Newsquawk European Market Wrap - 8th October 2026

Crude surged on US-Iran escalation risks before easing on constructive Iranian diplomatic comments. European equities rebounded from early losses as energy prices eased, while US equities opened lower amid chipmaker weakness. DXY and yields firmed following hawkish Fed Waller remarks and higher oil prices, before yields eased off highs. EQUITIES European bourses were under pressure at the start of the European session but have since rebounded as energy benchmarks began to pull back. The pullback across the energy space started following constructive comments by the Iranian FM, stating that the negotiation process continues and that Iran will respond to the US proposal within days. Sectors held their negative bias, although some sectors managed to climb into the green. Energy topped the sector pile, with Optimised Personal Care and Media rounding out the sector gainers. To the downside were Autos, Health Care and Banks. Top stories include: BMPS -1.9%, shareholder Caltagirone rejected the Co.'s bid for Banco BPM and Banca Generali; Tesco +5.9%, lifted the lower end of its FY26/27 adj. operating profit guidance range; Argenx -11.6%, discontinued its Phase 3 UNITY study; ALK-Abello +6.3%, raised its FY26 revenue growth and EBIT margin guidance; Bavarian Nordic +3.8%, raised its FY26 guidance to reflect stronger-than-expected performance in its Travel Health business. US cash equities opened entirely in the red. US memory and chips names are under pressure following prelim. Q3 metrics from Samsung Electronics that disappointed, missing on both operating profit and revenue. FX G10s were initially mixed early doors, but succumbed to broad selling pressure as the Dollar rose throughout the afternoon. CAD held towards the top of the pile, taking strength from higher energy prices, whilst the Antipodeans underperformed given the risk tone. DXY started the London session flat, but gradually moved higher as the session progressed. Earlier, there were some hawkish comments from the Fed’s Waller, where he noted that more rate hikes are likely needed to tame inflation, but there is flexibility over the pace, and hikes do not need to be consecutive. This spurred some mild strength in the index. However, into the afternoon, the index came off best levels after constructive commentary from the Iranian Foreign Minister. He suggested that the negotiation process continues and that Iran will respond to the US proposal within days. This spurred downside in energy benchmarks, which followed through to ease yields off highs, and in turn the Dollar. EUR was flat for most of the London session, and was largely unreactive to the ECB’s Minutes of the September meeting. Overall, it showed that policymakers fully backed a 25bps hike. One interesting point to note was the comment that higher long-end yields, if orderly, support the intended stance and could affect where policy rates should go in future. A factor which can be perceived as dovish heading into the October meeting. FIXED INCOME Global fixed benchmarks were mixed. USTs (-6 ticks) held in the red on the back of stronger energy prices (facilitated by geopolitics and Gulf of Mexico shuts), and hawkish commentary from the Fed’s Waller. On that note, he mentioned that more rate hikes are likely needed to tame inflation, and hikes do not need to be consecutive. As the afternoon progressed, constructive comments from the Iranian Foreign Minister helped yields ease off highs, though, US yields remain stronger on the session. The US 2yr is set to end the London day just shy of the 4.8% mark. Bunds (U/C) were flat. Domestic political updates were lacking, though French fiscal woes remain; the OAT-Bund spread remained at elevated levels around 136bps. On monetary policy, ECB Minutes revealed that policymakers fully backed a 25bps hike, though indicated less appetite for further rate hikes. A bout of strength was seen across EGBs as traders digested the comment that higher long-end yields, if orderly, support the intended stance and could affect where policy rates should go in future. In essence, this suggests that higher yields are having a tightening effect, so the Deposit Rate does not need to be lifted to compensate; moreover, the French fiscal situation will likely also keep policymakers away from tightening in October. Gilts (-14 ticks) were pressured by the ongoing strength in energy space, but off worst levels given the aforementioned comments by the Iranian FM. For the UK specifically, focus was on comments by several BoE members - but ultimately did little