Newsquawk Daily European Opening News - 17th September 2026

The Fed hiked rates by 25bps as expected in a unanimous decision, while the median projection saw another hike by year-end before rates remain on hold throughout 2027. The statement reiterated the Fed's commitment to price stability, a message echoed by Chair Warsh in the press conference. US stocks were pressured and the major indices largely finished lower; APAC stocks traded mixed, DXY and yields held onto post-FOMC gains. US President Trump said the US may impose heavy tariffs on Europe if it considers Europe's decision to grant Canada observer status a hostile act. European equity futures indicate a positive cash market open, with Euro Stoxx 50 futures up 0.5% after the cash market closed with gains of 0.5% on Wednesday. Looking ahead highlights include EU Inflation Final (Aug), US Initial Jobless Claims (Sep/12), Housing Starts (Aug), Building Permits Prelim. (Aug), Atlanta Fed GDP (Q3), New Zealand Trade Balance (Aug). BoE Policy Announcement, CNB Policy Announcement. Comments from ECB's Lane. Supply from Spain, France & the US. SNAPSHOT STOCKS Nikkei 225 +0.3% ASX 200 +0.3% Hang Seng -0.7% Shanghai Comp -0.3% Euro Stoxx 50 Sep'26 +0.5% DAX Sep'26 +0.5% ES Sep'26 +0.5% NQ Sep'26 +0.6% FX DXY -0.1% (100.28) EUR/USD U/C (1.1465) USD/JPY -0.2% (155.99) GBP/USD U/C (1.3379) BONDS US T-Note Dec'26 +1.5 ticks Bund Dec'26 -22 ticks US 10yr Yield 5.01% German 10yr Yield 3.53% ENERGY & METALS WTI Oct'26 -0.2% Brent Nov'26 -0.1% Spot Gold +0.7% LME Copper +0.3% CRYPTO Bitcoin +0.3% Ethereum +0.9% As of 06:20BST/01:20EDT Click for the Newsquawk Week Ahead. FOMC Fed hiked rates by 25bps to 3.75-4.00%, as expected, in a unanimous decision. Fed said inflation remains elevated (prev. Inflation remains elevated relative to the Committee's percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy). It also stated that economic activity is expanding at a solid pace, productivity growth is strong, and capital investment is robust. The statement added that "while uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient." Fed also stated that "today's policy action will support a timelier return to the Committee's 2 percent goal. The Committee will deliver price stability." FOMC Summary of Economic Projections showed only 18 of 19 members submitted forecasts, with expectations that Warsh would not submit forecasts, while the Fed Funds Rate in 2026 is seen at 4.1% (exp. 3.875%, prev. 3.8%), 2027 at 4.1% (exp. 3.875%, prev. 3.6%), 2028 at 3.9% (exp. 3.375%, prev. 3.4%), 2029 at 3.6% (exp. 3.375%) and longer run at 3.2% (exp. 3.125%, prev. 3.1%). Distribution of dots for 2026 showed 12 see one hike to 4.125%, four see two hikes to 4.375%, and two see rates unchanged at 3.875%, while distribution of dots for 2027 showed six see one hike to 4.125%, eight see two hikes to 4.375%, three see one cut to 3.625%, and one sees three cuts to 3.125%. Fed Chair Warsh said the decision comes when the economy appears to be strengthening and is pointing in a good direction, while he added they would be hard-pressed to describe broad financial conditions as restrictive, which was a view widely shared by the committee, so they removed a dose of accommodation. Warsh said inflation has been running above target for more than 5 years, and the predominant focus is on the price stability side of our mandate, adding the plain fact is that inflation is too high and has been, for too long, while the committee's unanimous vote shows resolve to achieve price stability on a timelier basis. Fed Chair Warsh reiterated in the Q&A that inflation is the problem, as well as stated that price stability is foundational to growth and that today, they took a step in delivering it. Warsh responded, when asked what changed between now and July, that data has shown the economy has strengthened and at Jackson Hole said inflation trends weren't passing the test, and seeing very little information since to reverse that, so have stuck with it. Furthermore, when asked whether he sees rates as restrictive, he reiterated that he found it difficult to describe financial conditions as restrictive and hard-pressed, and around the table his colleagues were hard-pressed to describe it that way too. He also sees three reasons for the rise in bond yields, which were economic strength, capital expenditures and geopolitics. IRAN CONFLICT US President Trump said Iran wants to make a deal and hopefully we're more at the end of the Iran war. Trump separately commented that the Iran war will end soon because Iran cannot go on and it is going to be a really good conclusion. US, Israel and Arab military chiefs held secret talks in Germany, while it was noted that increased risk in the Strait of Hormuz and Bab Al-Mandab was seen impacting energy, according to Nour News. Iran's Foreign Minister Aragchi said they had successful consultations with Chinese partners, and attach great value to the strategic partnership between the two countries. Israel conducted air and artillery fire on southern Lebanon, according to Mehr News Agency. Saudi forces conducted airstrikes on Houthi positions in Al-Mokha, Yemen. Yemeni armed forces report heavy clashes with Houthi militia in Taiz, while there were also reports that airstrikes targeted Houthi reinforcements in