European markets opened on a mixed note on Friday as investors digested a blend of corporate news and economic data.

London’s FTSE 100 slipped by 0.13%, losing over 11 points to 8,338, while Germany’s DAX mirrored the trend, shedding 0.13%.

In contrast, France’s CAC 40 climbed 0.28%, and Spain’s IBEX edged up by 0.018%.

The pan-European STOXX 600 hovered just below flat at 9:20 am GMT+1, down by 0.031%.

Aviva’s sweetened deal boosts Direct Line shares

Direct Line Group’s shares surged 7.6% to £2.53 after FTSE 100 insurer Aviva announced a £3.6bn cash-and-shares bid to acquire its rival.

The revised offer of £2.75 per share represents a 73% premium to Direct Line’s closing price before initial discussions were revealed.

The company had earlier rejected a £2.50 per share bid, arguing it could independently revive its performance after years of underwhelming results.

In a joint statement, both companies highlighted the significant synergies the merger could deliver, potentially unlocking substantial value for shareholders.

Aviva has until Christmas Day to make a firm offer or walk away.

UK house prices report the largest monthly increase this year

UK house prices continued their upward trajectory in November, marking a fifth consecutive monthly rise.

Mortgage lender Halifax reported a 1.3% monthly increase, the largest so far this year, pushing the annual growth rate to 4.8%.

The average house price hit a record £298,083.

Positive employment data and easing interest rates have bolstered demand, according to Halifax’s Amanda Bryden.

She cautioned, however, that higher borrowing costs compared to recent years could temper growth in the months ahead.

Frasers navigates another contested acquisition

Frasers Group’s shares dipped 1.21% after it announced an offer to acquire Norwegian sporting goods retailer XXL.

The move is seen as part of CEO Mike Ashley’s broader strategy to challenge corporate actions he deems value-destructive, including controversial rights issues.

This bid mirrors similar situations with Boohoo and Mulberry, where Frasers pushed for changes in board composition and strategy.

While it withdrew its offer for Mulberry after opposing a share issue, Frasers continues to actively pursue growth through acquisitions, signalling its aggressive stance in reshaping global retail.

Other notable movers in London trading

Severn Trent and United Utilities: Both water companies are underperforming on the FTSE 100 today. Jefferies downgraded the stocks, citing a more balanced risk-reward outlook for each.

AJ Bell: Shares of the investment platform have dropped nearly 4% following a downgrade by Deutsche Bank. Analysts noted that the stock is now trading at approximately fair value, limiting its potential for further gains.

National World: The media group, which owns titles such as the Yorkshire Post and The Scotsman, has surged over 5%. The rally follows news of a takeover agreement with Media Concierge, an Irish company that owns several newspapers.

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The United Kingdom may face tough decisions on whether to retaliate against potential US tariffs under President-elect Donald Trump’s administration.

Jonathan Reynolds, the UK’s business and trade minister, stated in an interview with the Financial Times that Britain would “think very carefully” before adopting retaliatory measures if Trump imposes fresh tariffs.

Trump’s tariff plan raises concerns

Trump, who will return to the White House in January, has proposed blanket tariffs of 10% to 20% on nearly all imports.

Countries like Canada, Mexico, and China have already been named as targets.

While the UK is not explicitly on the list, the possibility of being impacted has sparked concern.

“In this country, there’s no political constituency for protectionism,” Reynolds noted, emphasizing that Britain prefers open markets and free trade.

He added that while retaliation is an option, the government is wary of measures that could raise the cost of goods and food for consumers.

Reynolds expressed hope that the UK’s balanced trade relationship with the US might shield it from aggressive tariff measures.

However, he acknowledged the uncertainty surrounding the incoming administration’s trade policies and the potential for a shift in priorities.

Free trade agreement unlikely

The minister downplayed the likelihood of a traditional free trade agreement between the two nations, citing differences in food standards as a significant hurdle.

“Our food standards will remain an obstacle,” he stated, signaling limited room for compromise on the issue.

Chancellor Rachel Reeves previously stressed the importance of free trade, vowing to make “strong representations” to Trump’s administration.

She highlighted the mutual benefits of open markets and the risks of protectionist policies.

Tariffs and inflation: a question mark

Bank of England policymaker Megan Greene weighed in on the potential economic impact of US tariffs.

She remarked on Thursday that it remains unclear whether Trump’s tariff proposals would push British inflation higher or lower, adding another layer of complexity to the situation.

“None of us know exactly what those tariffs might look like. We can’t even work out which direction tariffs would push inflation, in particular in the UK and also in the euro zone to some degree,” Greene said at a panel discussion hosted by the Financial Times.

UK consumer price inflation stood at 2.3% in October, with the Bank of England projecting it to approach 3% next year.

This increase is driven by several factors, including the diminishing effect of last year’s energy price declines and the front-loaded stimulus in the recent budget.

As Trump prepares to take office, Britain must navigate a delicate balance between safeguarding its trade interests and maintaining consumer affordability.

The prospect of tariffs looms large, but the UK appears committed to keeping its options open, prioritizing diplomacy over immediate retaliation.

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In November 2024, Chile’s inflation rate saw a positive drop to 4.2%, down from 4.7% in October.

This shift is significant for consumers and policymakers, as it comes amid various economic challenges and uncertainties.

The decrease in inflation provides hope for improving consumer behaviour and guiding economic strategies.

Consumer prices rose just 0.2% in November, a slowdown compared to October’s 1% increase.