to shift the dial. Hawk Pill and hawkish member Greene stuck to the usual script; the latter thinks the UK will experience second-round effects. Elsewhere, Governor Bailey provided two-way commentary, but ultimately added very little. French Finance Minister Lescure said France is not experiencing a dysfunctional bond market. French Finance Minister Lescure said there is still investor demand for French government bonds. COMMODITIES WTI Nov and Brent Dec futures extended their gains amid mounting US-Iran escalation risks, with reports that Washington had completed operational plans for potential strikes against Iran ahead of the November midterms, although no final decision had been made. Military risks remained after satellite imagery showed fires at Saudi Arabia’s Abqaiq oil facilities and Tanjib gas plant, while the Houthis claimed to have launched ballistic missiles at Riyadh’s King Khalid Airport and warned workers to avoid Saudi oil facilities. The Saudi-led coalition subsequently said it intercepted two missiles targeting Riyadh. Nonetheless, diplomatic efforts continue, with Iranian Foreign Minister Araghchi saying negotiations remained ongoing and Tehran would respond to the US proposal within days, while Pakistan continued efforts to narrow differences between Washington and Tehran. Elsewhere, Rubio said oil shipments through the southern Hormuz corridor had recovered to nearly 80% of pre-conflict levels, while Euronews reported that the G7's 100mln bbl emergency release pledge would be tied to the unfinished March release. Hurricane Isaias also remained a supply-side risk as it strengthened ahead of reaching the northern Gulf Coast. WTI rose to a USD 92.84/bbl high from a USD 88.77/bbl low (vs yesterday’s USD 87.96-90.98/bbl range), while Brent climbed to a USD 105.48/bbl high from a USD 100.76/bbl low (vs yesterday’s USD 99.61-102.59/bbl range). Dutch TTF remained firmer as renewed Middle Eastern escalation risks added to supply concerns. TTF rose to a EUR 80.67/MWh high from a EUR 78.61/MWh low, extending its earlier gains. Precious metals were mixed as geopolitical tensions provided some support to gold, although higher energy prices, firmer yields and expectations for further Fed tightening capped upside. The FOMC Minutes were largely a non-event, showing all participants supported September’s 25bps hike, with most expecting another increase by year-end. Spot gold recovered from a USD 4,103.48/oz low to a USD 4,143.28/oz high (vs yesterday’s USD 4,067-4,170/oz range), while spot silver underperformed, falling to a USD 58.51/oz low from a USD 60.59/oz high. Base metals remained subdued amid the broader risk-off tone, high energy prices and concerns around US-Iran escalation, despite the return of Chinese buyers following the week-long National Day holiday. Reports that the EU was preparing a temporary import cap on Chinese hybrid cars added to trade concerns, while Goldman Sachs flagged subdued Chinese gasoline and diesel demand amid elevated domestic prices. 3M LME copper traded within a USD 14,368.83-14,652.90/t range, while COMEX copper fell to a USD 6.61/lb low from a USD 6.76/lb high. US Ag. Secretary Rollins said sales commitments for soybeans are already at 20mln metric tons for this marketing year, and China is on track to meet their 25mln metric tonnes commitment. "Sales to Indonesia jumped 88%, Malaysia posted the strongest four-week stretch of soybean purchases in 8 years, and soybean meal commitments to Vietnam are almost 3X what they were last year!". G7's 100mln barrel pledge is reportedly to be tied to the unfinished March emergency oil release, Euronews reported citing an internal document. NHC said additional strengthening is expected through early Friday, with Isaias forecast to remain a dangerous hurricane as it approaches the northern Gulf Coast on Friday night. Isaias is expected to turn northeast later today, followed by a turn northward on Friday. Japanese METI Vice Minister invited Saudi Arabia and the UAE to ministerial sessions with AZEC nations; expressed willingness to boost oil stockpiling. National Energy Services Reunited Corp (NESR) has signed an agreement with Aramco to launch the region's first direct lithium extraction project. CPC said that Tengiz-Novorossiysk pipeline resumed operations on October 6. UAE's ADNOC set November crude OSP at + USD 11/bbl vs Dubai quotes. Iraq's state oil marketer SOMO set the official November selling price for Basrah Medium crude to Asia at a USD 2.80/bbl discount to the Oman/Dubai average. Europe at a USD 3.85/bbl discount to dated Brent. North and South