Newsquawk European Market Wrap - 9th October 2026

European bourses gained throughout the European session; US equity futures mildly gained Crude benchmarks were initially lower after Trump said he is having productive discussions with Iran; energy benchmarks gradually reversed and then caught a bid after reports suggested that the Houthis planted mines in the Bab el Mandab strait. DXY gradually moved higher; CAD underperformed after a dire jobs report. EQUITIES European bourses are set to end Friday's trade entirely in the green, with outperformance in Germany's DAX 40. The equity space held resilient despite punchy rhetoric from the IRGC, warning that vessels violating restrictions will be pursued and punished beyond the Strait of Hormuz. Sectors held their positive bias, with Telecoms the only sector finishing in the red. Basic Resources topped the sector pile, followed by Autos and Retail. Positive commentary out of the EU-China trade talks, with EU Trade Commissioner Sefcovic announcing that China agreed to cut shipments of hybrid vehicles by 50%. Other top stories include: Deutsche Telekom -6.8%, as SpaceX boosted competition in telecoms following SpaceX's acquisition of Grain Management's 800 MHz spectrum portfolio; Hexagon +3.1%, acquired Rocscience for USD 535mln; Demant +5.7%, lifted its FY26 organic growth and EBIT before special items guidance; Salzgitter +12.8%, upgraded to Buy from Neutral at UBS. US cash equities opened entirely in the green, with outperformance in the NDX. Delta Air Lines (-3.0%) reported earnings pre-market; Q3 EPS missed while Revenue topped estimates. The CFO detailed that the downgraded forecast was due to higher fuel prices and that there is a reason it would remain higher for longer. FX G10s were initially broadly firmer against the USD, though they are set to end the London session with a mild negative bias. The Antipodeans topped the pile, whilst the Loonie was the clear laggard after a very poor jobs report, which saw Employment Change decline 68.3k (exp. +7k). Following the report, BoC pricing trimmed from 10bps of implied tightening in October to around 6.5bps. DXY started the European session with very mild losses, and then climbed higher as the session progressed; strength which came amidst a slight pick-up in energy prices after a UKMTO update and an IRGC warning that violating vessels would be targeted beyond the Strait of Hormuz. EUR was flat early door, but succumbed to some mild pressure into the afternoon. Focus for the single currency has been on two fronts: a) politics and b) EU-China trade relations. On the former, no material updates on the French fiscal situation; as such, the OAT-Bund spread is set to end the London session around 137bps (vs last week’s peak of 151bps). On the trade front, EU Trade Commissioner Sefcovic said that it had reached a shared understanding to improve access to the Chinese markets. He noted that the agreement of understanding with China on hybrid vehicles could cut shipments by half. FIXED A mixed final session of the week for fixed income. In brief, EGBs lead in a slight breather from the marked pressure we have seen across the week, with a similar narrative also seen in Gilts. Both aided by a slip in energy prices. Bunds firmer by about 30 ticks at the time of writing, though we are a similar amount off the 121.33 high. Specifics for the bloc are a little light, no follow-through from the ECB officials, while reports continue to focus on the French fiscal situation. As it stands, the OAT-Bund 10yr yield spread is around 137bps, vs a high in excess of 150bps earlier in the week. Gilts holding around the 84.00 handle, with gains of 60 ticks on the day. Specifics for the UK include the latest by-election, which saw Labour win and remove one of the obstacles in the way of an early election, with the next test the Autumn Budget. While firmer today, and yields lower as such, the WTD reaction remains notable, after the 10yr yield hit a 19yr high earlier in the week. USTs buck the trend slightly, with some modest pressure seen despite the pressure in energy as, for today at least, the correlation to energy has perhaps become somewhat stretched. Towards the low-end of 104-15 to 104-26+ parameters. Spanish Treasury announces plans to sell 2029, 2031 and 2033 bonds on October 15th. PepsiCo (PEP) files to sell EUR 1bln in 3-year and 9-year noted. Strong US long-term bond auctions on the 7th and US ultra-long-term bond auctions on the 8th have had an impact, and Japanese government bonds are also seeing increased buying, Kyodo reported citing sources. COMMODITIES WTI Nov and Brent Dec futures remained softer but recovered from earlier lows, with the complex initially pressured by Trump's assurances that the US would not attack Iran before the November midterms and that discussions with Tehran remained productive. However, it has been a busy day of geopolitics, overall underscoring high tensions. To recap, the IRGC claimed to have struck the LPG carrier NV Sunshine after it attempted to transit an unauthorised route south of the Strait of Hormuz, while the IRGC warned that vessels violating restrictions would be pursued and punished beyond the Strait. Further, UKMTO reported another vessel struck by a projectile near the UAE, causing a fire that was subsequently extinguished. Elsewhere, Yemen's government forces