This easing trend in inflation suggests that the factors causing prices to rise might finally be easing.

Analysts had anticipated a slightly higher increase of 0.3%, making the smaller rise rather interesting for economists monitoring Chile’s economy’s future.

Food and non-alcoholic beverage prices drop

This unexpected moderation could reflect changes in consumer confidence and spending habits.

One of the highlights of the November inflation report was the surprising drop in prices for food and non-alcoholic beverages, which fell by 0.3% after a substantial jump of 2.2% in October.

This decline is particularly significant as food prices greatly impact overall inflation.

Lower food costs could relieve households struggling with tight budgets and rising living expenses, helping boost consumer purchasing power and overall economic sentiment.

Additionally, prices for alcoholic beverages and tobacco also decreased by 1% in November, in sharp contrast to a 1.8% increase in the previous month.

This reduction may reflect changing consumer spending habits as people adapt to the current economic climate.

As prioritizing purchases becomes more essential, these sectors may see more adjustments, indicating a more cautious approach to discretionary spending.

A closer look at the inflation data reveals a general slowing trend across different categories within the consumer price index.

Other price categories slow down

Housing and utilities prices rose only 0.2% in November, significantly less than the 3.1% increase in October.

This cooling trend suggests that aggressive inflation contributors are beginning to stabilize, creating a more welcoming environment for consumers.

Similarly, the miscellaneous goods and services category saw a minor rise of just 0.1%, down from 0.4% the month before, and the recreation and culture sector also displayed reduced price growth.

However, core consumer prices—excluding the more volatile food and energy prices—actually increased by 0.5% in November, following a 0.2% increase in October.

This slight uptick raises important questions regarding underlying inflation trends in non-food categories, which economists and policymakers will closely examine for insights into future market dynamics and policy decisions.

Core consumer prices show moderate growth

The drop in the inflation rate to 4.2% will guide policymakers in Chile as they navigate economic recovery and stability.

Should this decline continue, it may influence the Chilean Central Bank to consider more aggressive monetary easing, aiming to stimulate growth without triggering a new wave of inflation.

Balancing economic growth and price stability will be a critical and delicate task for decision-makers. As the year comes to a close, Chile faces ongoing uncertainties in its economic landscape.

While recent inflation numbers provide some relief for consumers and businesses, both global and local factors will heavily influence the country’s financial future.

Implications for policymakers

The November data emphasizes the need for continuous monitoring and adaptable policies to maintain sustainable economic growth.

There’s hope that this decline in inflation might mark the start of a longer trend that benefits consumers and the economy overall, necessitating careful evaluation and responsive strategies as Chile moves forward.

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Argentina’s central bank announced on Thursday a dramatic cut in its benchmark interest rate, from 35% to 32%.

This is the latest in a string of monetary measures by the bank as the country struggles with an economic crisis marked by triple-digit inflation.

President Javier Milei’s administration hopes that this decision would demonstrate its commitment to restoring economic stability, but the effects of tough austerity measures have many people wondering about the long-term ramifications for the Argentine population.

Milei monetary strategy

President Javier Milei has supervised eight interest rate reductions since taking office in December 2023, bringing the rate down from a stunning 133% in October 2022.

The central bank justified the latest cut by citing a “consolidation of expectations for a lower inflation rate.”

This remark follows a market survey in which analysts revised their year-end inflation projections downward, expecting an average of 118.8%, down from 120% just a month earlier.

Milei’s administration has pursued a libertarian agenda, emphasizing austerity and budget cutbacks. While these measures have ostensibly reduced inflation, the typical Argentine citizen’s experience is somewhat different.

Poverty has risen, industrial activity has slowed, and the country has fallen into recession, raising concerns about the socioeconomic consequences of such measures.

Inflation trends & economic indicators

Inflation remains a significant issue in Argentina, as indicated by worrying numbers from the national statistics agency, the INDEC.

In October, annualized inflation reached a stunning 193%, a tiny decrease from previous months’ rates of more than 200%.

The sharp increase in rent and electricity expenses has been especially devastating for families, making everyday necessities increasingly unattainable.

While official inflation data may show hints of stabilization, many Argentines remain unconvinced. With the cost of basic commodities and services still rising, the prospect of recovery appears dim.

Furthermore, recent cuts to social services and mounting public-sector layoffs exacerbate household issues, putting additional strain on the nation’s social fabric.

The human cost of austerity

Milei’s austerity measures have a significant human impact, especially as economic indicators fluctuate.

For many, the decline in social services has resulted in a precarious existence, requiring families to prioritize essentials against rising living costs.

Layoffs in the public sector have heightened concerns about job security, and many professionals are negotiating a hazardous job market with dwindling opportunities.

Critics claim that Milei’s emphasis on lowering inflation through cuts is foolish. The very measures intended to stabilize the economy appear to reinforce cycles of poverty and inequality.

Opposition members argue that, while fiscal prudence is important, any long-term economic recovery must include provisions to safeguard the most vulnerable populations.

The road ahead: An uncertain outlook

As the crisis progresses, concerns arise regarding the appropriate mix of budgetary restraint and social support.

Advocates for more investment in social programs claim that if the human element of the crisis is not addressed, economic stabilization attempts may fail.

With public opinion becoming increasingly sceptical of government policies, the route forward remains loaded with complications.

In conclusion, while Argentina’s central bank is taking steps to combat inflation by lowering interest rates, the ramifications of austerity measures under President Milei suggest a challenging road ahead.

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