America for November at a USD 3.10/bbl premium to Argus Sour crude. Saudi Arabia is said to be in talks to formalise Hormuz shuttle services in a push for market access. NHC said Hurricane Hunter reconnaissance shows Hurricane Isaias is still strengthening; preparations across the Gulf Coast warning area for storm surge and destructive winds should be completed today. A Japanese official said strengthening oil reserve capacity across Asia is a priority area in cooperation with ASEAN; a special meeting with Middle East oil-producing countries will be held on Thursday after the conclusion of the ASEAN ministerial meeting. Japan is assisting other countries in building institutional frameworks and infrastructure for strategic petroleum reserves. Goldman Sachs sees gasoline and diesel demand remaining depressed due to high China product prices. EUROPEAN DATA German New Car Registrations (Sep YY) 9.0% (Prev. 2.6%). German Trade Balance (Aug) 19.5B vs. Exp. 19B (Prev. 21.3B). German Imports (Aug MM) 0.9% vs. Exp. 2.8% (Prev. -5.7%). German Exports (Aug MM) -0.8% vs. Exp. 0.8% (Prev. -0.8%). Greek Trade Balance (Aug) -2.2B (Prev. -3.1B). Swedish House Price Index (Sep MM) 2.0% (Prev. 3%). NOTABLE HEADLINES German Finance Minister said we have to move forward with capital market union, expects proposals from the EU on the windfall tax. French unions calling for further strike on October 13th. Swedish Government sees 2026 GDP growth at 3.0% (prev. +2.5%) and 2027 at 2.3% (prev. +2.5%). German government raised its 2026 GDP growth forecast to 1.3% (prev. 0.5%) in April; also lifts 2027 view to 1.1% (prev. 0.9%) and sees 0.6% growth in 2028. Inflation:. Projects inflation to rise 2.7% in 2026, 3% in 2027 and 2.2% in 2028. UK Chancellor Healey has reportedly called in retail and hospitality chiefs for pre-Budget talks next week amid industry concerns over a business rates raid, Sky News reported. Italian Deputy Economy Minister said that they are in talks with banks and energy groups over the contribution to state finances as it finishes its 2027 budget plan. BoE Bank Liabilities Survey Q3'26: Lenders reported that total funding volumes increased in the three months. ECB's Cipollone speaks on the digital euro. TRADE/TARIFFS USTR Greer said Vietnam, China, and other Asian countries do not agree on excess capacity, CNBC reported; All EU countries that Chinese exports are a problem; US has a stable situation with China. Speaking to Canadian counterparts frequently. Canada has always had the best treatment with regards to tariffs. US President is very comfortable with trade policy. Economic numbers in the US are going in the right direction. When the Canadians want to get together, we will be there. Strait of Hormuz is essentially open. China Commerce Minister meets EU trade Chief Sefcovic in Beijing. China's Vice Premier He held a video call with UK Chancellor Healey, Xinhua reported; to enhance economic and financial cooperation with the UK. EU Trade Commissioner Sefcovic said EU businesses need improved access to China market; goal of trip to China is to rebalance China trade deficit. French President's Adviser is to travel to China between October 9 and 13. CENTRAL BANKS Fed’s Waller (voter) said more rate hikes are likely needed to tame inflation, but there is flexibility over the pace and hikes do not need to be consecutive. INFLATION. Inflation remains too high, with AI investment and the ongoing energy shock among persistent inflationary forces. LABOUR MARKET. Labour market was solid and stable in September despite weaker job creation. ECONOMY. There is evidence the economy is strengthening in H2 2026. COMMUNICATION. Fed communications can avoid promises of forward guidance while improving outcomes by signalling to markets about possible policy choices. BoJ Osaka Branch Manager said big firms and exporters in the area are benefiting from the weak JPY; small service-oriented firms are more vulnerable to the demerits of the weak JPY. *ECB Minutes: Deposit rate of 2.50% remained in range of neutral estimates by staff; important to refrain from giving any guidance regarding future interest rate path. ECB's Stournaras said that the region is showing resilience. Inlation expectations are well anchored around 2%. There are no serious second round effects. Currently between the baseline and adverse scenarios. ECB chief economist Lane said Governments have to be realistic about the fact that the interest rate environment has changed. ECB's Lane said that "you should believe Banks when they say inflation will return to target"; shock is medium sized and a