Newsquawk European Market Wrap - 26th October 2026

European bourses were broadly firmer; Brazilian stocks were hit after Lula unexpectedly won a fourth term. Anthropic unveiled plans to IPO; Meta announced a USD 95bln stock offering. Crude benchmarks moved lower as delegations met in Tehran. EQUITIES European bourses (STOXX 600 +0.7%) were broadly in the green this morning, with strength facilitated by softer oil prices and with attention on a Saudi, Turkish and Pakistani delegation meeting in Tehran; talks focused on the current situation in the Middle East, but sources suggest that discussions were not on the nuclear file. As for European sectors, there was a clear cyclical bias; Travel & Leisure and Autos were buoyed, whilst Energy was amongst the laggards. Over in Brazil, domestic assets were hit after left-wing Lula won the Presidential election. US-listed ADRs such as Braskem (-44%) and Itau Unibanco (-24%) have been hit, whilst the iShares MSCI Brazil ETF (-23%) extends losses. Back in Europe, the IBEX 35 (U/C) underperformed vs peers, given its high exposure to the region. Key movers this morning included a number of healthcare names: AstraZeneca (+0.5%, SAFFRON Phase III trial showed statistically significant improvement in progression-free survival vs chemotherapy), Bayer (+3.4%, Phase III DASL-HiCaP trial showed a statistically significant 58% reduction in the risk of metastasis vs the placebo), Novartis (-0.7%, Remibrutinib met its primary endpoint but fell short of analyst expectations). Other key movers: Man Group (+5%, Co. expands partnership with Meiji Yasuda), Computacenter (+9%, lifts profit forecast), Plus500 (+1.9%, raises FY26 outlook after reporting solid Q3 growth). US equity futures are posting mild gains between 0.3-0.5%, following this positive sentiment set out by their European counterparts. Focus stateside is on the Anthropic S-1 filing, which showed that it will trade under the ticker “ANT”. Interestingly, the Co. said it may need to seek additional financing sooner than currently anticipated. Further fuelling woes surrounding circular financing, the Co. has secured agreements with SpaceX/xAI, Google Cloud, Broadcom and other leading tech-names. Other key movers include: Meta (-1.1%, plans up to USD 95bln stock offering), Verizon (-1.8%, rev. missed expectations). FX DXY softened in Asia as oil pulled back and yields eased, but gradually climbed throughout the European session, topping the 102.00 mark and currently holding towards the upper end of a 101.59 to 102.07 range, with early European upside potentially amid expectations of a hawkish tone from the FOMC. EUR initially held up well after France was spared a downgrade by Moody's on Friday, with today's German Ifo survey mixed (Business Climate and Expectations beat, Current Conditions missed). However, EUR/USD succumbed to the firmer Dollar and slipped beneath the 1.12 mark to trade at the lower end of a 1.1173-1.1227 range. GBP lagged in the morning without a clear driver and failed to benefit from a much better-than-expected CBI Distributive Trades print (-10 vs exp. -47). Cable trades towards the bottom end of a 1.3327-1.3388 range, with focus on Wednesday's Autumn Budget, which the government has positioned to be uneventful. USD/JPY extended higher throughout the session and currently sits at the top end of a 156.65-157.50 range. The BoJ is widely expected to keep rates on hold when it concludes its two-day meeting on Friday. The Antipodeans were the laggards; NZD/USD trades at the bottom end of a 0.5670-0.5707 range ahead of Wednesday's RBNZ decision, while AUD/USD holds within a 0.7012-0.7040 band ahead of Australian CPI, also due Wednesday. USD/CAD climbed towards the top of a 1.3998-1.4055 range, alongside the pullback in crude. Brazilian assets came under heavy pressure after President Lula unexpectedly won a fourth term, defeating Flavio Bolsonaro, who said he will challenge the result. USD/BRL surged by over 10%. Barclays FX month-end: weak USD buying vs most majors, no directional bias against EUR or JPY. FIXED INCOME A slightly mixed start to the week for benchmarks, upside as a function of the relative energy pullback; however, TTF remains bid and has biased European peers higher to some degree. For the most part, we appear to be waiting for the next few weeks' major events to land. USTs spent the morning with modest gains, but remained shy of last week’s peaks from Thursday and Friday at 106-14+ and 106-16+. Thereafter, the main updates came on the corporate front, with Meta’s stock offering sparking no sustained follow-through. OATs opened higher by