European markets await euro zone inflation data

The U.K. is set to roll back some of the ringfencing rules that were imposed on banks in response to the Financial Crisis, City Minister Andrew Griffith told the Financial Times.

Since 2019, banks with more than £25 billion ($29.9 billion) in deposits have been required to formally separate their consumer operations from their investment banking arms, including holding separate pots of capital to protect against losses in each and having separate boards.

Lenders with limited U.K. trading activities such as Santander UK, Virgin Money and TSB Bank could soon be exempt from the measures, the FT reports, with proponents arguing this will make them more competitive.

Griffith said it would “make the U.K. a better place to be a bank,” and “release some … trapped capital over time.”

The biggest investment banks, including HSBC and Barclays, would still be required to ringfence their operations to reduce risk to consumers from shocks in other parts of the business.

The government is promoting the reform as part of a package of measures to boost the U.K. financial sector.

— Jenni Reid

A fall in British businesses’ confidence was recorded in two surveys published Wednesday.

A gauge from bank Lloyds showed business confidence at its lowest level since February 2021 and below the long-term average.

It also found overall economic optimism fell for a sixth straight month and hiring intentions were at an 18-month low.

Wage expectations dipped slightly for businesses, but they said they would continue to target higher prices for their goods and services to offset higher operating costs.

Meanwhile, a survey of the services sector by the Confederation of British Industry found a decline in optimism for the third consecutive quarter. The fall was sharpest since May 2020, when the U.K. was in lockdown.

— Jenni Reid

SBB shares climbed 5% in early trade to lead the Stoxx 600 after the Swedish real estate company agreed to sell a 49% stake in its educations unit to Brookfield for 9.2 billion Swedish krone ($870.42 million).

At the bottom of the European blue chip index, Swedish bank Avanza fell 7% after suggesting the Riksbank’s latest policy rate hike will not impact its net interest income positively.

– Elliot Smith

France was the first major European economy to report inflation data on Wednesday.

The French consumer price index rose by 0.4% month-on-month and 6.2% year-on-year, according to preliminary figures from statistics office INSEE, unchanged from October and slightly above projections of 0.3% monthly and 6.1% annually.

On an EU-harmonized basis, the annual rate was unchanged at 7.1% in November, in line with forecasts.

– Elliot Smith

Goldman Sachs’ Global Head of Commodities Research Jeff Currie told CNBC that historically, oil stocks have traded at a much higher premium to crude oil prices compared to current price levels.

For instance, the price gap between SPDR Oil & Gas ETF and ICE Brent Crude futures contract was about $66.60 on Tuesday. That’s significantly lower than the $104 gap recorded at the start of January 2017, according to Koyfin data, as the chart below shows.

Wall Street pros are worried about the outlook for stocks, and are urging investors to stay defensive. These stocks with margin growth could be safe bets.

Pro subscribers can read more here.

— Zavier Ong

European markets are heading for a higher open on Wednesday as regional markets await the latest inflation data from the euro zone in November.

The U.K.’s FTSE index is expected to open 23 points higher at 7,536, Germany’s DAX up 68 points at 14,414, France’s CAC up 29 points at 6,697 and Italy’s FTSE MIB up 119 points at 24,597, according to data from IG.

Data releases include preliminary inflation figures for the single currency area, France’s and Italy’s final third quarter gross domestic product readings and Ireland’s unemployment rate for November.

— Holly Ellyatt