Fed decision ahead, data and stocks

Financial markets have allowed countries like France to get away with disrespecting the euro zone’s fiscal rules for too long, economist Raphael Gallardo told CNBC Wednesday.

France is among a number of euro zone member states that have failed to meet the single currency union’s fiscal rules that require member states to keep budget deficits below 3% of GDP (gross domestic product) and to restrict public debts below 60%.

The French government expects the budget deficit to hit 6.1% of GDP this year, however, while the International Monetary Fund predicts the country’s debt to GDP ratio will reach around 112%. Arguments between lawmakers over taxation and spending plans means France currently has no 2025 budget in place and has instead rolled over this year’s fiscal plan, as political turbulence continues.

Gallardo, chief economist at Carmignac, said France had not respected the rules for years.

“Unfortunately, the problem in the euro area is that you cannot have a currency union with it without fiscal discipline and a mechanism to enforce that fiscal discipline, and in the case of France, for 25 years, we have never respected the rules,” he told CNBC’s “Squawk Box Europe” Wednesday.

“The safeguards in the European constitution have been completely unable to enforce it on the French government and the markets haven’t done their job either, because they have considered that France — being a core country — will be bailed out,” he said.

— Holly Ellyatt

Shares of Italian lender Unicredit gained 0.5% by 8:45 a.m. London time, after the bank said it had raised its potential stake in Commerzbank to 28%.

Unicredit had previously held a 21% stake in the German lender.

Read the full story here.

— Chloe Taylor

Shares of French carmaker Renault rose 5.39% by 8:21 a.m. London time, following reports that Nissan and Honda are set to enter into merger talks.

Renault owns a minority stake in Nissan, whose Tokyo-listed shares gained 24% during the trading session in Asia — their best day in four decades.

— Chloe Taylor

Inflation in the U.K. rose to 2.6% in the year to November, meeting expectations but further dampening hopes of a rate cut from the Bank of England on Thursday.

The U.K.’s annual inflation rate stood at 2.3% in October.

Yields on the U.K.’s 10-year Gilt were little changed by 7:05 a.m. at 4.519%, while the British pound was down 0.07% against the U.S. dollar to trade at around $1.2700.

Markets are now overwhelmingly expecting the Bank of England to hold its key interest rate at 4.75% when its Monetary Policy Committee meets for the final time this year, according to overnight index swap data.

Read the full story here.

— Chloe Taylor

The British pound traded lower against the dollar and the euro on Wednesday morning, as investors awaited the U.K.’s latest inflation print and a policy update from the Bank of England.

Sterling was around 0.1% lower against the euro, and 0.06% weaker against the greenback by 6:35 a.m. London time.

November inflation data, which will be published Wednesday morning, comes after official figures showed wage growth in Britain jumped 5.2% in the three months to October, while the nation’s economy unexpectedly contracted that month.

On Thursday, the Bank of England will make its final monetary policy decision of the year.

— Chloe Taylor

Six stocks in the S&P 500 have been inversely correlated to Nvidia’s share price moves over the past month, according to analysis by CNBC Pro.

Five of the six stocks have also risen by an average of 6.75% alongside Nvidia’s fall from all-time highs.

It comes as Nvidia fell into correction territory this week, meaning it’s fallen over 10% from its closing high of $148.88 reached last month.

CNBC Pro subscribers can read more here.

— Ganesh Rao

European markets are expected to open lower Wednesday.

The U.K.’s FTSE 100 index is expected to open 8 points lower at 8,191, Germany’s DAX down 48 points at 20,202, France’s CAC down 10 points at 7,353 and Italy’s FTSE MIB down 100 points at 34,258, according to data from IG.

Data releases will include U.K. inflation data.

— Holly Ellyatt