Newsquawk European Market Wrap - 30th September 2026

European bourses initially started the session with broad gains but now look set to end Wednesday's trade mixed. Crude futures recovered strongly from earlier lows after initially remaining subdued. A dovish reaction seen across the market to softer-than-expected PCE data. EQUITIES European bourses initially started the session with broad gains but now look set to end Wednesday's trade mixed. The pullback came amid a steady climb in energy benchmarks; however, no clear driver for the upside was seen. On the data front, an upward revision to the UK's Q2 GDP failed to support the FTSE 100, although it is the European outperformer. On inflation, EZ figures continued to surprise to the upside, with French, Italian and German figures extending further from the ECB's 2% target. One bright point was Germany's core figure, which remained unchanged at 2.4%. Sectors lack a clear bias. Retail remained the sector outperformer, as Optimised Personal Care and Basic Resources held the top spots. Media was the sector laggard, with Energy and Insurance following behind. Key movers include: BMW (+2.6%), targets Auto EBIT margin in 2028 and the start of the decade of 3-5% and 5-10% respectively; CTS Eventim (-13.4%), CFO stepped down with immediate effect; Greggs (+7.6%), guided a modestly improved outcome for 2026; TomTom (+2.1%), expands its Microsoft (MSFT) collaboration. US cash equities opened entirely in the green. The focus in the futures session was the PCE data, which printed cooler-than-expected; contrary to its European peers. In an immediate reaction, equities saw upside as markets pared back rate hike bets. Now, markets turn to Micron earnings. Analysts are expecting Q4 revenue to grow 354% from a year prior. Focus will be on guidance, with Morgan Stanley analysts shifting the debate from 'how good it can get?' to 'how long can it stay this good?'. FX Snapshot: G10s were mostly firmer against the USD. GBP outperformed post-GDP, whilst the Aussie lagged following the region’s cooler-than-expected CPI data. DXY was mildly lower in early morning trade, and then was swept following the US PCE report, which was broadly cooler-than-expected, but with metrics either in-line or rising from the prior. However, it is worth mentioning that the PCE report was subject to a methodology change, which was seen to downwardly state the headline, with the effect of Portfolio Management & Investment Advice to be significantly lower. The index moved lower following the PCE report, but has since largely reversed that move, as markets digest the methodology change, and given that the underlying trend does not appear to be improving for the Fed. Elsewhere, ADP Employment was strong (90k vs exp. 70k); but given that the Fed’s focus appears to be on inflation, little reaction was seen in the USD. Following the strong ADP data, via CME Fedwatch, market pricing for a 25bps hike rose from 44.8% to 47.1%. However, after the soft PCE report, money markets reduced that probability to 37.1%. GBP outperformed vs peers. The strength came after mild revisions higher in Q2 GDP, though it will likely have little impact on the BoE in the near term. Elsewhere, the JPY also performed well, continuing the strength seen overnight. This comes despite poor Japanese Industrial Production data overnight. In the European morning, Nikkei reported that PM Takaichi will vow a nimble response to unexpected market moves. EUR was a little firmer this morning, digesting inflation reports out of France, Germany and Italy, which were broadly indicative of rising inflation; however, core CPI in Germany remained unchanged from the prior. Therefore, it is clear that the second round effects are yet to have taken place. Some ECB members have sounded their concerns about waiting for that evidence to be apparent, as such, the metrics today keep an October hike in play. AUD was the laggard, following a weaker-than-expected CPI report; odds of a November hike are priced in at 24%, with a number of key metrics due until then. Westpac analysts reiterated their call for a hold at the November meeting following the inflation figures. Japan currency intervention amounted to JPY 0 from August 27-Sep 