western Taiz. An explosive-laden drone targeted a camp of the Iranian opposition Kurdish group northwest of Iraq's Sulaymaniyah, although no injuries were reported. US TRADE EQUITIES US stocks were pressured and the major indices largely finished lower, although the Nasdaq was little changed, while the Dow lagged and the RSP fell 0.8%. Sectors were predominantly in the red with Energy, Financials and Materials lagging, while Tech, Health Care and Utilities outperformed, albeit with minimal gains. The overall reaction to the FOMC rate decision and press conference was hawkish. The Fed hiked rates by 25bps as expected in a unanimous decision, while the median projection saw another hike by year-end before rates remain on hold throughout 2027. The statement reiterated the Fed's commitment to price stability, a message echoed by Chair Warsh in the press conference against the backdrop of a labour market at or near full employment and strong economic growth. SPX -0.40% at 7,555, NDX +0.03% at 28,945, DJI -1.21% at 51,463, RUT -0.32% at 2,861. Click here for a detailed summary. TARIFFS/TRADE US President Trump said the US may impose heavy tariffs on Europe if it considers Europe's decision to grant Canada observer status a hostile act. Trump separately commented that they are very close to a deal with Mexico and we don't need anything Europe has, while he questioned why should the US carry Canada, Mexico and Europe. US-Mexico trade talks were pushed back one week, according to WSJ China's chief trade negotiator Li Chenggang met with a business delegation to discuss issues including China-US economic and trade. EU asks China to voluntarily limit car exports and wants Beijing to restrict sales of Chinese hybrid vehicles to around 15% of the EU market, according to FT. NOTABLE HEADLINES US President Trump said Fed Chair Warsh has a tough board and that he still has confidence in Warsh, while he stated that interest rates are too high and not appropriate. Trump said they should be paying the lowest interest rates in the world and noted that inflation is too high. Furthermore, Trump stated he told Warsh to do what he wants and that he wants Warsh to be independent. US President Trump posted that interest rates in the US should be 1% or less and urged to "LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!" White House Council of Economic Advisers Chair Phelan said it was a mistake for the Fed to raise rates, according to Bloomberg TV. US Treasury Secretary Bessent said the US is open to discussing shared risks with China in upcoming AI talks this weekend, while it was separately reported that Trump officials were considering an AI executive meeting on the sidelines of Xi's visit. OpenAI launched a new framework for tracking and disclosing model misalignment, as well as published six reports on unexpected behaviour observed in the last six months. APAC TRADE EQUITIES APAC stocks traded mixed as the region partially weathered the hawkish reaction triggered by the FOMC meeting, where the Fed hiked the Fed Funds Rate by 25bps to 3.75-4.00%, as expected, in a unanimous decision and the dot plots pencilled in another rate hike this year. ASX 200 was kept afloat as outperformance in financials, healthcare and real estate offset the losses in the commodity-related sectors, but with upside capped amid a lack of bullish drivers. Nikkei 225 began with firm gains following a pullback in energy prices, although it has gradually faded the majority of the opening advances as participants also brace for a widely anticipated BoJ rate hike when the central bank concludes its 2-day policy meeting tomorrow. KOSPI gradually climbed amid tech resilience and with South Korea's Finance Minister vowing to deploy market stabilising measures if required. Hang Seng and Shanghai Comp were pressured with underperformance in Hong Kong after the HKMA raised rates for the first time since 2023 in lock-step with the Fed, while the downside in the mainland is cushioned following the PBoC's increased liquidity efforts. US equity futures recouped most of their losses after slumping on the hawkish Fed. European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.5% after the cash market closed with gains of 0.5% on Wednesday. FX DXY took a breather and held on to recent spoils after climbing back above the 100.00 level owing to the broad hawkish reaction to the FOMC meeting, where the Fed hiked rates by 25bps as expected in a unanimous decision, while the updated SEPs median view was for another 25bps hike this year, followed by rates remaining on hold throughout 2027. In terms of Fed Chair Warsh's presser, the overall message was a familiar one, with price stability the primary focus, while there were later comments from US President Trump that interest rates in the US should be 1% or less and called for a fast cut to US rates, although Trump also told Warsh to do what he wants and said that he wants Warsh to be independent. EUR/USD languished near post-FOMC lows after slumping to sub-1.1500 territory. GBP/USD retreated beneath the 1.3400 handle as the dollar strengthened on the Fed, while in-line UK CPI data is unlikely to shift views for the BoE's MPC at today's confab, where rates are expected to be held steady in a 6-3 vote split. USD/JPY plateaued overnight after climbing