EUROPEAN OPEN: RIO LN-GLEN LN resume tie-up talks; SBRY LN reports strong Xmas sales; Ahead, US jobs data, potential SCOTUS tariff update, Trump meets oil execs, EU-Mercosur vote

• EUROPEAN OPEN: European equities open the final trading day of the week on a firmer footing. Futures on the Stoxx 600 point to a fourth consecutive weekly gain, while the Euro Stoxx 50 is set for a second week of advances. APAC equities were mostly higher overnight, tracking mixed Wall Street trade, as markets position ahead of US nonfarm payrolls, a potential Supreme Court ruling on tariffs, and a meeting between the Trump administration and oil executives on rebuilding Venezuela’s energy sector. December US jobs data should help clarify underlying labour market conditions following shutdown-related distortions, and informs on whether the Fed will move policy again in January/March. Gold steadied around USD 4,465/oz as a firmer USD offset safe-haven demand ahead of payrolls. Bullion is up more than 3.4% on the week, though gains have moderated after US jobless claims for the week ending 3rd January, reported on Thursday, came in slightly below expectations, and Revelio data signalled firm conditions. Oil prices extended gains amid geopolitical risk, with President Trump threatening Iran and the US seeking to assert greater control over Venezuelan exports; WTI traded above USD 58/bbl and Brent above USD 62/bbl, also supported by commodity index rebalancing, according to Citigroup. In data, China CPI rose 0.8% Y/Y in December, the strongest since March 2023, while factory-gate prices remained in contraction, leaving FY inflation flat versus 2024. German industrial production rose +0.8% M/M in November (exp. -0.4%), while the trade surplus narrowed to EUR 13.1bln as exports fell and imports rose. In the UK, potential redundancies rose to 33,392 in the week ending 14th December, the highest since 2023, data showed. Separately, the Ministry of Defence faces a GBP 28bln funding gap over four years despite higher spending pledges, with military leaders preparing for cuts amid rising tensions with Russia. Looking ahead, focus centres on US payrolls, possible Supreme Court commentary on tariffs, a White House meeting with oil executives, and any signals on the next Fed Chair after Trump said he has decided on a candidate who supports lower borrowing costs; a decision is expected early this year. Elsewhere, an EU decision on Mercosur is expected; Italy is edging towards supporting the vote despite backlash concerns, while France will vote against.
• STOCK SPECIFICS: In materials, Rio Tinto (RIO LN) and Glencore (GLEN LN) are in early talks on a possible all-share deal that could create the world’s largest miner, with a combined market value near USD 207bln; the companies confirmed discussions but said no deal is certain. Under UK takeover rules, Rio Tinto must decide by 5th February. The new round of talks follows on from failed attempts of a tie-up in 2025. Trump administration and US Congress plan to overturn a Biden-era mining ban in northern Minnesota, benefiting Antofagasta’s (ATO LN) Twin Metals copper, cobalt and nickel project; the 2023 ban blocked mining for 20 years. In energy, Repsol (REP SM) will seek a US license to export Venezuelan oil. In consumer sectors, Sainsbury's (SBRY LN) reported Q3 sales up 4.9% Y/Y, total retail sales up 3.9% Y/Y and LFL sales up 3.4% Y/Y. It now expects retail cash flow of more than GBP 550mln and plans to return more than GBP 800mln via dividends and buybacks. In notable broker updates, Aviva (AV/ LN) was downgraded at Morgan Stanley; Marks and Spencer (MKS LN) was upgraded at Berenberg; Barclays downgrades BMW (BMW GY) and Porsche (P911 GY); BNP Paribas (BNP FP) was upgraded at JPMorgan; Orange (OR FP) was upgraded at UBS; Societe Generale (GLE FP) was downgraded at Kepler; Novo Nordisk (NOVOB DC) was initiated with an Outperform rating at CICC.