28. FIXED INCOME Global fixed benchmarks were broadly firmer this morning, though Gilts eventually slipped into the red. USTs (+6 ticks) knee-jerked higher following the region’s US PCE report, which printed beneath expectations. However, the move largely pared back given the updated methodology, which was widely seen to understate the PCE figure itself. USTs are set to end the European session at the mid-point of a 104-14 to 104-25+ range. Bunds had a few regional CPI reports to digest, with mild pressure seen in the morning following slightly hawkish German State CPIs; the nationwide figure itself rose from the prior, a little more than expected. However, second round effects are still yet to be seen, given that core held steady at 2.4% Y/Y. Into tomorrow’s EZ CPI, Citi calculates that headline will print above consensus at 3.8% Y/Y, which would be c. 20bps above the ECB’s September forecast. Gilts were the initial outperformers across benchmarks, taking leads from a positively received Burnham presser on Tuesday. However, as energy benchmarks moved higher throughout the session UK paper gradually eased and fell into the red; the benchmark is set to end the London session off by c. 7 ticks. Norwegian Cruise Line (NCLH) files to sell USD 750mln of senior noted. Germany sold EUR 4.177bln vs Exp. 5.5bln 3.00% 2036 Bund: b/c 1.16x (prev. 1.47x), average yield 3.58% (prev. 3.39%), retention 24.1% (prev. 23.62%). COMMODITIES WTI Nov and Brent Dec futures recovered strongly from earlier lows after initially remaining subdued following yesterday’s pronounced downside. US-Iran negotiations continued to struggle for progress, with Iran receiving Washington’s response to its seven-point proposal via Qatari mediators, although reports suggested the main disagreement centred on the sequencing of the proposed seven-day framework rather than its components. Axios also reported that mediation efforts this week had yielded little progress, while the White House tempered expectations of an imminent breakthrough. Further, Iranian Civil Defence raised readiness levels at 46 facilities, including oil refineries, power plants, ports, bridges and airports, in anticipation of potential attacks. UKMTO also reported that both crude and LNG tankers were struck by unknown projectiles in the Strait of Hormuz, while Israeli press increasingly assessed the Flydubai incident as a terrorist attack, with a second Flydubai flight subsequently diverted back to Dubai. WTI rebounded from a USD 88.58/bbl low to a USD 91.10/bbl high, while Brent recovered from a USD 95.12/bbl low to a USD 98.40/bbl high. Dutch TTF recovered sharply from earlier lows as Middle East supply risks remained heightened despite continued US-Iran mediation efforts. Germany also ordered the procurement and storage of 8 TWh of natural gas by 15th December as Europe continued efforts to bolster inventories ahead of winter. TTF rebounded from a EUR 67.88/MWh low to a EUR 72.71/MWh high. Precious metals were mixed but gold added to yesterday's attempted recovery as global yields eased, with further (but fleeting) upside seen following softer-than-expected US PCE inflation. Headline PCE printed 3.4% Y/Y (exp. 3.7%) and Core PCE 3.0% (exp. 3.3%), while both monthly measures were also softer than expected. Spot gold briefly rose above USD 4,200/oz to a USD 4,219/oz high from a USD 4,166/oz low, while spot silver remained more contained within a USD 60.57-61.72/oz range. Base metals were mostly firmer following constructive Chinese PMI data, with the official Manufacturing PMI returning to expansion and Non-Manufacturing also improving, while RatingDog Manufacturing and Services topped expectations. Copper was additionally supported by Chilean production falling to 369.5k tonnes in August from 403.4k tonnes. 