Newsquawk Daily European Opening News - 5th November 2026

US President Trump said it was "largely true" that Republicans lost the midterms because of the Iran war, while he said he is not replacing War Secretary Hegseth. APAC stocks were mixed after the rally on Wall Street, with a rotation out of chip names; US equity futures are mixed, with the NQ lagging, while European equity futures point to a positive open. DXY remained subdued post-Midterms alongside lower yields; USTs and Bunds extend gains as lower oil eases inflation concerns. Crude remained pressured after Wednesday's slump, while spot gold returned to levels above USD 4,100/oz. Looking ahead, highlights include Swedish CPIF Prelim. (Oct), German Factory Orders (Sep), EZ PPI (Sep), US Initial Jobless Claims (Oct/31), Norges Bank, BoE, CNB & Banxico Policy Announcements, Canadian Federal Budget. Speakers include BoE's Bailey, ECB's Cipollone, Schnabel, Lane & Lagarde, BoC's Macklem, Fed's Hammack & Barkin. Supply from Spain & France. Earnings from ConocoPhillips & Deutsche Telekom. SNAPSHOT STOCKS Nikkei 225 -1.8% ASX 200 +2.6% Hang Seng +3.4% Shanghai Comp -0.3% Euro Stoxx 50 Dec'26 +0.3% DAX Dec'26 +0.4% ES Dec'26 -0.2% NQ Dec'26 -1.1% FX DXY -0.2% (101.26) EUR/USD +0.3% (1.1259) USD/JPY -0.3% (157.98) GBP/USD +0.2% (1.3489) BONDS US T-Note Dec'26 +8.5 ticks Bund Dec'26 +29 ticks US 10yr Yield 4.85% German 10yr Yield 3.28% ENERGY & METALS WTI Dec'26 -1.1% Brent Jan'27 -0.6% Spot Gold +1.6% LME Copper +0.1% CRYPTO Bitcoin U/C Ethereum U/C As of 06:20GMT/01:20EST Click for the Newsquawk Week Ahead. IRAN CONFLICT US President Trump said it was largely true that Republicans lost the midterm elections because of the war in Iran, as the conflict had driven gasoline prices higher in the short term. Trump also stated that Iran could not be allowed to obtain a nuclear weapon and that military action had been necessary, while he added that he would probably get along with Democrats unless they wanted to be destructive. US President Trump had reportedly been asking advisers whether War Secretary Hegseth should remain in his position following the Republicans' heavy losses in Tuesday's midterm elections, according to CBS News citing sources. Furthermore, some White House aides expect blame for the GOP losses to fall on US CENTCOM Commander Cooper and Chairman of the Joint Chiefs of Staff General Caine, both of whom played significant roles in shaping guidance on the Iran war, while other sources said Trump had not decided whether to replace Hegseth, and that the prospect of a Democratic impeachment effort against him could increase if Democrats secure strong majorities in both chambers. US President Trump said War Secretary Hegseth is doing a very good job and he is not replacing him, when asked if he is considering replacing him. White House said US President Trump had complete confidence in War Secretary Pete Hegseth, according to CBS, citing a US official. US Republican Rep. Thomas Massie plans to force a House vote on War Secretary Hegseth’s impeachment next week unless Hegseth steps down. US House Armed Services Committee top Democrat Adam Smith called for probes into the Iran war and US military strikes in the Caribbean and Latin America, according to WSJ. US Senate Democratic Leader Schumer said Democrats would end the war, adding that some Republicans had joined them, while he commented that Americans did not understand why the war against Iran had been launched and that it should come to an end. US Treasury issued fresh Iran-related sanctions. IRGC announced that two oil tankers suffered fires after hitting mines last night as they attempted to pass through the 'illegal' passage south of the Strait of Hormuz, while it stated that a tugboat that approached the supertanker to fight the blaze also caught fire. Furthermore, it said it seized two drones after intercepting them and affirmed that it maintains control of navigation in the Strait of Hormuz. The course of US-Iranian negotiations will become clearer on Friday, and significant progress has been made, according to Al Jadeed citing Arab diplomatic sources. A delicate phase precedes the new Congress taking office, during which Trump may decide to launch a war on Iran, according to Al Jadeed citing US sources. However, it was noted that US President Trump may face restrictions from his team in the next two months due to the repercussions of the war on Iran and accusations by Democrats that he is involved in major corruption cases. Israel reportedly prepares for a possible surprise Iranian attack as US President Trump weighs resuming the war, while Israel’s high security alert remains unchanged since before last week’s elections, with no significant changes to operational preparations, according to an i24 News journalist. Israel conducted artillery