TODAY'S AGENDA:

• DAY AHEAD: The US jobs figures for December are the highlight, where payroll editions are expected to be similar to recent prints, while the jobless rate is seen easing by one-tenth to 4.5% (see preview, below). The Canada jobs report is out at the same time. Traders will be eying a potential Supreme Court update on Trump's tariffs, but there is no guarantee it will announce a ruling on the matter (see preview, below). Prelim University of Michigan sentiment data for January are expected to show headline sentiment and expectations easing a little, while conditions are expected to tick up, but ultimately, the major indices are seen little changed. In afternoon trade, Baker Hughes will release its weekly rig count data. Today's speakers' slate includes Fed's Kashkari (voter; no text or Q&A are expected), and Fed's Barkin (2027 voter; text and Q&A expected, but the text is likely to be similar to his remarks made on Tuesday). ECB's Chief Economist Lane is also scheduled to speak. Elsewhere, oil execs will meet US President Trump today, as the administration seeks to enlist the industry’s help in rebuilding Venezuela’s energy sector. Elsewhere, an EU decision on Mercosur is expected before 16:00GMT, with safeguard text examined around 10:00GMT, Politico reports; Italy is weighing potential backlash but edging towards support. Expectations are for approval by a qualified majority, requiring Italy, while France indicates it will vote against.
• POTENTIAL SCOTUS TARIFF UPDATE: The Supreme Court has scheduled an opinion day for Friday, with justices taking the bench at 10:00EST/15:00GMT, when opinions may be announced without advance notice of cases, making a ruling on challenges to US President Trump’s tariffs possible but not guaranteed, with written decisions typically posted shortly afterwards. The cases concern “Liberation Day” tariffs imposed on 2nd of April 2025, setting rates of about 10–50% on most imports alongside targeted levies on China, Canada and Mexico, justified by Trump under the 1977 International Emergency Economic Powers Act on grounds that trade deficits and fentanyl trafficking constituted a national emergency. Lower courts ruled that Trump exceeded his authority, prompting appeals to the Supreme Court, with Trump describing the potential ruling as critically important and warning of national security consequences. Betting markets show reduced expectations of a ruling in Trump’s favour, with Kalshi at 29% and Polymarket at 22%, down from higher levels before November 5th oral arguments, during which conservative and liberal justices expressed scepticism about using IEEPA for large-scale tariffs. Officials including US Treasury Secretary Bessent have indicated alternative legal routes could be used to recreate tariffs if IEEPA authority is curtailed.
• PREVIEW - US NONFARM PAYROLLS (13:30GMT/08:30EST): Headline nonfarm payrolls are expected to be relatively in line with the prior report, with the consensus looking for 60k nonfarm payrolls to be added to the economy vs the 64k in November. The unemployment rate is expected to fall by one-tenth to 4.5%. The Fed in December cut rates due to the slowing labour market, and the December jobs data will help to shape expectations regarding the January and March FOMC meetings; currently, money markets are pricing an unchanged outcome in January (with around 80% probability), and there is around 48% chance rates will have been cut by a further 25bps by March. Labour market proxies in December have generally printed similar figures to the November period; weekly initial jobless claims were little changed across the two survey windows; continuing claims eased but there might be some distorting factors; ADP printed a positive figure vs the negative reading in November, and was a little short of expectations; the Conference Boardʼs gauge of consumer confidence signalled a softer labour market vs November. JPMorganʼs strategists suggest that the data would be received positively by stocks if the headline came in between 0-105k, but could see some downside outside of that range.
• Click here for Newsquawk's full nonfarm payrolls preview
• OIL EXECS MEETING: Nearly 20 US oil executives, including veteran wildcatter Harold Hamm, are scheduled to meet President Donald Trump and senior administration officials at the White House on Friday as the administration seeks to enlist the industry’s help in rebuilding Venezuela’s severely damaged energy sector. The meeting is described as shaping up to be a prominent gathering of US oil figures, reflecting Washington’s growing focus on Venezuela following recent US military actions, political developments involving President Nicolas Maduro, and debates in the US Senate over war powers. The talks are part of a broader push by the Trump administration to influence the future of Venezuela’s oil industry, which has suffered years of mismanagement, underinvestment and sanctions, and is seen as central to any effort to stabilise or reshape the country’s economy and governance.
• RECAP – CHINA CPI: China’s consumer inflation rose to 0.8% Y/Y in December (exp. 0.9% , prev. 0.7%), the highest since March 2023, while producer prices fell 1.9% Y/Y (exp. -2%, prev. -2.2%). FY25 inflation was flat, missing the 2% target, highlighting weak demand despite stimulus, persistent deflation and an ongoing property downturn.