around 70 ticks, after Moody’s maintained the rating, an Aa3, Outlook Negative rating that is one notch higher than both S&P and Fitch’s assessment of France. The hold was broadly on the assumption that a deficit-reducing budget will at some point be adopted. Given the challenging political and deteriorating fiscal backdrop in France, this was perhaps a stay of execution rather than a change in the narrative; next, we have S&P on November 27th. Since, OATs have extended to gains in excess of a full point, sending the OAT-Bund 10yr yield spread narrower by 10bps on the day, after downside of 8bps on Friday. However, we remain wider by around 30bps MTD. Bunds were directionally in-line with USTs, and have also not moved significantly from the unchanged mark, with the marginally larger pullback vs USTs at points potentially following Moody’s, as this removed a dovish risk into the ECB. Currently, the benchmark remains at the 121.81 base. Gilts opened with modest gains, before succumbing to the regional pressure and moving lower by a handful of ticks. Since then, the pressure in WTI and Brent and PM Burnham’s continued pro-EU stance, appear to have supported UK assets, with Gilts set to end the European day in pole position, and firmer by over 25 ticks. Brazil announces a tender to purchase 15mln units of BRL-denominated fixed-rate notes. Southwest (LUV) files for a USD-denominated two-parter. Brazilian Treasury cancels auction of inflation-linked government bonds scheduled for October 27th. Meta (META) reportedly to offer 6-6.5% dividend on mandatory convertible and to offer 17.5-22.5% conversion premium on preferreds. Meta (META) files for mixed shelf offering, no size disclosed. Future offerings of common and preferred stock, depositary shares, warrants, purchase contracts and units. EU sold 2029, 2036 and 2051 EU-bonds. 2029: average yield 3.486%. 2036: average yield 3.981%. 2051: average yield 4.433%. Schneider Electric (SU FP) to sell EUR-denominated noted in a six parter. COMMODITIES WTI Dec is set to end the London session lower by c. 1.8% within a USD 100.60-102.63/bbl range, while Brent Jan is lower by around 1% within a USD 109.22-110.99/bbl range; both remain within Friday's broad ranges. Crude benchmarks pulled back in the Asia-Pac session from Friday's surge and extended on losses in early European trade, with the move lacking a clear driver, though focus was on a meeting in Tehran between senior officials from Saudi Arabia, Turkey and Pakistan and their Iranian counterparts. Further pressure was seen after the Saudi Foreign Ministry said the visit is part of efforts to de-escalate tensions. Dutch TTF bucked the trend, rising to a peak of EUR 97.64/MWh and bringing the EUR 100/MWh mark into view, before paring back some of its gains to trade firmer by over 2%. There was no clear headline catalyst, although colder weather forecasts have been cited as supportive, while the benchmark remains underpinned by ongoing LNG disruptions and low EU storage levels heading into winter. Henry Hub futures were lower by over 2%. Spot gold climbed back above the USD 4,000/oz mark in the European morning, peaking at USD 4,025/oz, before paring its gains to trade flat around the figure, within a USD 3,978-4,025/oz range, alongside the firmer USD. Spot silver underperformed, trading towards the lower end of a USD 53.01-54.41/oz range. 3M LME copper was little changed within a USD 14,247.78-14,394.01/t range. Russian Deputy Foreign Minister said Russia is considering proposals to ensure the security of grain shipments through the Black Sea and remains in contact with Turkey, Interfax reported. HSBC lowers its gold rating to Overweight, whilst increasing oil to Overweight. India is expected to extend its duty-free cotton import policy through December, sources say. Iranian President is to visit Russia today to attend the gas exporting countries' summit, Tasnim reported. EUROPEAN DATA UK CBI Distributive Trades (Oct) -10 vs. Exp. -47 (Prev. -55). German Ifo Expectations (Oct) 91.6 vs. Exp. 90 (Prev. 90.4). German Ifo Current Conditions (Oct) 88.8 vs. Exp. 89.9 (Prev. 89.5). German Ifo Business Climate (Oct) 90.2 vs. Exp. 90 (Prev. 89.9). Spanish PPI (Sep YY) 18.3% (Prev. 13.2%). Swedish PPI (Sep MM) 3.4% (Prev. 0.9%). Swedish PPI (Sep YY) 11.2% (Prev. 6.8%). NOTABLE HEADLINES UK PM Burnham said he is "not proposing re-joining the EU in this parliament", Sky's McDaid reported; but would like to re-join at some point in his lifetime. UK PM Burnham rules out an early election; said, "I don’t think people want another backward looking squabble. They want me to get