shelling on areas in southern Lebanon, according to SNN. Yemeni armed forces announced a series of successful military operations against Saudi military targets, causing significant damage, according to Press TV. South Korea's Cheonghae Navy unit will expand operations into the sea near the Strait of Hormuz. US TRADE EQUITIES US stocks rallied following the Democratic sweep in the midterm elections. The initial reaction overnight was to sell equity futures, but the move was swiftly pared as Louisiana, a state with significant data centre exposure, stayed Republican, supporting hyperscalers. Also supportive of hyperscalers was that the recent weakness in neocloud stocks has prompted speculation that if neocloud providers lack the capacity to meet elevated AI demand, hyperscalers may step in and absorb the excess demand. There were plenty of earnings to digest, with strong results from AMD, SMCI and MCD, although DDOG earnings disappointed and weighed on other software names, with both AMD and SMCI paring initial strength. In terms of sectors, Consumer Discretionary, Real Estate, and Financials outperformed, while Industrials and Energy were the only sectors to close in the red, with Industrials pressured by concerns over potential Democratic AI regulation, while Energy was the clear laggard as crude prices tumbled. SPX +1.59% at 7,690, NDX +0.91% at 28,437, DJI +3.03% at 53,357, RUT +1.57% at 2,857. Click here for a detailed summary. TARIFFS/TRADE Chinese Vice Premier Ding Xuexiang said at the CIIE that China's overall tariff has been reduced to 7.3% and that China will import more fine products and services. NOTABLE HEADLINES US President Trump said he can work with Democrats on 'financial ideas' and that they would be 'mutually good', according to CNBC. US House Democratic Leader Jeffries said they would pass a bill to stop Trump tariffs and end the Iran war, adding that Medicaid cuts must be reversed and ACA tax credits extended. US House Democrats will hold leadership elections between November 18th-19th. White House delayed the hearing on Fed Governor Cook to December 14th, according to NYT. APAC TRADE EQUITIES APAC stocks were ultimately mixed after the rally on Wall Street as yields declined and oil slumped in the aftermath of the blue tsunami in the US Midterms, while a rotation out of chip stocks was evident overnight. ASX 200 rallied as gains were led by strength in mining and tech, with gold miners boosted by the surge in the precious metal to above USD 4,100/oz, while energy and financials were at the other end of the spectrum following a slump in oil prices and a drop in NAB's FY profit. Nikkei 225 wiped out its opening gains and more, amid weakness in electronics and tech stocks, while the drop in oil prices ultimately failed to provide a cushion despite Japan's heavy reliance on oil imports. KOSPI underperformed with a sidecar triggered amid a rotation out of semiconductor stocks after the blue wave in the US Congress raised concerns over the AI buildout. Hang Seng and Shanghai Comp were mixed as the mainland was constrained, while the Hong Kong benchmark surged as hyperscalers and ecommerce stocks benefited from the rotations out of semis. US equity futures were mixed as participants mulled potential after-effects from the blue tsunami. European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.3% after the cash market closed with gains of 2.0% on Wednesday. FX DXY remained subdued alongside lower yields and the recent drop in oil following the Democratic sweep in the US midterm elections, while implications from the decisive Democratic win include the prospects of a sooner end to the Iran conflict, but also policy uncertainty after Trump had previously touted that he would become "Mr Veto". In terms of the recent data, ISM Services fell more than expected, although the internals were mixed as business activity and new orders declined, but employment rose, and the price index fell, while the next key events in the US include the NFP data and comments from Fed's Williams on Friday. EUR/USD gained on the back of a softer dollar, while there were comments from ECB's Kazaks that there may be a gradual increase in interest rates, and the Netherlands nominated Knot for ECB President. GBP/USD edged closer towards a retest of resistance around the 1.3500 level, and with participants looking ahead to today's BoE rate decision, with money markets pricing a 95% likelihood of a 25bps hike. USD/JPY declined amid a softer buck and with the yen getting mild tailwinds from lower oil prices. Antipodeans benefited from a weaker buck, with NZD outperforming despite the mixed sentiment. PBoC set USD/CNY midpoint at 6.7156 vs exp. 6.6783 (prev. 6.7180) Brazil Central Bank held the Selic rate at 13.75% as expected, with the decision unanimous, while it stated that