3M LME copper traded within a USD 14,455.60-14,550.88/t range, while COMEX copper traded within a USD 6.61-6.67/lb range. Panama's Government said now it has the data to decide on future of first Quantum minerals cobre Panama mine. Chile’s August copper production fell to 369.5k tonnes (prev. 403.4k tonnes). Chile August total copper production 369.5kT (prev. 403.4kT). Iraq's SOMO offered buyers October contract crude supplies at discounts to regional benchmarks of up to USD 37/bbl, according to reported, citing documents. Argentine economy minister said Japan has opened its market to Argentine beef. Libya’s NOC said the Sharara oil field is now pumping at more than 340k BPD. European Commission assessment finds a 50-tonne single mass threshold under CBAM would exempt 0.87% of embedded emissions, below the 1% cap, based on data through end-March 2026. OPEC+ oil producers are reportedly set to keep output targets unchanged at this Sunday's meeting, sources suggest. Oman OSP for Nov' Crude set at USD 114.07/bbl (prev. USD 87.84/bbl). German Economy Ministry spokesperson said the government will establish a strategic gas reserve from 2027. said steps taken by SEFE are meant to send a clear signal to other companies on obligations to store gas for the winter. The government will procure these volumes through additional supplies so as not to interfere with injections by other market participants. Iraq’s oil exports averaged 2.65mln BPD in September, including 250k BPD shipped via Turkey’s Ceyhan port, according to the Oil Ministry spokesperson. Russian government has extended the ban on diesel fuel exports until end-October, Ifx/Tass report; a one-month extension. Germany’s Economy Ministry has ordered the procurement and storage of 8 TWh of natural gas by December 15th, SEFE said. EUROPEAN DATA German HICP Preliminary (Sep YY) 3.3% vs. Exp. 3.1% (Prev. 2.9%). German HICP Preliminary (Sep MM) 0.6% vs. Exp. 0.5% (Prev. 0.2%). German CPI Prel (Sep MM) 0.6% vs. Exp. 0.5% (Prev. 0.2%). German CPI Prel (Sep YY) 3.3% vs. Exp. 3.2% (Prev. 2.9%); Core CPI Prel (Sep YY) 2.4% (Prev. 2.4%). Italian HICP Preliminary (Sep YY) 4.1% vs. Exp. 3.8% (Prev. 3.2%). Italian HICP Preliminary (Sep MM) 2.0% vs. Exp. 1.8% (Prev. 0.1%). Italian CPI Prel (Sep YY) 4.2% vs. Exp. 3.8% (Prev. 3.3%). Italian CPI Prel (Sep MM) 0.7% vs. Exp. 0.3% (Prev. 0.5%). Italian Business Confidence (Sep) 91.9 vs. Exp. 90.5 (Prev. 90.2). Italian Consumer Confidence (Sep) 91.2 vs. Exp. 94 (Prev. 94.5). Spanish Current Account (Jul) 5.91B (Prev. 2.41B). French CPI Prel (Sep MM) -0.3% vs. Exp. -0.6% (Prev. 0.7%). French HICP Preliminary (Sep MM) -0.4% vs. Exp. -0.5% (Prev. 0.7%). French HICP Preliminary (Sep YY) 3.4% vs. Exp. 3.1% (Prev. 2.6%). French CPI Prel (Sep YY) 3% vs. Exp. 2.8% (Prev. 2.4%). French PPI (Aug YY) 4.80% (Prev. 3.50%). French PPI (Aug MM) 1.0% (Prev. 1.3%). French Household Consumption (Aug MM) -0.5% vs. Exp. 0% (Prev. 0.4%). UK GDP Growth Rate Final (Q2 YY) 1.4% vs. Exp. 1.2% (Prev. 0.9%). UK Business Investment Final (Q2 QQ) 1.8% vs. Exp. 1.7% (Prev. 0.9%). UK Business Investment Final (Q2 YY) 5.2% vs. Exp. 0.8% (Prev. 1.8%). UK GDP Growth Rate Final (Q2 QQ) 0.5% vs. Exp. 0.4% (Prev. 0.6%). UK Current Account (Q2) -19.9B vs. Exp. -24.7B (Prev. -21.1B). Swedish Retail Sales (Aug YY) 6.9% (Prev. 6.5%). Swedish Retail Sales (Aug MM) 0.8% (Prev. -0.1%). NOTABLE HEADLINES European Commission said it has launched EU-level coordinated action targeting nine video-game companies; the Consumer Protection Cooperation network’s action aims to protect gamers’ rights. The German government plans to introduce a sugar tax on July 1, 2027, Welt reported citing a draft; government expect it will generate an additional EUR 945mln for the federal budget next year. UK PM Burnham has suggested that a move to rejoin the EU is among the options for the UK, BBC Radio 4. The current settlement has caused more harm than good. Said, UK-EU relations could: stay as they are; move towards a customs union; a single market; or go all the way (i.e. rejoin). Swedish think-tank NIER raises its 2026 CPIF inflation forecast to 1.6% (prev. 1.3%) and 2027 to 2.6% (prev. 2.1%); raises its 2026 GDP forecast to 3.09% (prev. 2.4%) and cuts 2027 to 2.4% (prev. 2.8%). TRADE/TARIFFS French President Macron said the UK would be welcomed back if it wants to rejoin the EU. French Interior Ministry source said France is discussing with the UK the terms for withdrawing from the “one in, one out” agreement. EU is open to providing single-market access to those looking to join the bloc, on the condition they stand with the EU against industrial competition and hostile nations, Politico reported citing sources. CENTRAL