The yield on France's 10-year OAT edged up to 3.04%, while the risk premium over German Bunds widened to 90 basis points, marking the highest level since 2012 amid escalating political uncertainty in France. The 2025 budget remains far from approval, and Marine Le Pen’s far-right party is threatening to bring down the government if her demands on the budget are not met, which include blocking electricity tax increases and raising state pensions. The budget bill for next year must be passed by December 21st and the minority government from Michel Barnier is under pressure to reduce the French debt and control the public finances. The government aims to cut the deficit from an estimated 6% of GDP this year to 5% in 2024 through a €60 billion austerity plan. Meanwhile, persistent economic challenges in Europe and growing concerns over the potential implications of a second Donald Trump administration continue to weigh on investor sentiment.

The STOXX 50 was down 0.5% and the STOXX 600 edged 0.1% lower on Wednesday, extending losses from previous session. Market sentiment remained cautious as Donald Trump continued assembling his administration team and traders assessed the potential impact of recently announced tariffs. Trump appointed Jamieson Greer as the US Trade Representative and Kevin Hassett as director of the National Economic Council. Greer had been involved in trade decisions during Trump’s first term. French stocks were among the hardest hit, namely Societe Generale (-2.3%), BNP Paribas (-2%), AXA (-2.3%) and Saint-Gobain (-2%) amid mounting concerns about the political situation in the country. On the earnings front, shares of Easyjet gained over 2% after the airline posted a 25% rise in full-year operating profit. In contrast, Aston Martin tumbled 4% after the luxury carmaker issued another profit warning.

The personal consumption expenditure price index in the US likely rose 0.2% month-over-month in October 2024, the same as in September and the core index, which excludes food and energy, is set to rise 0.3%, also the same as in the previous month. Meanwhile, the annual PCE rate is seen edging higher to 2.3% from 2021-lows of 2.1% in September and the annual core PCE inflation is projected to rise to 2.8% from 2.7%. These increases in annual rates are likely influenced by base effects from the previous year, although the broader trend of slowing disinflation is expected to persist. The Federal Reserve revised its economic projections in September, lowering annual PCE and core PCE inflation estimates to 2.3% and 2.6%, respectively, from 2.6% and 2.8% in June.

The Japanese yen strengthened past 152.5 per dollar on Wednesday, reaching its highest level in over two weeks, fueled by speculation that the Bank of Japan may raise interest rates in December. BOJ Governor Kazuo Ueda recently hinted at the possibility of a rate hike next month, citing concerns over the yen’s weakness. Investors are now awaiting Tokyo's inflation data later this week, which could offer further clues on the outlook for monetary policy. The yen also received support from increased safe-haven demand following US President-elect Donald Trump’s threat of tariffs on China, Mexico, and Canada. Additionally, the dollar and US Treasury yields retreated after the nomination of Scott Bessent as Treasury Secretary, leading traders to dial back on their "Trump trades."

Profits earned by China's industrial firms declined by 4.3% yoy to CNY 5,868.04 billion in the first ten months of 2024, steeper than a 3.5% fall in the prior period. This reflected an economic downturn driven by persistently shaky demand, deflation risks, and property weakness. Profits in state-owned companies dropped further (-8.2% vs -6.5% in January-Sept), while those in the private sector fell much slower (-1.3% vs -9.6%). Among industries, profits shrank for non-metallic minerals (-49.6%), coal mining (-23.7%), chemicals (-7.7%), special equipment (-5.2%), electrical machinery (-5.1%), cars (-3.2%), and oil and natural gas (-1.8%). Meanwhile, petroleum and other fuels, and ferrous metal smelting turned from profits to losses. On the other hand, profits rose for non-ferrous metal smelting (40.0%), heat production (13.8%), textile (5.3%), computer, communications (8.4%), and agriculture, food (2.8%). Monthly, industrial profits shrank by 10.0% yoy, after a 27.1% slump in September.

The Reserve Bank of New Zealand lowered its official cash rate (OCR) by 50 basis points to 4.25% during its November 2024 policy meeting, marking the third consecutive rate cut this year and aligning with market expectations. The annual inflation rate in New Zealand slowed to 2.2% in Q3 2024, the lowest reading since March 2021, down from 3.3% in the previous quarter. Meanwhile, economic activity in New Zealand remains subdued, with output still below potential and employment growth expected to remain weak through mid-2025. With inflation now close to the midpoint of the policymakers' 1% to 3% target band, combined with weak GDP and labor market figures, the committee is increasingly confident about further easing monetary policy restraints.