London Midday: FTSE Edges Higher Ahead of Expected Fed Rate Cut

Switzerland's parliament elected Economy Minister Guy Parmelin as the country's president for 2026, succeeding Finance Minister Karin Keller-Sutter.

Parmelin will take up a role that is rotated among the seven members of the Federal Council. He was vice president this year, and will now assume the head of state position because it is his turn. Foreign Minister Ignazio Cassis, who will be his deputy, will then become president in 2027.

While the job is largely ceremonial, it gained attention this year as Keller-Sutter took a direct role in negotiating with the White House over tariffs. Just hours after a call she made to US President Donald Trump in April, he suspended much of his trade onslaught on the world.

Yet another conversation between the two in late July went awry, resulting in Switzerland getting the highest import levies of any industrialized country. In a subsequent dash to Washington — just before the tariffs were to take effect — she was snubbed by most administration officials and ended up only talking to Secretary of State Marco Rubio, whose portfolio doesn't include trade.

Keller-Sutter then took a less prominent role in negotiations, throwing the spotlight on Parmelin. The 66-year-old economy minister's remit includes trade and under his direction Switzerland was finally able to clinch an agreement with the US in mid-November.

Still, the lower tariffs — 15% on most goods versus 39% previously — have yet to kick in.

Parmelin hails from the French-speaking part of Switzerland and is the longest-serving member of the Federal Council. He already served as president in 2021. A member of the right-wing Swiss People's Party, he's a trained wine grower.

As president, Parmelin will deliver welcoming remarks at the World Economic Forum's annual meeting in Davos in January — an event that will be attended by Trump for the first time since 2020, though he gave a virtual address at this year's event just after his inauguration.

Source: Bloomberg Europe

Microsoft is planning new investments totaling close to $23 billion in artificial intelligence, with a significant chunk set aside for India, marking its largest-ever investment in Asia.

The U.S. tech giant said Tuesday that it will invest US$17.5 billion in India over the next four years to advance the country's cloud and AI infrastructure, skilling and ongoing operations. Microsoft would have the largest hyperscale presence in the country, with a new data center becoming operational in mid-2026.

The latest investment plan is in addition to the US$3 billion in spending announced earlier this year.

The spending will "help build the infrastructure, skills, and sovereign capabilities needed for India's AI first future," Microsoft Chief Executive Satya Nadella said in a post on X.

The investment came after Nadella's meeting with Prime Minister Narendra Modi, who also met with the CEOs of Intel and Cognizant.

Microsoft separately disclosed an additional investment of 7.5 billion Canadian dollars, equivalent to US$5.42 billion, in the next two years, to expand its Azure data-center regions in Canada. New cloud capacity is expected to come online in the second half of 2026. The move is part of the company's total planned spending of C$19 billion between 2023 and 2027.

Demand for the tech giant's cloud services is so great that Microsoft will boost its AI capacity by more than 80% this year and double its total data-center footprint in the next two years, Nadella told investors in October.

The company's closely watched Azure cloud business grew by about 40% for its first fiscal quarter ended Sept. 30, also topping expectations.

Tech giants such as OpenAI, Meta and Alphabet have been pouring money into chips, data centers and electrical power at historical levels.

India has attracted billions of dollars from major technology companies this year. Google has pledged $15 billion to establish its first AI hub in the country, while Amazon's cloud unit plans to spend over $8 billion in the country.

Source: TradingView

After volatility in August and September, driven by summer shutdowns, October data was key to gauging underlying industrial momentum. Leading indicators suggested a mild contraction, but the official estimate shows a sharper decline in the seasonally adjusted index.

Istat reports a 1% monthly drop in the seasonally adjusted production index and a 0.3% annual decline (adjusted for working days). The monthly fall affects consumer goods (-1.8%), investment goods (-1%) and intermediate goods (-0.3%), while energy is the only segment posting growth (+0.7%).

Sector details offer few surprises: the year-to-date trend confirms marked weakness in transport equipment and textiles, while pharmaceuticals and electronics performed well. The modest decline in machinery and equipment suggests that the investment cycle hinted at in third quarter national accounts is not yet on solid ground.

Today's data dampens hopes of a positive contribution from industry to fourth-quarter growth. Slight improvements in order books and a small drop in inventories, as shown by November's business confidence survey, should support higher production in the coming months – but likely only gradually. A more decisive acceleration will probably require Germany's ambitious investment plan to kick in, which is unlikely before the second half of 2026.

