The market is perfectly aligned with the age-old adage: buy the rumour. Whether it will sell the news next week remains to be seen, but this afternoon brings a key opportunity to refine that 88% forecast. At 10:00 a.m. Washington time, the US administration is due to release the September PCE inflation figures - originally scheduled for 31 October but delayed by the government shutdown. The data is now over two months old but nonetheless significant, as no other inflation figures have been published in recent weeks and inflation remains one of the primary obstacles to a rate cut.

Economists expect annual PCE inflation to come in at 2.8%, up from 2.7% in August, equivalent to a monthly increase of 0.3%. Core PCE inflation, which strips out the most volatile components, is expected to rise by 0.2% month-on-month. If price growth remains broadly within these expectations, a rate cut next week will be all but sealed. The only truly problematic scenario would be a sharper-than-expected acceleration towards the 3% mark. In such a case, market disruption could follow.

Barring that, the moderately optimistic tone that has characterised early December is likely to persist, particularly as the relevance of 2025’s macroeconomic risks begins to fade with the year’s end approaching.

As I noted yesterday, US investors continue to play the rate cut narrative through small caps. One sentence sums it up: the Russell 2000 gained 0.8%, while the Nasdaq 100 slipped 0.1% at the bell. The Russell 2000 even notched a new closing high at 2,531 points. Elsewhere, the market largely drifted, except for Meta Platforms, which surged 3.4% following unconfirmed reports of a significant scaling back of its Metaverse ambitions.

Mark Zuckerberg is said to have abandoned part of his dream of a parallel universe, slashing spending by 30%. Analysts suspect this reallocation is aimed at funnelling capital into the seemingly bottomless barrel of artificial intelligence, rather than the already $80 billion–deep well of the Metaverse, with little to show for it.

AI remains a compelling narrative driver for markets, despite growing concerns about the future profitability of the massive sums currently being poured into it. In well-informed circles, whispers abound that AI could be Time magazine’s “Person of the Year” for 2026. The verdict is expected next week. On betting platform Polymarket, AI currently leads the field with 37% of the vote, ahead of Nvidia CEO Jensen Huang (32%), himself a figurehead of the AI revolution.

Third place, however, has slipped from Sam Altman, who now trails at 8%, behind Pope Leo XIV (10%), whose presence in the rankings remains something of a mystery given the absence of any notable track record. Altman has lost ground in investors’ eyes as he has become increasingly erratic, and as doubts have grown over whether OpenAI is truly the juggernaut once expected to dominate the sector.

In recent weeks, Alphabet has methodically overtaken OpenAI, while Anthropic has transformed from a lagging rival into a formidable competitor. The financial world is now captivated by Dario Amodei, CEO of Anthropic and something of an anti-Altman. At a New York Times event on Wednesday, Amodei didn’t hold back, criticising his counterpart — who “likes big numbers” and the YOLO approach — as both brilliant and dangerous, to his own firm and to the sector at large.

Add in the open-source challengers, Chinese competitors, and a few other unpredictable variables, and it becomes clear that the jury is still out on the sector’s eventual winners and losers. That said, AI remains firmly at the centre of the investment game.

Now, after this extended digression into the world of AI, let us return to more grounded matters. While the US awaits its inflation verdict, it was India’s central bank that took centre stage this morning. As expected, the Reserve Bank of India cut its benchmark rate by a quarter-point and injected liquidity into the system. The ongoing trade spat with the United States is beginning to sting, justifying a more accommodative monetary stance.

In contrast, expectations of a rate hike in Japan in two weeks’ time are gaining traction.

In the Asia-Pacific region, Japan erased yesterday’s gains with a 1.2% drop. Mainland Chinese and Hong Kong markets rebounded, while South Korea advanced once again, buoyed by renewed domestic enthusiasm for equities following a series of incentive policies. The KOSPI is up 68% year-to-date, making it the most prolific among major global indices. India and Australia also posted modest gains.

As for Europe, the opening looks uncertain, albeit with a slight upward bias.