measured response is appropriate. Expects upward pressure on food prices in the next year. Has not seen wages rise materially. ECB’s Zigman said the October meeting will involve intensive discussions. ECB's Dolenc said inflation risks are skewed to the upside on oil, gas, food and strong growth. Reiterates a meeting-by-meeting approach. Monetary policy is transmitted more or less homogeneously into broader financial conditions. More stable core inflation provides some reassurance that broader price pressures are contained. ECB's Wunsch said that the case for lifting the minimum reserve requirement is not very clear or convincing. ECB’s Sleijpen does not expect second-round inflation effects. ECB's Moulin said that inflation is clearly 100% energy and does not see second round effects; geopolitical shock is transmitting into financial shock. Economic growth in the Euro area has been quite resilient. ECB's Sleijpen said energy shock is quite persistent; inflation expectations are well anchored. BoE's Governor Bailey said market movements are some way from normal, but we are not seeing illiquidity or stress conditions. Must test for significant shock to expectations. Still seeing resilient markets. Will spare no effort to restore inflation to target. Fiscal policy must be credible and aimed at ensuring stability. Fiscal policy commitments are more necessary than ever in the event of adverse shocks. Cannot be relaxed about large and concentrated positions in markets. BoE Governor Bailey said we are seeing volatile markets. BoE Governor Bailey said policymakers should strengthen core financial markets so they can absorb future shocks without amplifying them; monetary policy needs an unwavering commitment to returning inflation to target. BoE's Greene said she thinks the UK will send some second round effects from current inflation; are early indications are that UK wages will grow around 3.5% next year, and that worries me. BoE’s Pill said current price pressures are concerning and need to be addressed; monetary policy must focus strongly on inflation. BoE Credit Conditions Survey Q3'26: Lenders reported that the availability of secured credit to households decreased. Supply:. Lenders reported that the availability of unsecured credit to households decreased. Lenders reported that the overall availability of credit to the corporate sector. Demand:. Lenders reported that demand for secured lending for house purchase decreased. Lenders reported that overall demand for unsecured lending was unchanged. PBoC does not intend to devalue the CNY currency for trade advantages; keeps market as main influencer in Yuan exchange rate. To begin reporting FX operation data to the IMF in 2027. NBP Govenor Glapinski said the Bank has 672 tonnes of gold; forecasts indicate that inflation could return to the target range in October. Must be cautious that high fuel prices do not affect the whole economy. Q3 GDP growth may slow slightly. September core inflation may have fallen. If risks to inflation rise, the MPC is ready to act. Could raise rates in November but do not expect to do this. If second round effects appear, MPC is ready to act. Nothing shows there are second round effects and there is no need to worry. SNB's Martin said inflation pressures have slightly increase since June; recent rise is due to a lift in oil prices. Not observing any second round inflationary effects which is extremely reassuring. There is no need to change monetary policy at this stage. GEOPOLITICS MIDDLE EAST Yemen's Houthis said that they attacked King Khalid airport in Riyadh with ballistic missiles on Thursday. Houthi spokesperson warns "all employees, including experts, engineers, and workers, at all Saudi oil facilities against being present in areas that are targets for our forces". Full post: "The Armed Forces warn all employees, including experts, engineers, and workers, at all Saudi oil facilities against being present in areas that are targets for our forces, so as not to endanger their lives, whether these facilities have been targeted previously or not. They also reiterate their warning to air navigation companies, airports, and their passengers and employees, as previously announced.". Iran's nuclear chief said they will not back down on the point of enrichment. Turkish Foreign Minister said Ankara has completed submitting the Mecca Agreement to parliament for approval; Ankara is assessing how to assist Saudi Arabia in countering Houthi attacks, particularly in air defence. said the Mecca Agreement is a defensive pact and prohibits Turkey from deploying troops to another