In short, today's figures don't change the overall picture: exiting stagnation remains a bumpy process. We still expect positive GDP growth for Italy in the final three months of the year, but the risk is higher that services will once again carry most of the weight.

Source: ING

The U.K. economy is expected to see lackluster growth and a build-up in labor market slack in the first half of 2026, prompting an extended borrowing cost cutting cycle by the Bank of England, according to Morgan Stanley.

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In a note, analysts at the bank including Bruna Skarica predicted that the British economy's expansion will slow to 0.9% on an annualized basis next year, with the savings rate declining moderately and real disposable income growth decelerating.

Momentum in private capital expenditures is tipped to edge down "a touch too," while the contribution of the state to growth is anticipated to decline by 10 basis points as well.

Meanwhile, the analysts predict that the U.K. unemployment rate will keep rising steadily to quarterly average of 5.3% in the January-June period.

"We don't model a near-term improvement in the labor market, nor a further stark deterioration, given that the scale of increase in the jobless rate might be capped by a sharp decline in inward migration flows," they wrote.

"But we do see a period of elevated slack."

Labor cost growth is also seen decelerating, along with food and energy price gains. Annualized headline inflation is tipped to stand at 2.3% in 2026.

The comments come as financial markets are widely expecting the Bank of England to cut interest rates at an upcoming December 18 meeting, buoyed by signs that inflationary pressures may have eased in the wake of finance minister Rachel Reeves' recently-unveiled budget.

The proposal, announced last month, is projected to knock roughly 0.4 to 0.5 percentage points off the annual rate of inflation from the second quarter of 2026. The BoE has been mindful of price growth hovering above its 2% target level, but has also had to grapple with weak domestic demand.

In theory, cutting rates can help boost investment and economic activity, albeit at the risk of reigniting inflation.

The Morgan Stanley analysts expect the BoE to cut rates in December and February, skip a reduction at its March gathering, and take "further action" in April and June "as inflation data continue to evolve favorably."

"As the BoE reduces restrictiveness, and as global growth picks up, U.K. growth improves over the second half of 2026 and 2027," the Morgan Stanley analysts wrote, adding that risks are "skewed to the downside."

Source: Investing

Asian countries should strengthen cross-border early warning systems for natural disasters, the head of a regional United Nations development agency has urged, in the wake of cyclones and floods that killed approximately 1,800 people across the Indian Ocean.

Armida Salsiah Alisjahbana, executive secretary of the U.N.'s Economic and Social Commission for Asia and the Pacific (ESCAP), said meteorological disasters are becoming more frequent and intense in the region as an impact of climate change, while some countries' poor environmental management is exacerbating it.

"Proper functioning of early warning systems is very important to ... better prepare for any natural disaster," Alisjahbana told Nikkei Asia on a visit to Tokyo last week, shortly after storms and flooding battered parts of Indonesia, Sri Lanka, Thailand and Malaysia. "Disaster knows no boundary, therefore the early warning system has to cover a wider region, not only [one] country."

More than half of the deaths from the storms were in three Indonesian provinces in northern Sumatra, where search and rescue efforts are slated to end on Wednesday. The government is preparing plans for reconstruction that it estimates will cost 51.8 trillion rupiah ($3.1 billion).

Alisjahbana, a former Indonesian development planning minister, said ESCAP had developed early warning systems in the wake of the Indian Ocean tsunami in 2004, which killed some 230,000 people in more than a dozen countries. A year after that, ESCAP established a trust fund for disaster preparedness, which finances an integrated regional early warning system for multi-hazards called RIMES, with a secretariat in the Maldives.

Such frameworks should be strengthened, Alisjahbana said, adding there should also be support for countries in Asia and the Pacific that do not have capacity to develop their own early warning systems.

She did not name any countries that might need help, or where poor environmental management is having a detrimental effect. But the Indonesian government, for example, has been accused by environmentalists of mismanaging forests in Sumatra, allowing plantation and mining companies to exploit for many years what are supposed to be natural barriers against floods.

Alisjahbana said ESCAP has also been developing regional disaster mapping to better understand risks faced by individual countries, such as typhoons in the Philippines and Pacific island nations, and sand and dust storms in Central Asia.

More recently, heat pockets in parts of South Asia and Southeast Asia are also being mapped, amid rising temperatures threatening water supply, agriculture and food security in the region. Alisjahbana said ESCAP is working "very closely" with ASEAN to map the "slow onset" disaster.

"Why slow onset? Because it's like creeping, taking many years and becoming worse and worse," she said. "Maybe many countries do not realize [the disaster] immediately, [until] after it becomes quite a big problem."

