of 2026, adding that traders seemed unbothered and unimpressed by the recent U.S. intervention in Venezuela.
Gas
Natural-gas prices remained in a tight range.
Prices settled higher in the previous session as colder weather across Europe and storage declines provided support.
According to Gas Infrastructure Europe, EU inventory levels were 58% full.
"The latest positioning data indicate that investment funds reduced their net short position in TTF for the third consecutive week," ING said.
"Funds bought 6.2 TWh [terawatt-hour] over the last reporting week, leaving them with a net short of 72.4TWh."
Metals:
Gold fell on a stronger dollar and as investors awaited the release of key U.S. data later this week.
"The move reflects profit-taking after crowded positioning in a market where liquidity has improved slightly, rather than a deterioration in the underlying narrative," Sucden Financial said.
"Dips are likely to be met with renewed buying interest as long as the broader allocation and structural support for precious metals remains intact."
Copper
Copper retreated , falling back below the $13,000-a-ton mark as traders locked in profits.
"While long-term prospects for copper remain bullish, the pace of the rally, up more than 40% last year-the strongest since 2009-has raised the risk of sharp pullbacks as profit-taking sets in," according to MUFG.
EMEA HEADLINES
German Factory Orders Jump as Tariff Headwinds Ease
German manufacturing orders jumped in November, with large-scale orders once again boosting the factory sector as tariff uncertainty subsides.
Total orders were up 5.6% on month, following a 1.6% uptick in October, statistics agency Destatis said Thursday. Economists polled by The Wall Street Journal forecast a drop of 0.8% for November.
Shares in Primark Owner AB Foods Tumble on Profit Warning, Sales Disappointment
Shares in Associated British Foods fell sharply after the group issued a profit warning, citing underperformance at its Primark clothing retailer and some of its food businesses as they grapple with a challenging consumer environment.
The group said it expects both adjusted operating profit and adjusted earnings per share to decline in the fiscal year that ends in September as tough conditions continue in the short term.
Tesco Says It Expects to Hit Higher End of Profit Target
Tesco said it expects to land in the higher end of its profit guidance for fiscal 2026, after reporting a rise in sales for the third quarter and Christmas period.
The U.K. supermarket chain said on Thursday that it expects to hit the higher end of its previously guided range, between 2.9 billion pounds and 3.1 billion pounds ($3.90 billion- $4.17 billion) in group adjusted operating profit for the fiscal year ending February. The metric removes exceptional and other one-off items.
GLOBAL NEWS
Trump Moves to Ban Big Investors From Buying Single-Family Homes
President Trump said he will ban large investors from buying single-family homes, the administration's first significant move to address the country's severe housing shortage.
"I am immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it. People live in homes, not corporations," Trump said in a social-media post Wednesday.
Trump Orders Crackdown on Defense Industry Stock Buybacks
President Trump lashed out at U.S. weapons manufacturers Wednesday, announcing new restrictions on executive pay and stock buybacks while also threatening to cancel contracts with one of the country's largest defense contractors.
An executive order posted Wednesday evening said companies "are not permitted in any way, shape, or form to pay dividends or buy back stock, until such time as they are able to produce a superior product, on time and on budget."
Swiss Inflation Inches Up, Easing Pressure on SNB Over Negative Rates
Swiss inflation edged up in the final month of 2025, likely alleviating the pressure on the country's central bank to cut rates below zero.
Annual consumer-price inflation climbed to 0.1% in December from 0.0% in November, the first rise in five months, Switzerland's statistics office said Thursday.
China Detains Church Leaders as Crackdown on Religion Intensifies
BEIJING-Chinese authorities are widening a crackdown on Christian groups, this week detaining church leaders in southwestern China as officials across the country intensify a campaign to root out religious organizations beyond the state's control.
The roundup of preachers and congregants of Early Rain Covenant Church, a prominent unsanctioned Protestant group in Sichuan province, shows that China has been undeterred in pursuing its campaign despite calls by U.S. Secretary of State Marco Rubio for Beijing to allow its people to worship without fear of retribution.
Cuba Is Already on the Brink. Maduro's Ouster Brings It Closer to Collapse.
Elderly Cubans are digging through garbage for scraps of food in Havana. In the country's second city, Santiago, crowds have gathered, blaring music by Cuban exiles such as Gloria Estefan and Willy Chirino, who sings "Our day is coming soon."
The U.S. ouster of Venezuelan dictator Nicolás Maduro has jolted this country of fewer than 10 million people, which has long relied on Venezuela for oil imports that have barely kept its tiny economy from collapsing.
The War in Gaza Is Paused but the Battle Over Aid Rages On
TEL AVIV-The cease-fire in Gaza has held for almost three months, but the battle over aid in the enclave rages on and is rapidly turning into a standoff-with two million Palestinians caught in the middle.
Throughout the two-year war, Israel and humanitarian groups have clashed over the amount and type of aid allowed into the territory and who could distribute it.
Greenland Confronts the Reality That Trump Isn't Going Away
NUUK, Greenland-For the past year, Denmark's plan for dealing with President Trump's ambition to acquire Greenland was to tell him it wasn't for sale, spend more on Arctic defense and hope the American president's enthusiasm would melt away.
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01-08-26 0518ET