country to launch attacks. US Secretary of State Rubio said "oil shipments through the southern Hormuz corridor, which we cleared of mines, have reached nearly 80% of pre-conflict levels". Iran faces enormous economic pressure that will worsen significantly in the next few weeks. The only country that cannot reliably export oil from the Middle East is Iran because of the embargo. Iranian supreme leader’s adviser said the Strait of Hormuz will not reopen until outstanding issues are resolved, Al Jazeera reported; Iran will take any measures necessary to strengthen the country. Houthi leader will speak at 16:00 local time (14:00 BST / 09:00 EDT). Israeli military source said Hamas is organising and planning operations against Israel, Al Hadath reported. Iranian Army Deputy Commander said Iran’s Armed Forces are more prepared than ever and are standing "more firmly and powerfully against the enemy", Mizan reported. Pakistan's Army Chief said they are working to reduce the differences between the US and Iran, via Nour. US is stepping up preparations and has completed operational plans in case President Trump orders strikes against Iran, i24 News reported citing sources; forces at Fort Bragg is ready to deploy to any theatre within 18 hours. Iranian Foreign Ministry spokesperson Baghaei said Iran’s conditions for ending the war on all fronts and restoring security to the Persian Gulf and Strait of Hormuz have been clearly set out. Baghaei said Iran and Oman have agreed on the geographical coordinates of safe transit routes through the Strait of Hormuz and how they will be notified to the relevant international body. Saudi Civil Defence said that it intercepted a ballistic missile in Riyadh, though debris fell on a medical complex. Saudi-led coalition said it destroyed two ballistic missiles targeting Riyadh. reported suggest smoke was seen rising from a stationary aircraft at Riyadh Airport; No official confirmation from Saudi authorities. Iranian Foreign Minister Araghchi said the negotiation process continues and will respond to the US proposal within days. Currently examining the Americans' views, and I think we will provide our response within the next few days. UKMTO publishes a time-late report of an incident within the Strait of Hormuz, which occurred on October 4th. A verified source has reported that an LPG tanker transiting inbound has been struck by an unknown projectile. Iranian intelligence services are reportedly targeting the US Ramstein and Spangdahlem air bases in Germany, WiWo reported. Iranian intelligence services are reportedly also targeting other US bases in Europe and planning complex attacks, with the UK also said to be a potential target. IRGC Navy Commander Rear Admiral said the force will continue on its path with determination and will respond directly and decisively to any threat or wave of hostile action, Tasnim reported. Satellite images showing smoke rising from the Abqaiq oil facilities in Saudi Arabia, as of October 8th; fire seen at both Abqaiq facilities and Tanjib gas plant. Tasnim reported satellite images show fresh damage to previously damaged Aramco facilities south of Riyadh, including a destroyed fuel storage tank. Explosions heard in Riyadh, Saudi Arabia, IRGC-linked Iraqi militia media Sabereen News reported. Pakistan Deputy Foreign Minister said they “Exchanged views on Gulf and emphasised on importance of restraint, dialogue and diplomacy”, in a joint presser with FM Bahrain. reported of explosions heard and fires visible in Riyadh, Saudi Arabia, IRGC-linked Iraqi militia media Sabereen News reported. RUSSIA-UKRAINE US Secretary of State Rubio said the war in Ukraine appears to be at a stalemate. US Secretary of State Rubio said he hopes the risk of escalation brings the parties in Ukraine to talks. Ukrainian Forces strike an oil refinery in Russia’s Bashkortostan region; also announces attack on Russia's Gazprom Neftekhim Salavat. Russia's Kremlin said the exact timing of a call between Russian President Putin and US President Trump will be agreed, adding that the call may take place, TASS reported. Russia's Kremlin said that there is no exact date yet for the phone call between Russian President Putin and US President Trump, Interfax reported. NORTH AMERICAN DATA US Continuing Jobless Claims (Sep/26) 1716K vs. Exp. 1710K (Prev. 1699K). US Jobless Claims 4-week Average (Oct/03) 198.00K (Prev. 200.50K). US Initial Jobless Claims (Oct/03) 197K vs. Exp. 200K (Prev. 199K). BofA Total Card Spending (w/e Oct 3rd) +3% Y/Y (prev. +5.6%); lower income spending growth continued to outpace higher income.