the current scenario is marked by a substantially contractionary Selic rate, a significant increase in uncertainty surrounding the reference scenario and higher inflation expectations. SNB Chairman Schlegel said inflation in Switzerland has risen and the October reading was higher than expected, adding that the SNB is to watch the situation closely, particularly for second-round inflationary effects. Furthermore, he said there were no significant second-round effects so far, but they can't be ruled out in the future and that the SNB won't hesitate to adjust policy if price stability is put at risk. FIXED INCOME 10yr UST futures continued the upward momentum with a lower-yield environment facilitated as collapsing oil prices helped ease inflationary concerns, while expectations of enhanced regulation could weigh on growth and further fiscal expansion may be constrained as the GOP will no longer be able to pass their reconciliation 3.0 package. Bund futures retested the 123.00 level to the upside amid lower oil prices, while participants await comments from several ECB speakers and German Factory Orders. 10yr JGB futures followed the rally in global peers but are slightly off their best levels following the somewhat mixed results from the 10yr JGB auction. COMMODITIES Crude futures remained pressured after tumbling by more than 8% yesterday as the Democratic sweep reduced the likelihood of an extended US/Iran war, while some reports suggested uncertainty regarding Secretary of War Hegseth's future in the Trump administration, as it was noted that the House could vote as soon as next week to impeach him, while President Trump was said to be asking advisers whether War Secretary Hegseth should remain in his position following the Republicans' heavy losses in Tuesday's midterm elections, although Trump denied that he was considering replacing Hegseth. US President Trump’s diesel deal with Russian President Putin falters as US-bound tankers veer off course, according to FT. Spot gold extended its post-Midterm rally and returned to above the USD 4,100/oz level amid dollar weakness, softer yields and the recent slump in oil prices. Copper futures were subdued alongside the mixed risk appetite in Asia as the dust settles from the blue tsunami. CRYPTO Bitcoin was indecisive with prices oscillating above the USD 80,000 level. NOTABLE ASIA-PAC HEADLINES BoJ September meeting Minutes stated members agreed it was appropriate that the bank continue to raise the policy interest rate and adjust the degree of monetary accommodation, while many members agreed that it was challenging to determine the neutral interest rate beforehand and that the BoJ should adjust policy while assessing changes in financial conditions, including short-term interest rates, and their impact on economic activity and prices. Furthermore, a member said it was important to show the BoJ's determination to prevent upward deviations in prices through a swift response, and a member said it was preferable for the Bank to bring the policy interest rate closer to its approximate target relatively soon and maintain scope for nimble adjustments in either direction. China blocked SoftBank's (9984 JT) USD 5.4bln acquisition of ABB's (ABBN SW) robotics division in a shock move that threatens to jeopardise CEO Son's ambitions of physical AI, according to FT. DATA RECAP Australian Trade Balance (Sep) 2.826B vs. Exp. 0.8B (Prev. 0.495B) Australian Exports (Sep MM) 2.3% (Prev. 3.7%) Australian Imports (Sep MM) -3.3% (Prev. 5.8%) GEOPOLITICS RUSSIA-UKRAINE Russian strikes targeted a logistics centre in Ukraine's Kharkiv region and a power plant in Dnipropetrovsk region, according to the Russian Defence Ministry. An explosion was reported at a Russian oil refinery in Ryazan after a Ukrainian drone attack. OTHER North Korea test-fired a newly designed advanced air-defence missile system, while South Korea's Defence Ministry reported suspected multiple missile launches by North Korea. Chinese Foreign Minister Wang Yi met with a North Korean delegation in Beijing, while he stated that China is ready to advance deeper, practical and positive development of China-North Korea ties. EU/UK NOTABLE HEADLINES UK Chancellor Healey pledged to overhaul public spending controls and vowed that new rules to ringfence “preventative” programmes would save money in the future, according to FT. ECB's Kazaks said rates need to rise if inflation risks are spreading and that there may be a gradual increase in interest rates. ECB's Moulin said the solution to France's financial problems is in France and not in Frankfurt, while he added that banks can deal with rising rates and there is no longer a risk of a loop between banks and sovereigns. Furthermore, he is sceptical regarding the French government's plan to raise the regulated savings cap.