BANKS US Federal Reserve finalises changes to enhance the transparency and public accountability of its stress test and reduce volatility in its stress test-related capital requirements. Requires the Board to invite public input annually on the stress test scenarios and any material model changes. Requires the Board to average the results from the two most recent annual supervisory stress tests for firms subject to the stress test in both years. The changes are likely to reduce Y/Y volatility in capital requirements by approximately 50% and are not expected to materially affect aggregate capital requirements. Fed's Bowman:. "The stress test is an essential component of our regulatory capital framework.". "Today's changes preserve its resilience by ensuring that it is transparent, granular, and risk-sensitive. The public will now have greater assurance that the risks banks take will be reflected appropriately in their stress test losses and their capital requirements.". BoE Governor Bailey said regulating AI is not an appropriate entry point. BoE Financial Policy Committee (Sep): The re-escalation of the conflict in the Middle East has renewed uncertainty around growth and the path of interest rates in a number of advanced economies. CCyB held at 2%. SNB Quarterly Bulletin: Swiss economy grew robustly in Q3 and Cos. plan to increase hiring, staff levels too low. Riksbank Minutes (Sep):. Governor Thedeen:. Once again, the economy appears to be surprisingly resilient. If underlying inflation this year and next develops roughly as in the forecast, conditions are favourable for CPIF inflation to stabilise at the 2 per cent target in the longer term. What I am worried about is the risk outlook around the forecast; the longer the high oil-related prices remain, the greater is the risk that it will give rise to a broader upturn in inflation. Hjelm:. I assess the initial situation for the real economy and the outlook going forward to be stronger and more robust than earlier this year. When it comes to the effects of these driving forces on inflation, they have so far been limited. I assess that the risks with regard to inflation are largely on the upside. Seim:. As regards the risk outlook, I continue to see a risk of inflation being higher than in our forecast. GEOPOLITICS MIDDLE EAST Explosion heard near Zahedan's Jomhuri Boulevard, Tehran, Iran, Fars reported; The sound of the explosion was related to an acoustic object. Iran's President said that Tehran is earnestly fulfilling its responsibility to safeguard regional waterways and ensure safe navigation. "Sustainable security in territorial waters and waterways depends on cooperation and shared responsibility among the countries of the region". US White House is reportedly tempering expectations of an imminent breakthrough between US-Iran, Semafor reported; a source suggested that "The bar is being raised very high". Iranian government spokesperson said Foreign Minister Araghchi presented President Pezeshkian with a US proposal following his New York trip, which included discussions on Iran’s conditions for reopening the Strait of Hormuz, IRNA reported. Iranian Navy Commander said the Strait of Hormuz is part of Iran’s strategic geography and its strength there is a cornerstone of safeguarding its security and interests, Al Jazeera reported. Senior source said mediators conveyed Washington’s response to the Iranian Foreign Minister, Al Arabiya reported. US-Iran negotiations have moved to the implementation stage, including who will act first and what guarantees will be provided. The seven-point plan requires fundamental changes before any progress can be discussed. "The plane changed direction back to Israel but will not be allowed to land here until it is clear what is happening on board", N12. Iranian Foreign Minister Araghchi received US feedback on Iran’s seven-point proposal on Tuesday via Qatari mediators in Doha and will discuss it in Tehran on Wednesday, Reuters reported. The document being formed outlines a seven-day framework for building mutual trust and returning to an expanded and upgraded version of the Memorandum of Understanding (MOU) signed between Washington and Tehran last June. It was also reported that the