claimed to have secured Bab al-Mandab, although fighting reportedly continued around the strategic waterway. More recent reports suggested that Houthis have laid mines in Bab al-Mandab area, which prompted upside in crude. On the supply front, Gulf of Mexico producers had shut around 63% of oil production ahead of Hurricane Isaias, removing nearly 1.3mln BPD. WTI fell to a USD 90.01/bbl low from a USD 91.76/bbl high, while Brent declined to a USD 102.33/bbl low from a USD 104.09/bbl high with both recovering from worst levels amid the flurry of geopolitics. Dutch TTF reversed its earlier downside and moved firmer despite the broader weakness in crude, with upside facilitated by reports that The IRGC attacked on an LPG carrier, alongside subsequent warnings against vessels violating restrictions. TTF recovered from a EUR 76.27/MWh low to a high above EUR 80/MWh, reversing its earlier losses. Precious metals remained firmer despite the USD resilience but amid a flurry of geopolitical headlines. Spot gold climbed to a USD 4,207.50/oz high from a USD 4,131.82/oz low, extending above yesterday's USD 4,103-4,146/oz range. Spot silver similarly advanced to a USD 60.72/oz high from a USD 59.19/oz low, outperforming gold. Base metals were firmer across the board as the pullback in energy prices yesterday provided some relief, with copper recovering from yesterday's losses. The complex also found support from renewed Chinese demand, low inventories and supply disruption concerns at Antofagasta's Centinela mine in Chile. Elsewhere, China reiterated its commitment to accelerating breakthroughs in key technologies, while constructive EU-China trade discussions provided some support to sentiment. 3M LME copper rose to a USD 14,580.38/t high from a USD 14,298.53/t low, while COMEX copper climbed to a USD 6.72/lb high from a USD 6.51/lb low. Gazprom and Lukoil have started production at the Rayavodskoye oil field. EDF and Octopus are expected to be sounded out by KPMG advisors about a deal to buy Ecotricity, Sky News reported. German Economy Minister said Germany is to release up to 15mln barrels of oil and petroleum products; diesel and heating oil will be released first from reserves, followed by crude oil. Shanghai Futures Exchange set daily price limits for fuel oil futures. Shanghai Futures Exchange set daily price limits for fuel oil futures FU2612 and FU2701 at ±16%, with hedging margins at 17% and general position margins at 18%; set petroleum asphalt futures BU2610, BU2611, BU2612 and BU2701 price limits at ±12%, with hedging margins at 13% and general position margins at 14%. India is reportedly holding 60 containers of Niger-origin soybeans as importers fail to submit documents, according to sources. NHC said Hurricane Isais is strengthening, with maximum sustained winds of 101mph. EU Commission selects 46 new Strategic Projects to bolster the EU's supply of critical raw materials. To strengthen EU supply chains and diversify sources of critical raw materials, the European Commission today announced that it has selected 46 new Strategic Projects across 16 Member States. The projects will contribute to the benchmarks set in the Critical Raw Materials Act (CRMA) that by 2030 EU capacity meets at least 10% of the EU's annual consumption for extraction, 40% for processing, and 25% for recycling of strategic raw materials to enhance competitiveness, develop greater resilience and be less dependent on any single supplier. Zimbabwe said there is no reason to delay lithium concentrate export ban. Gulf of Mexico oil producers shut 63% of production ahead of a hurricane, while cuts have removed nearly 1.3mln barrels per day from the market, according to NBC citing Marine Minerals Admin. EUROPEAN DATA Italian Industrial Production (Aug MM) -1.3% vs. Exp. 0.0% (Prev. 0.6%). Italian Industrial Production (Aug YY) 0.0% (Prev. -0.1%). Swedish Construction Output (Aug YY) 3.9% (Prev. 1.7%). Swedish Industrial Production (Aug MM) 5.4% (Prev. -2.9%). Swedish Industrial Production (Aug YY) 5.8% (Prev. 1.7%). Swedish New Orders (Aug YY) 5.1% (Prev. 7.7%). Swedish GDP (Aug MM) 1.1% (Prev. -0.7%). Norwegian PPI (Sep YY) 30.1% (Prev. 30.1%). Norwegian Core CPI (Sep MM) 0.2% (Prev. -0.5%). Norwegian Core CPI (Sep YY) 3.0% vs. Exp. 3.1% (Prev. 3.0%). Norwegian CPI (Sep YY) 3.4% vs. Exp. 3.6% (Prev. 3.3%). Norwegian CPI (Sep MM) 0.5% (Prev. -0.3%). NOTABLE HEADLINES Eurogroup Chief Pierrakakis said EU approves Greece's energy escape clause request. Bank of Spain lifts 2026 inflation forecast to 3.9% and sees 3.7% inflation in 2027 (prev. 2.7%); raises 2026 economic growth forecast to 2.6% (prev. 2.3%) and sees 2.2% growth in 2027 (prev. 1.7%). EU Council agrees key elements of crucial measures to deepen EU capital markets. TRADE/TARIFFS EU Trade Commissioner Sefcovic said the trade deficit with China demands a credible path to rebalancing. EU and China reaffirmed to properly handle differences under the framework of WTO rules. Reached a shared understanding to improve access to the Chinese market for a series of EU products through lower MFN tariffs. These range from car parts to olive oil and footwear, totalling almost EUR 4bln in current export value, which would bring at least EUR 225mln in duty savings. The agreement of understanding with China hybrid vehicles could cut shipments by half. Both sides commit to