on with the job", The Times reported. TRADE/TARIFFS EU reportedly plans to hit China with import curbs on chemicals and furniture, Bloomberg TV reported; to present new curbs on China trade as early as Q1'27. CENTRAL BANKS PBoC is to set up bond market NBFI swap facility to maintain bond market stability. BCB poll shows economists see year-end 2026 Selic rate at 13.25% (prev. 13.25%) and year-end 2027 at 11.75% (prev. 12.00%). Swiss Weekly Sight Deposits (w/e Oct 23) Total: 434.743bln (prev. 457.01bln); Domestic 434.743bln (prev. 435.36bln). GEOPOLITICS RUSSIA-UKRAINE Ukraine President Zelensky is expected to be in Brussels for peace talks across 27th-28th October, Jozwiak reported. Russian Kremlin said any agreement to resume talks with Ukraine and the US do not prevent Russia or Ukraine from conducting military activity in the meantime. EU leaders seek to finalise EUR 45bln Ukraine loan guaranteed by the EU budget before year-end. MIDDLE EAST Iranian President Pezeshkian said "Iran is ready to resolve disputes and benefit from the combined capabilities of countries in the region", Al Mayadeen reported. An explosion was heard in the Strait of Hormuz near the Iranian coast, Sabereen News reported. Yemeni military source reiterates warnings over the security of Saudi Aramco facilities, ISNA reported. Senior Iranian official said talks in Tehran with Mecca Pact members exclude the nuclear issue, reports suggest; Iran will not discuss its nuclear programme until the US meets Tehran's demands. An explosion has reportedly occurred aboard a vessel off the coast of Iraq, amid reported of an attack, Fars reported. US informed Iraq that it would respond to the factions if they militarily joined Iran, reported Al Arabiya sources. Saudi Foreign Ministry said the visit of representatives of the Mecca Agreement countries to Tehran is part of efforts to de-escalate tensions between the parties to the crisis, Al Hadath reported. It is important to open negotiation channels under the Mecca Pact talks in Tehran, aimed at preventing further escalation and paving the way for an agreement to end the conflict. Hopes to reach an agreement that ends the crisis and ensures security and peace in the region and globally. UKMTO reported a time-late report on the Strait of Hormuz; incident occurred on October 23. Iran's FM spokesperson Baghaei, in response to the claim of a negotiation proposal from the Europeans, said "apart from a statement emphasizing the importance of negotiations, we did not see any specific proposal from the Europeans". Iran's FM spokesperson said "Iran has never closed the window of diplomacy and has been steadfast in implementing international agreements, but the history of America's reneging on commitments cannot be ignored". Iranian Foreign Minister said the Qatari delegation's visit to Iran is within the context of talks in the region. Adds that, US sanctions will impact on regional ties. Consultations are continuously underway with Pakistan to resolve technical problems more quickly. "A fire broke out at the Rabigh refinery (400k BPD) in Saudi Arabia after the Yemeni armed forces targeted the refinery", Sabereen News. US forces in the Middle East are reportedly prepared to launch major strikes against Iran within 96 hours of US President Trump's approval, CNN reported. US officials familiar with military planning say it is a question of when, not if, Trump orders renewed strikes against Iran; action likely to be after midterms. "Officials say that Trump has not made up his mind on what he will do after the midterms but that he appears to be leaning toward ordering major action". Iranian Foreign Ministry Spokesperson Baghaei said the outcome of Israel's elections does not matter to Tehran. Israeli Defence Minister Katz denies plans to attack Iran before the elections, N12 reporters say, citing sources. Iran's head of the Parliament's Civil Engineering Commission said that the Strait of Hormuz is completely under Iran's control, adding that they are increasing speed of oil price growth in the coming days. Iran's Foreign Minister Araghchi proposed a 7-day plan to reopen the Strait of Hormuz with conditions, while he stated that US military aggression and sanctions are key obstacles, adds energy cooperation with Russia boosts security and exports. NOTABLE NORTH AMERICAN NEWS Democrats lay groundwork to probe US President Trump's diesel deal, Axios reported. NORTH AMERICAN DATA Canadian Wholesale Sales Prel (Sep MM) 0.5% (Prev. -1.6%). US Dallas Fed Manufacturing Index (Oct) 13.4 (Prev. 9.8 US Chicago Fed National Activity Index (Sep) 0.07 (Prev. -0.08).