Europe markets edge higher as euro zone inflation exceeds ECB target; Anglo American up 4%

OPEC and non-OPEC allies, an influential energy alliance collectively known as OPEC+, could decide to postpone its oil output hike when the group meets at its delayed policy meeting on Dec. 5, according to David Fyfe, chief economist at Argus.

“I think it is quite interesting. First of all, they have pushed the meeting back. Secondly, they have on several occasions already deferred the tapering of production cuts that was due to begin back in the autumn,” Fyfe told CNBC’s “Street Signs Europe” on Friday.

“Our feeling at Argus Media, when we look at the market for next year, we see likely demand growth of about a million barrels per day — more than matched by growth in non-OPEC supplies from places like the U.S., Brazil, Canada and Guyana,” Fyfe said.

“So, our feeling is they need to take a long hard look and potentially push those increases in supply further back into 2025,” he added.

— Sam Meredith

Europe’s mining stocks led the gains on Friday, up 0.8% at around 12:05 p.m. London time.

Mining giant Anglo American was last seen around 3% higher, while Antofagasta and Glencore were both trading up almost 1%.

— Sam Meredith

European stock markets have solid momentum behind them going into next year despite recent weakness, according to Michael Field, equity market strategist at Morningstar.

“The fact that we’ve all this negative news flow from the U.S. about tariffs and other kind of measures coming in is giving people pause for thought,” Field told CNBC’s “Squawk Box Europe.”

On whether there is opportunity in European equities given their discount against those in the U.S., Field said: “Ultimately, if you look at U.S. markets, they’re growing at a faster clip. There’s a reason the [price to earnings ratio] is higher there, and it’s reflecting the growth profile.”

“But at the same time… if you look at the trajectory of the European macro economy, things are going quite well for us at the moment. GDP is improving, inflation is coming down, interest rates seem to be coming down as well.”

“So we do actually have this good tailwind behind European markets that we should probably be considering. “

Euro zone inflation data for November came in at 2.3% on Friday, in line with expectations and above the European Central Bank’s 2% target.

The reading is seen as likely to bolster the case for a more cautious approach from the ECB at its December meeting.

“Today’s data coupled with the increase in negotiated wage growth in Q3, record low unemployment figures and decent money and credit data suggest to us that the ECB will stick with a gradual pace of easing,” Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said in a research note.

“We think the central bank will cut by 25bp in December, but it’s a close call.”

European Union flags flutter on the day European Central Bank (ECB) President Christine Lagarde speaks to reporters following the Governing Council’s monetary policy meeting in Frankfurt, Germany September 12, 2024. 

Jana Rodenbusch | Reuters

The main reason for the ECB to stick with a quarter-point rate cut on Dec. 12 was because the central bank’s January meeting will follow relatively quickly, Debono said.

“We now expect a 25bp cut at that meeting too, such that we now see the ECB cutting rates to 2.25% next year, following its January cut with a 25bp cut at each of its meetings in March and June,” Debono said.

Separately, ING’s Bert Colijn said headline euro zone inflation appears set to come in high again in December, before moderating early next year.

“With demand expected to remain weak, it doesn’t look like the ECB should be overly concerned about the current uptick in inflation,” Colijn said in a research note.

— Sam Meredith

Euro zone inflation rose from 2% in October to 2.3% in November, flash data from statistics agency Eurostat showed on Friday, above the European Central Bank’s 2% target.

Economists polled by Reuters had expected a 2.3% reading for headline inflation in November.

— Sam Meredith

Fabio Balboni, senior European economist at HSBC, told CNBC’s “Squawk Box Europe” on Monday that the European Central Bank will likely discuss a 50-basis-point interest rate cut when it meets in December, but then implement a 25-basis-point reduction.

The ECB is next set to meet on Dec. 12, with markets widely pricing in a 25-basis-point cut to be announced then.

“I think we should remember that this is the ECB so they always move very, very slowly,” Balboni said, explaining that at the last ECB meeting, the 25-basis-point reduction that was announced only started to be an option days before the meeting.

ECB President Christine Lagarde especially has been seeking consensus, Balboni pointed out, and to achieve this “you often have to move a little bit more slowly” than other central banks might.

“I think at the December meeting yes there will be some discussion on a 50-basis-point cut but in the end they’ll settle for a 25-basis-point cut,” he said, adding that there could however be some guidance about more aggressive rate cuts next year depending on economic growth data.

— Sophie Kiderlin

Shares of British mining giant Anglo American rose around 3% on Friday after Jefferies raised its stock rating to buy from hold.

The firm’s stock price is up nearly 25% year-to-date.

Shares of Anglo American year-to-date.

European markets opened slightly lower on Friday.

The pan-European Stoxx 600 index was 0.2% lower shortly after the opening bell, with most sectors in negative territory.

— Sam Meredith

France’s harmonized inflation rate came in at 1.7% in November, up slightly from 1.6% in October, according to preliminary data from the National Institute of Statistics and Economic Studies (Insee).

The November reading was in line with the expectations of economists surveyed by the Wall Street Journal and remains below the European Central Bank’s 2% target.

Office buildings in the La Defense business district in Paris, France, on Thursday, Nov. 28, 2024. 

Bloomberg | Bloomberg | Getty Images

The Harmonized Index of Consumer Prices (HICP) is adjusted for comparison with other euro zone countries.

Flash euro zone inflation data for November is expected later in the session.

— Sam Meredith

British insurance firm Aviva has contacted shareholders of Direct Line, The Financial Times reported on Thursday, citing people familiar with the move. The approach could pave the way for a hostile takeover attempt.

Aviva declined to comment on the report.

The Aviva Plc logo inside the offices containing their headquarters at 80 Fenchurch Street in the City of London, UK, on Tuesday, March, 5, 2024.

Bloomberg | Bloomberg | Getty Images

It comes shortly after Direct Line dismissed Aviva’s cash and share offer as “highly opportunistic” and said the proposal “substantially undervalued” the company. Aviva said it submitted an offer for its smaller rival on Nov. 19.

Shares of Direct Line soared 41% in the previous session, notching their highest level since 2023.

— Sam Meredith

As investors prepare their portfolios for 2025, Wall Street’s finest have identified several European companies they believe offer significant growth potential despite market uncertainties.

Morgan Stanley downgraded European equities to neutral earlier this year. Yet, they suggest “Europe is a stock picker’s market” now since equities on the continent have begun to diverge from each other in terms of performance.

Meanwhile, investment firm Bernstein’s top 10 picks outperformed the MSCI Europe Small index by 5 percentage points since the end of October.

CNBC Pro subscribers can read more here.

— Ganesh Rao

As Europe faces the prospect of tariffs on its exports to the United States, TS Lombard has advised investors in the region on how to “tariff-hedge” their portfolios.

In a note this week, Davide Oneglia, director of European and global macro at TS Lombard, advised European investors to address their “tariff risk” by looking at their exposure “in the way Donald Trump … does, i.e. in terms of the USD value of the U.S. deficit/surplus in goods by country and sector.”

He suggested three key ways investors could protect their portfolios.

Pro subscribers can read more here.

— Holly Ellyatt

European markets are expected to open mixed on Friday.

The U.K.’s FTSE 100 index is expected to open 7 points higher at 8,285, Germany’s DAX down 13 points at 19,408, France’s CAC down 5 points at 7,173 and Italy’s FTSE MIB down 48 points at 33,261, according to data from IG.

Market participants will closely monitor flash euro zone inflation data for November, as well as preliminary inflation readings for France and Italy.

— Sam Meredith