continue working with the view to stabilise the bilateral relationship more balanced. Reached an agreement on rare earths and magnets. Will continue to explore the possibility of tariff reductions or elimination for certain goods. Talks are far from over. Two sides recall the guidance document on the price undertakings of the BEV's anti-subsidy case. China's Commerce Ministry said minister had pragmatic and productive talks with EU trade chief; two sides agreed to hold third regular meeting of mechanism in March 2027. To continue exploring the possibility of lowering tariffs on some goods under WTO rules. China and EU reach an understanding on hybrid vehicle trade in a WTO-compliant manner after intensive negotiations. China and EU to maintain dialogue on medical device market access. To continue facilitating rare earth and permanent magnet export licenses to EU via "Green Channel". US Treasury Secretary Bessent may skip the APEC finance ministers’ meeting in Hong Kong to focus on talks with Chinese Vice-Premier He Lifeng in Shenzhen ahead of President Trump’s November visit, SCMP sources reported. GEOPOLITICS RUSSIA-UKRAINE Russian Kremlin said a call between President Putin and US President Trump will take place soon, Ifx. German Foreign Minister said they will impose new sanctions on the Russian economy. MIDDLE EAST Military source said Houthi forces have planted large quantities of mines in the Bab al-Mandab area, Al Arabiya reported. Yemen's Homeland Shield Forces say they are engaged in fierce battles with the Southern Giants Brigades to pursue remaining Houthi forces around Bab al-Mandab and fully secure the area, Al Arabiya reported. Iran's IRGC warns vessels violating restrictions will be pursued and punished beyond the Strait of Hormuz. Reiterates sanctions will be imposed on the companies that are taken in by the US aggressors and on all vessels belonging to violating companies. Iran's IRGC Navy said it struck the LPG carrier NV Sunshine after the vessel attempted to transit an unauthorised route south of the Strait of Hormuz, causing a major fire in its engine room and propulsion system and forcing it to stop. "[Yemen] Government forces complete control over Bab al-Mandab after clearing it", Al Hadath reported citing sources. Saudi Arabia rules out a truce with the Houthis until the Yemeni government regains territory; Saudi Arabia will not bow to Houthi “military blackmail”. Diplomatic sources say US-Iran negotiations and exchanges of messages have continued since the Iranian delegation returned from New York, Al-Akhbar reported. Qatari mediation efforts are intensifying as talks enter a “decisive and highly sensitive” stage that could either pave the way for an agreement or sharply increase the risk of a return to war. US Secretary of State Rubio said political talks on Venezuela will resume on October 14th. Explosions heard in Erbil, Iraq, Tasnim reported. UKMTO has received a report of an incident 13NM west of Al Jazeera, UAE. Incident was 9th October, 10:00UTC. Vessel has been struck by a projectile causing a fire that has since been extinguished. Iranian President said everyone has the right to benefit from nuclear energy peacefully. Explosions reportedly heard in Riyadh, Naya reported; air operations at King Khalid have been suspended. Iranian President Pezeshkian said peace negotiations will not succeed under pressure and threats, Sky News Arabia reported. "The Southern Giants are close to securing full control of Bab al-Mandab", Al Hadath reported. An attack by the Saudi enemy's mobilisations south of Bab al-Mandab coming from Lahj was repelled, Saba reported citing sources. A US military source told Al-Hadath that "US forces received orders to mobilise last Sunday"; "We have replaced thousands of missiles and sent our forces the ammunition they need". The summer period gave US forces a great opportunity to rearm. Our options are always available, and we have 50,000 soldiers on constant standby. We are focusing on imposing a complete blockade on Iranian ships and ports. Proposals have been presented to Trump to strike Iranian military capabilities along the coast to a depth of 50 to 80 km. Yemeni sources say pro-government Southern Giants forces are advancing towards the Bab al-Mandab coastal area, Sky News Arabia reported. Saudi's Civil Aviation confirms that two attacks targeted the King Khalid International Airport in Riyadh. Chinese Foreign Ministry said reported that Chinese and US officials discussed reciprocal visits to nuclear facilities are inconsistent with the facts. Tasnim reported of a "massive fire" breaking out at Saudi Arabia's Abqaiq oil facility. IRGC Navy political affairs officer said vessels violating restrictions in the Strait of Hormuz are punished every night, via Arabic TV. NOTABLE NORTH AMERICAN NEWS US Treasury appoints Judy Shelton as counsellor to Secretary Bessent, CNBC reported. Pakistani PM Sharif nominates US President Trump for the Nobel Peace Prize. NORTH AMERICAN DATA Canadian Part Time Employment Chg (Sep) -32.9K (Prev. -5.8K). Canadian Full Time Employment Chg (Sep) -35.4K (Prev. -35.9K). Canadian Unemployment Rate (Sep) 6.5% vs. Exp. 6.5% (Prev. 6.4%). Canadian Participation Rate (Sep) 64.8% (Prev. 65.0%). Canadian Employment Change (Sep) -68.3K vs. Exp. 7K (Prev. -41.7K). Canadian Average Hourly Wages (Sep YY) 2.3% (Prev. 2.0%).