She asserted that cross-country collaboration is "very important," also for response, recovery, reconstruction and rehabilitation efforts in the aftermath of catastrophes.

With climate change being an underlying cause of the more frequent and more severe water-related disasters, Alisjahbana said Southeast Asia needed to accelerate a transition to clean energy.

To support that, she said her agency is working with ASEAN to develop a regional renewable energy market, as the 11-member bloc seeks to implement its master plan for regional energy connectivity and a power grid.

ASEAN countries like Singapore, which is facing surging electricity demand for data centers, is seeking to import renewable energy from its neighbors. Alisjahbana said making such deals bilaterally is "not efficient, hence the importance of creating ... a regional renewable energy market."

Source: Asia_Nikkei

Thailand and Cambodia accused each other of targeting civilians in border attacks on Wednesday, as U.S. President Donald Trump said he would make a telephone call to stop the fighting and salvage a ceasefire he brokered in July.

The Southeast Asian neighbours have blamed each other for the clashes that started on Monday, and remain at odds over a diplomatic solution to months of simmering tension.

Asked about the prospect of further intervention by Trump, a Thai government spokesperson said there had been no talks with him so far, while Bangkok's position was that negotiations should not be initiated by a third party.

"It should not start with a mediator, but it must start with Cambodia changing its stance, stopping threatening Thailand and formally requesting negotiations with Thailand," Siripong Angkasakulkiat told Reuters.

Cambodian government spokesperson Pen Bona said Phnom Penh's position remained the same, that it wanted only peace, and had only acted in self-defence.

The responses followed Trump's offer to halt the renewed Southeast Asian hostilities, made at a rally in Pennsylvania after enumerating the wars he claimed to have helped stop, such as those between Pakistan and India, and Israel and Iran.

"I hate to say this one, named Cambodia-Thailand, and it started up today, and tomorrow I am going to have to make a phone call," he added.

"Who else could say, 'I'm going to make a phone call and stop a war of two very powerful countries, Thailand and Cambodia?'"

In an interview on Tuesday, Thailand's foreign minister had said he saw no potential for negotiations, adding that the situation was not conducive to third-party mediation.

A top adviser to Cambodia's Prime Minister Hun Manet told Reuters that day his country was "ready to talk at any time".

CLAIMS CIVILIAN AREAS HIT

On Wednesday, Cambodia withdrew its athletes from the Southeast Asian Games in Thailand, citing safety reasons and their families' concern.

Thailand's military said BM-21 rockets fired by Cambodian forces landed near the Phanom Dong Rak Hospital in Surin district on Wednesday, forcing the evacuation of patients and staff to a shelter.

Drones and BM-21 rockets and tanks were used at other border points, including the vicinity of the contested Preah Vihear temple complex, it added.

"Our forces destroyed an anti-drone position to the south of Chong Chom in order to support operations to clear Cambodian elements in a mango plantation ... across the line of operations," the military said in an update, referring to a Thai border town.

Cambodia's military said Thailand used artillery fire and armed drones in attacks in Pursat province, fired mortars into homes in Battambang province, while its F-16 fighter jets entered Cambodian airspace to drop bombs near civilian areas.

LAND MINE ALLEGATIONS RAISED TENSION

Trump has previously spoken to leaders of both countries and been central to the fragile truce between them since five days of fighting in July, which killed at least 48 people and was their heaviest conflict in recent history.

In July, Trump used the leverage of trade negotiations to broker a ceasefire. Thai Foreign Minister Sihasak Phuangketkeow told Reuters on Tuesday he did not think tariff threats should be used to pressure his country into talks.

Last month, Thailand suspended de-escalation measures agreed at an October summit in Trump's presence, after a Thai soldier was maimed by a landmine that Bangkok said was newly laid by Cambodia, which rejects the accusation.

Both countries have said they have evacuated hundreds of thousands from border areas, though some people have stayed behind, hoping to avoid the fighting.

"I have to stay behind," said Wuttikrai Chimngarm, as he hunkered down behind a makeshift bunker of tyres stacked six high while shelling shook Thailand's border province of Buriram.

"I'm the head of the village, if not me, then who? Who will be safeguarding the houses and belongings of the villagers from looters?"

As soon as Monday's fighting erupted, wary residents fled the disputed village of Kaun Kriel, about 25 km (15 miles) northwest of Cambodia's city of Samraong.

"This is my second run because the place I live ... was under attack both times," said Cambodian Marng Sarun, a 31-year-old harvester who left with his wife and two children.

Source: Reuters