Today's economic highlights:

On today's agenda: household spending in Japan and factory orders in Germany; In Canada, the hourly wage rate for permanent employees year-over-year; In the United States, non-farm payroll changes, the unemployment rate, durable goods orders, factory orders, and the University of Michigan sentiment. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,225.06
  • Crude Oil (BRENT): US$63.18
  • United States 10 years: 4.06%
  • BITCOIN: US$92,378.2

In corporate news:

  • Visa is relocating its European headquarters to a 300,000 sq ft office space in London's Canary Wharf.
  • Big Yellow Group has terminated discussions with Blackstone regarding a potential takeover deal.
  • Albion Enterprise VCT has reduced its dividend following a drop in its interim net asset value due to macroeconomic uncertainty.
  • NARF Industries PLC has secured a $3.6 million contract from the U.S. government to create cybersecurity recovery solutions.
  • Gelion successfully reached a significant fourth-quarter areal capacity milestone with its advanced sulfur battery technology.
  • Shell has increased its stake in Brazil's pre-salt oil projects by acquiring additional equity in the Atapu and Mero units.
  • Aroundtown SA has issued a GBP400 million bond for refinancing purposes and initiated a buyback tender to extend its maturity.
  • Ferrovial's CEO is optimistic about growth and expansion opportunities in U.S. airports and infrastructure, particularly anticipating long-term passenger increases at the JFK Terminal.
  • Swiss Re aims to increase its net profit to $4.5 billion by 2026 and has announced a $500 million share buy-back program for the same year.
  • Schott Pharma anticipates a modest revenue growth of 2-5% and an EBITDA margin of around 27% for FY 2025/26, which is below market expectations due to prevailing uncertainties.
  • Toscana Aeroporti recorded over 600,000 passengers in November for the first time, marking a 10.4% increase year-over-year with a total of 613,000 passengers.
  • Premia Finance has agreed to swap its 51% stake in Prestito Più for shares with Agostino Costa Marras.
  • BHP has initiated trials of battery-electric haul trucks to cut emissions.
  • Rio Tinto has initiated trials of battery-electric haul trucks to cut emissions.
  • Thermo Fisher has entered into an agreement to sell, distribute, and manufacture GENinCode's CARDIO inCode-Score, a polygenic risk score test designed for predicting and preventing coronary heart disease.
  • Netflix is in exclusive negotiations to acquire Warner Bros. Discovery's studio and streaming assets for $28 per share, offering a $5 billion breakup fee if the merger is blocked by regulators.
  • Google is expanding its AI capabilities and strategic partnerships, launching new services like Gemini 3 Deep Think Mode, while also facing regulatory scrutiny and EU feedback requests regarding its advertising practices and safety regulations.
  • Chevron and its Gorgon joint venture partners have committed to a $2 billion AUD investment for the Stage 3 development of the Gorgon natural gas project.

See more news from UK listed companies here

Analyst Recommendations:

  • Balfour Beatty Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 710 to GBX 760.
  • Compass Group Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 3000 to GBX 3100.
  • Whitbread Plc: Berenberg maintains its buy recommendation and reduces the target price from GBX 3500 to GBX 2900.
  • Wise Plc: Grupo Santander initiates an Outperform recommendation with a target price of GBX 1090.
  • Aj Bell Plc: Deutsche Bank maintains its buy recommendation and reduces the target price from GBX 625 to GBX 570.
  • Workspace Group Plc: Deutsche Bank maintains its buy recommendation and reduces the target price from GBX 520 to GBX 480.
  • Derwent London Plc: Deutsche Bank maintains its hold recommendation and reduces the target price from GBX 2100 to GBX 2000.
  • Whitbread Plc: Bernstein maintains its underperform recommendation and reduces the target price from GBX 2500 to GBX 2300.
  • Pagegroup Plc: BNP Paribas downgrades to underperform from neutral and reduces the target price from GBX 250 to GBX 200.
  • Hays Plc: BNP Paribas maintains its outperform recommendation and reduces the target price from GBX 75 to GBX 67.
  • Kingfisher Plc: Peel Hunt maintains its add recommendation and raises the target price from GBP 3.20 to GBP 3.30.
  • Watches Of Switzerland Group Plc: Peel Hunt maintains its hold recommendation and raises the target price from GBP 3.70 to GBP 4.50.
  • Londonmetric Property Plc: Morgan Stanley maintains its equalwt recommendation and raises the target price from GBX 210 to GBX 215.
  • Hammerson Plc: Morgan Stanley maintains its equalwt recommendation and raises the target price from GBX 325 to GBX 350.