Europe biz: Fiat, Chrysler and Peugeot in merger talks, Airbus cuts
Catherine Newman

Fiat, Chrysler and Peugeot in merger talks to create $50 billion firm 

US-Italian auto giant Fiat Chrysler and France's Peugeot are in the process of merger talks that would produce an entity valued at $50 billion. 

Carlos Tavares, the chief executive of Peugeot's parent, PSA group, would become the new CEO of the company. John Elkann, chairman of Fiat Chrysler Automobile (FCA), would be chairman. 

The two groups merging would join together Alfa Romeo, Chrysler, Citroen, Dodge, DS, Jeep, Lancia, Maserati, Opel, Peugeot and Vauxhall. 

In a statement, Fiat Chrysler Automobiles said it "confirms there are ongoing discussions aimed at creating one of the world's leading mobility groups."

The discussion comes months after merge talks between Fiat Chrysler and French carmaker Renault fell through. (Credit: Associated Press)

The discussion comes months after merge talks between Fiat Chrysler and French carmaker Renault fell through. (Credit: Associated Press)

Airbus cuts delivery forecast

Airbus has cut its forecast for the number of planes it will deliver this year as it struggles to meet ambitious targets to quicken the pace of production, while profits remained steady during the first quarter. 

In a statement the European plane manufacturer said it now proposes delivering 860 commercial aircraft in 2019, up from 800 last year, but lower than earlier estimates of 890 jets. 

Production of aircraft has increased this year, with Airbus delivering 571 in the first nine months of this year compared to 503 in the same period last year. The firm had ambitions to put more of its top-selling next-generation jets into the hands of clients. 

Airbus CEO Guillaume Faury said  "We are focused on the A320neo ramp-up and improving the industrial flow while managing the higher level of complexity on the A321 ACF in particular."

The A320neo line of planes are fuel-efficient, and targeted towards transatlantic flights. (Credit: ASSOCIATED PRESS)

The A320neo line of planes are fuel-efficient, and targeted towards transatlantic flights. (Credit: ASSOCIATED PRESS)

Volkswagen confident despite lower unit sales outlook 

On Wednesday German car giant Volkswagen said it was confident about hitting financial targets despite a lower unit sales outlook, saying "vehicle markets will contract faster than previously anticipated in many regions."

The company does not anticipates deliveries to match 2018's level, after its unit sales fell 1.5% in the year to September at around eight million. 

There has been a global growth slowdown that has particularly impacted the car industry as a result of trade wars and Brexit uncertainty. 

Germany criticized by new ECB chief for low spending

European Central Bank (ECB) chief Christine Lagarde said on Wednesday that eurozone countries running budgetary surpluses, including Germany, have failed to make enough effort to increase spending.

Speaking to France's RTL radio, Lagarde said "the countries which have budgetary space have not really made the necessary efforts, countries like the Netherlands and Germany," despite having coordinated their fiscal policies well in an attempt to save the bloc during the sovereign debt crisis. 

The markets are treading water in anticipation of the Fed today but things could perk up with interest rate decisions, earnings and more data.

Brexit on hold

In the UK, MPs up and down the land hit the campaign trail ahead of the first December General Election in almost a century.

"It is a good thing Brexit is as polarizing as it is or turnout at that time of year could likely be appalling" said Craig Erlam at OANDA.

Analysts say the Conservatives remain favourite to take a majority which, while killing any hope of a second referendum, would probably be the most market-friendly outcome and keep the pound in check.

Rates, rates, rates

Two big rate decisions to look out for which could drown out everything else happening on the markets: the Fed and Bank of Canada, with more eyes on the former. Any surprise here could really shake up the markets, but the interesting bit will be the statement that accompanies the decision.

"We expect the Fed to cut rates by 25 basis points, much in line with market pricing… and for Chairman Powell to continue to speak of a US economy that is 'in a good place' highlighting strong consumption, healthy labor markets and a robust service sector" said John Vale, FX and Macro Strategist at BNP Mellon.

While factored in, not all market watchers are sold on the move. Jeffery Halley at OANDA says "I believe the market is placing far too high an expectation of a 25 basis points cut. Neither the data nor the international trade situation justifies a third cut so soon." 

The FOMC decision will also be important for gold, with a cut perhaps pushing it above $1500 per ounce.

Earnings "likes"

Facebook will be the highlight of the earnings day with analysts expecting the social media network to announce improved profits.

Meanwhile in Germany, Deutsche Bank reported its second consecutive quarterly loss as it continues to restructure the business.

The German bank said it has made significant progress with the major overhaul it announced it would be undertaking in July.

"Despite having launched the most comprehensive restructuring of our bank in two decades, we delivered profits in our four core businesses during the quarter and grew loans and assets under management," Chief Executive Christian Sewing said.

The deep restructuring plan includes exiting its global equities sales and trading business and cutting 18,000 jobs.