to 156.00 territory in reaction to the Fed announcement, while the BoJ also kicks off its 2-day policy meeting where the central bank is seen to be backed into a corner and expected to hike rates following rare joint currency intervention in July and rhetoric from officials, including pressure from the US. Antipodeans nursed some of their recent losses as sentiment in Asia-Pac proved to be resilient, while participants also digested the stronger-than-expected New Zealand GDP data. PBoC set USD/CNY mid-point at 6.7580 vs Exp. 6.7241 (prev. 6.7628). Brazilian Central Bank cut the Selic Rate by 25bps to 13.75%, as expected and with the decision unanimous, while it will continue to monitor developments in this scenario in order to keep monetary policy adequately restrictive to ensure convergence to the inflation target. BCB also stated that the scenario requires serenity and cautiousness in the conduct of monetary policy. BoC Minutes noted Governing Council members agreed near-term inflation was likely to remain elevated and that monetary policy would be guided by the inflation forecast and risks around it. Furthermore, it stated that persistently high gasoline prices and the Iran conflict had raised market expectations for oil prices, and members also saw a higher risk of inflation spreading to non-energy goods and services in Canada. FIXED INCOME 10yr UST futures were contained after yesterday's Fed-triggered selling and curve flattening. Bund futures nursed some of the losses seen in the aftermath of the Fed as the recent pullback in energy prices eased inflationary pressures, while there were also comments from the German Economy Minister that it would be sensible to reduce VAT on fuel from 19% to 7%. 10yr JGB futures lacked demand in the absence of tier-1 data from Japan and with the BoJ kick-starting its 2-day policy meeting. COMMODITIES Crude futures were contained after retreating throughout the prior day following supply-related headlines, including a report that Saudi looks to resume half of the key oil pipeline within days, while Libya's NOC Chief said production has returned to normal levels after shutdowns at three oil fields. Saudi Arabia reportedly looks to resume half of the key oil pipeline within days. US President Trump's administration temporarily relaxed truck hours of service rules for gasoline and diesel shipments, according to the US Department of Transportation. Spot gold rebounded overnight after the post-FOMC slump and retested the USD 4,300/oz level. Copper futures clawed back FOMC losses as Asia-Pac markets partially shrugged off the Fed rate hike. CRYPTO Bitcoin was choppy with prices oscillating above the USD 76,000 level. NOTABLE ASIA-PAC HEADLINES HKMA raised its base rate by 25bps to 4.25%, as expected, while Chief Executive Eddie Yue commented that the HKD may gradually ease after carry trade activity. Chinese President Xi said China is to boost supply chain self-reliance and strengthen advanced manufacturing, while he added that high-quality development and high-level security should be coordinated. Xi also said to improve the independent and controllable level of industrial chains. Japanese Finance Minister Katayama said they will review budget requests and control debt issuance at a level that can gain market credibility, while she added they have stated their determination to address excessive volatility when they launched Japan-US joint intervention. Japan's Chief Cabinet Secretary Kihara said Japan will continue close talks with the US Treasury to support orderly foreign exchange markets. DATA RECAP New Zealand GDP Growth Rate (Q2 QQ) 0.2% vs. Exp. 0.1% (Prev. 0.9%) New Zealand GDP Growth Rate (Q2 YY) 2.6% vs. Exp. 2.3% (Prev. 1.7%) GEOPOLITICS RUSSIA-UKRAINE US President Trump said they are working very hard on Russia and Ukraine, while he added that the Ukraine war is the toughest war to end and is the one driving up diesel prices. US House voted to impose sanctions and tariffs over Russia's conflict with Ukraine. OTHER US intelligence warned regarding the sale of F-35 jets to Saudi Arabia that China could acquire US jet technology through spying or cooperation with Saudis, according to NYT. North Korean leader Kim's sister denounced the IAEA's meeting on denuclearisation. North Korean Vice Defence Minister said the US arms buildup justifies North Korea's nuclear force building, and that they will continue expanding the defensive nuclear deterrent. Pakistan Foreign Ministry lodged a strong protest over Indian naval provocation in its Exclusive Economic Zone, stating that while the Pakistan Navy was undertaking a biennial exercise, an Indian vessel carried out aggressive manoeuvres in close proximity. EU/UK NOTABLE HEADLINES UK government’s EU reset summit could be delayed again unless the EU agrees to include “Made in Europe” legislation on the agenda, according to a source cited by The Guardian's Elgot. German Economy Minister said it would be sensible to reduce VAT on fuel from 19% to 7%, while adding that a cap on fuel prices is the wrong approach. Italian PM Meloni said Italy extends tax cut on diesel to October 5th. Sweden election authority said centre-left parties widen lead, with the count indicating 176 seats for centre-left parties versus 173 for the right-wing bloc as counting continues.