Financial news

Low inflation, car giants merge, Pearson shakeup

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Via Yahoo Finance

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

The UK inflation rate stayed at 1.5% in November compared to the same month last year — slow price growth that will be a boost to households ahead of Christmas, according to the Office for National Statistics (ONS).

Analysts had expected the rate of price growth to slow further to 1.4% in November, writes Yahoo Finance UK’s Edmund Heaphy.

Below-target inflation would normally prompt the Bank of England to slash interest rates and introduce stimulus measures designed to boost the economy.

The central bank’s monetary policy committee will meet on Thursday to make its final interest rate decision of 2019. But the bank has been reticent about making major decisions ahead of the UK’s departure from the European Union.

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The boards of Fiat Chrysler Automobiles and PSA Peugeot on Wednesday signed a binding merger deal. Photo: AP Photo/Francois Mori

The boards of Fiat Chrysler (FCA) and Peugeot-owner PSA have officially agreed a deal to merge, forming the world’s fourth largest car manufacturer.

Both companies said Wednesday their boards had signed a binding agreement for a 50:50 merger of stock. PSA (UG.PA) shareholders will receive 1.742 shares in the new company for every PSA share they hold. FCA (FCAU) investor will get 1 share for every FCA share they own.

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The deal, which is expected to take up to 15 months to close, will create a company with annual sales of €170bn, or 8.7 million vehicles a year. Analysts estimated the combined group would be worth around $50bn, writes Yahoo Finance UK’s Oscar Williams-Grut.

Shares in PSA rose 1.5% in Paris. Shares in FCA were up 0.3% in Milan.

Pearson sells Penguin stake as CEO quits

The education and publishing firm Pearson has announced the departure of its CEO and the £530m sale of its stake in Penguin Random House.

Pearson will sell its last 25% stake in the group to German media giant Bertelsmann, in a deal valuing Penguin at around $3.67bn (£2.8bn).

It ends almost half a century in consumer publishing for Pearson, with the Financial Times and its stake in the Economist also sold in recent years.

Pearson also confirmed its CEO John Fallon will retire in 2020 after a successor is appointed.

The pound’s gains since the UK election on Thursday have been wiped out within a week, after government plans to stop the Brexit transition period being extended sparked fresh fears of a hard exit.

Sterling was hovering (GBPUSD=X) at around $1.31 on Wednesday morning, just under its exchange rate last Thursday night shortly before the election exit poll signalled a decisive Conservative victory.

The pound was also treading water against the euro (GBPEUR=X) on Wednesday at a lower rate than immediately before the election.

It remained below the €1.18 mark it had fallen to on Tuesday, also dipping lower than it had been trading shortly before the 10pm exit poll last Thursday.

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European and Asian markets mixed

European stocks were largely flat on Wednesday. The Euro Stoxx 50 (^STOXX50E) and the French CAC 40 (^FCHI) were both up 0.2%, while the FTSE (FTSE) was up 0.1%.

The German DAX (^GDAXI) was down 0.2% in mid-morning trading.

Overnight in Asia, the Hong Kong Hang Seng Index (^HSI) rose 0.2% and the Nikkei (^N225) dropped 0.6%, while China’s Shanghai Composite index (000001.SS) was 0.2% lower.

What to expect in the US

US stocks looked set to rise on the latest hopes over trade, with Dow Jones futures (YM=F), S&P 500 futures (ES=F) and Nasdaq futures (NQ=F) all 0.1% higher.

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