All eyes are on today's inflation data. The TPP midweek market update.

Markets have moved off highs this week as all eyes are on today's US inflation data.

The S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite all slipped 0.3% on Tuesday as bond yields ticked higher. Stock and sector performances were mixed, with about twice as many S&P 500 components rising as falling on the day.

That’s the second day in a row after all 3 indices closed lower on Monday. There is a little apprehension around the inflation figures due to be released later today.

Economists surveyed by FactSet expect November to deliver another month of stalled progress in getting inflation back down to the Federal Reserve's 2% goal. Headline CPI is expected to rise again by 0.2% month over month—which would be the fifth month in a row that inflation has registered at that pace. It would push the annual rate to 2.7% for November, up from the 2.6% rate logged in October.

Core CPI, which excludes more volatile food and energy costs, is expected to be a bit steadier, measuring 0.3% month over month in November for the fourth consecutive month. November's core reading is expected to again measure 3.3% compared to a year ago—the same pace as October.

M&A has been in the U.S. headlines this week as news of a potential tie-up between snack giants Mondelez and Hershey was announced on Monday, while Tuesday’s headline was about Walgreens Boots Alliance talking to a private-equity firm about a sale.

U.S. and U.K. pharmacy chain Walgreens cut its dividend earlier this year and was then booted out of the Dow in favour of Amazon, adding insult to injury. News of interest in a takeover by Sycamore Partners sent the stock up nearly 18%.

The flurry of recent dealmaking may be a sign of rising optimism among corporate executives and their advisors. There's plenty of hope on Wall Street that M&A will get a softer regulatory touch under the new Trump administration.

In the meantime, there's one deal that won't be happening. A federal judge today ruled to block a merger between grocery chains Kroger and Albertsons, which had been challenged by the Federal Trade Commission on antitrust grounds.

There's a rosier post-election outlook way down the size spectrum, as well.

The National Federation of Independent Business' small business optimism index jumped by 8 points in November, to 101.7—its highest level since June 2021. The gap between survey respondents expecting a better economy ahead and those who don't surged to +36%, from -5% a month earlier, the new data show.

“The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners," NFIB Chief Economist Bill Dunkelberg said in a statement. "Main Street also became more certain about future business conditions following the election, breaking a nearly three-year streak of record high uncertainty."

In Europe, stocks took a brief moment to shine on Monday morning after China vowed to ramp up policy stimulus to spur growth in 2025. The good news didn’t stick though when the U.S. market opened. The rally halted and has been followed by a two day slide. The European STOXX 600 index is trading lower this morning by 0.2%, falling for the second day in a row after finishing 0.5% lower on Tuesday.

The CAC in Paris led the decline Tuesday falling 1.1%, the most among major European economies after getting a brief respite on Monday. The CAC has had a terrible year, currently trading down nearly 2% for 2024. Political tensions continue to hurt the market.

The FTSE 100 wasn’t too far behind Paris, falling 0.9%, its worst day since 12th November. Mining shares led the drop with Gencore, Antofagasta and Anglo American all falling between 1.1% and 3.5%.

Precious metal miners dropped 1.7%, while aerospace and defence stocks saw the biggest sector fall, down 2.1%.

Ashtead dropped 14% to the bottom of the FTSE 100. The equipment rental firm said it was proposing to move its primary listing to New York from London and also warned of lower than expected annual profit due to a weak commercial construction market in the United States.

Ashtead joins a growing list of companies moving away from European listings in favour of U.S. markets, where valuations are generally higher.

Things are going from bad to worse for London’s IPO market, where less money has been raised this year than on some tiny frontier venues.

Fundraising from London initial public offerings has declined about 9% this year to $1 billion, pushing the UK four spots lower to 20th place in a ranking of global IPO venues, according to data compiled by Bloomberg through the end of November.

It’s been leapfrogged by upstarts including Oman, a market that is 1% the size of the UK, as well as Malaysia and Luxembourg. That’s a big change from just a few years ago, when London would regularly feature among the top five venues globally.

The rankings show the depth of the challenges for the UK: The market has been undermined by low valuations, a risk-averse pool of local investors and growing competition from other financial centres. While the nation recently overhauled its listing rules, investors and executives say more needs to be done to reinvigorate the 300-year-old bourse.

One small piece of good news is that British stocks saw their first monthly inflow in five years in November, potentially marking a turning point, as cheap valuations, political stability and Britain's relative immunity to escalating trade tensions attract investors.

Traders will be closely watching the inflation data out of the U.S. this afternoon. This has a tendency to move the market, unfortunately, it’s impossible to know which way until the numbers are released! Such is the nature of trading. Long-term positions tend to ignore the short-term volatility but our traders will always be looking for opportunities in the market. Let’s hope there are some this afternoon.

More from us at the weekend with our trading week in review.

‍