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This week's headlines
- UK construction falls – November PMI data showed a sharp slowdown in activity, during challenging economic conditions. Companies pointed to weak client confidence and delayed spending decisions before the Budget as key factors behind falling order numbers.
- US services show resilience – activity slightly picked up in November, reaching a nine-month high. Both general business activity and new orders improved, despite demand and cost pressures caused by the government shutdown.
- Euro Area inflation remains stubborn – inflation inched higher to reach 2.2% in November, up from 2.1% in October. The increase was led by Germany, while Spain and the Netherlands saw declines – highlighting an uneven picture across the bloc.
- Japan confidence grows – in November, consumer confidence hit its highest level since April 2024, beating expectations. This was thanks to broad improvements around income growth and employment outlook.
- Netflix eyes major expansion – the streaming giant has today entered exclusive talks to buy Warner Bros. Discovery’s film and TV studios, including their HBO streaming service. The potential deal would mark a major consolidation for the industry, with Netflix reportedly offering a $5bn breakup fee if the deal falls through.
What this means for financial advisers and clients
After the ‘excitement’ of last week’s Budget, this week’s economic activity has been fairly muted. In the UK, falling construction activity spells trouble for the country’s economic growth targets - particularly at a time when higher capital spending is needed to build-up momentum.
Across Europe, the small up-tick in inflation offers little encouragement for the European Central Bank (ECB) to cut interest rates this month. With rates still significantly below the US and UK at just 2%, the central bank is likely to stay cautious, keeping the interest rate environment relatively steady for now.
Chart of the week - Emerging Market disinflation
Source: Bloomberg
Why this matters
Since hitting post-pandemic highs, global economies have been fighting to bring inflation levels back under control. Developed markets, often overly cautious in lowering interest rates and facing fresh uncertainties like new US tariffs, have seen inflation remain stubbornly high.
Emerging markets, on the other hand, acted swifter and more decisively. Their interest rate cuts – for the first times in decades – have helped average inflation (CPI) fall below that of their developed counterparts.
This progress has been bolstered by a weakness in the US dollar, making emerging market debt – which is often denominated in dollars – cheaper to finance and significant tech and manufacturing stimulus accelerating China’s economy. The result: Emerging Markets have staged a strong comeback after a few years of relative underperformance.
The Markets
UK edges down
Both the FTSE 100 and FTSE 250 saw small falls this week. Mining companies benefited from rising copper prices, while defence companies gained from stalled Russia-Ukraine talks. On the other hand, the pharmaceutical sector and select financial stocks, such as HSBC, fell.
US awaits interest rate decision
The US remained flat (in USD terms) as investors await the Fed’s next interest rate decision on the 10th December. Continued uncertainty in the tech sector remains.
Mixed bag of Emerging Markets
China kept Emerging Markets subdued on disappointing manufacturing output and a clampdown on digital assets. However, South Korea’s KOSPI index rose as the US agreed to lower auto tariffs.
Little change for oil or gold
Both commodities were fairly flat this week, oil was supported by continued Russia-Ukraine tension limiting supply, while gold slipped despite growing expectations of future Fed rate-cuts.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -0.08% | 22.94% |
| FTSE 250 | -0.32% | 10.84% |
| S&P 500 | -0.79% | 10.09% |
| NASDAQ | -0.34% | 14.77% |
| FTSE Developed Europe Ex-UK | 0.19% | 23.94% |
| FTSE Emerging Markets | -0.49% | 16.70% |
| FTSE Japan | 0.70% | 18.54% |
| Brent Crude | 0.25% | -16.72% |
| Gold Spot | -0.32% | 61% |
| UK 10yr Gilt yield | -2bps | -14bps |
| US 10yr Treasury yield | +8bps | -48bps |
Source: FE FundInfo, goldprice.org, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 4th Decmeber 2025.
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This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