main dispute between the United States and Iran does not concern the components of the plan itself, but rather the order of operations and the stages of implementation of the seven-day framework. IRGC said there is no disagreement between the diplomatic corps and the armed forces in the country, and coordination is ongoing between the two sides. IRGC Commander - speaking about past events, 5 months ago - "When the enemy saw that he could not make any move, he took action and hit our Basij resistance areas. He hit the IRGC headquarters in Tehran completely". Iranian Civil Defence said it has raised readiness levels at 46 facilities in anticipation of attacks on infrastructure, Al Arabiya reported; Raising readiness levels includes oil refineries, power plants, ports, bridges, and airports. UKMTO said that an LNG tanker was struck by an unknown projectile on September 29th, within the Strait of Hormuz. UKMTO said that a crude oil tanker was struck on the port side by an unknown projectile in the Strait of Hormuz on September 29th. The incident occurred on Sept 29, 2026, and authorities are currently investigating. UKMTO advised vessels transiting the area to exercise caution and report any suspicious activity. IRGC spokesperson said military confrontations take place in the Strait of Hormuz every 24 hours, but the US has not responded for some time, Al Mayadeen reported. -Flydubai flight FDB1073 from Dubai to Tel Aviv was diverted after issuing a distress signal and entering a hijacking code, prompting Israeli jets to scramble; contact with the aircraft was temporarily lost and early reports raised concerns over a possible violent incident on board, although Israeli officials later said they were not convinced it was a hijacking. The aircraft subsequently made contact with Saudi Arabia and was expected to land there, while a second Flydubai flight was also diverted back to Dubai. Israeli press reported growing assessments that the incident aboard the Flydubai plane was a terrorist attack, Al Jazeera adds; reported suggest the co-pilot who stabbed the other pilot was of Omani origin. A second Flydubai flight has been diverted back to Dubai from Tel Aviv, according to Flightradar24. RUSSIA-UKRAINE Kremlin said Russia President Putin will address the newly-elected parliament later today. Russia's Kremlin has dismisses reported regarding possible discussion of lifting sanctions against Russia in exchange for prisoners. Loud explosions have been heard in Kyiv, Ukraine, witnesses suggest. Russian Defence Ministry said energy system facilities in Kyiv region were hit in a massive strike, according to IFX. NOTABLE NORTH AMERICAN NEWS [CALENDAR ADDITION] US President Trump to make an announcement with the Commerce Secretary at 15:30EDT/20:30BST. NORTH AMERICAN DATA US Real Personal Spending (Aug MM) 0.6% (Prev. 0.1%). US Wholesale Inventories Adv (Aug MM) 0.7% vs. Exp. 1.1% (Prev. 1.3%). US GDP Sales Final (Q2 QQ) 2.8% vs. Exp. 2.2% (Prev. 1.9%). US Corporate Profits Final (Q2 QQ) 7.7% vs. Exp. 8.2% (Prev. 0.5%). US GDP Price Index Final (Q2 QQ) 6.1% vs. Exp. 6.4% (Prev. 3.6%). US Real Consumer Spending Final (Q2 QQ) 3.8% vs. Exp. 3.4% (Prev. 0.5%). US Core PCE Index (Aug MM) 0.2% vs. Exp. 0.3% (Prev. 0.1%). US PCE Price Index (Aug MM) 0.3% vs. Exp. 0.4% (Prev. 0.1%). US Core PCE Index (Aug YY) 3.0% vs. Exp. 3.3% (Prev. 3.0%). US PCE Price Index (Aug YY) 3.4% vs. Exp. 3.7% (Prev. 3.4%). US Personal Spending (Aug MM) 0.9% vs. Exp. 0.8% (Prev. 0.1%). US Personal Income (Aug MM) 0.2% vs. Exp. 0.4% (Prev. 0.3%). US Core PCE Prices Final (Q2 QQ) 3.30% vs. Exp. 3.6% (Prev. 4.40%). US PCE Prices Final (Q2 QQ) 5.0% vs. Exp. 5.3% (Prev. 4.6%). US Retail Inventories Ex Autos Adv (Aug MM) 0.1% (Prev. 0.8%). US GDP Growth Rate Final (Q2 QQ) 2.2% vs. Exp. 1.5% (Prev. 2.1%). US Goods Trade Balance Advance (Aug) -132.60B vs. Exp. -115B (Prev. -118.80B). US ADP Employment Change (Sep) 90K vs. Exp. 70K (Prev. 38K). Median change in annual pay. Job stayers: 4.4% (pre. 4.4%). Job changers: 7.3% (prev. 7.3%). US MBA 30-Year Mortgage Rate (Sep/25) 7.30% (Prev. 7.12%). US MBA Mortgage Applications (Sep/25) -6.0% (Prev. -1.5%). US MBA Purchase Index (Sep/25) 148.2 (Prev. 154.9). US MBA Mortgage Market Index (Sep/25) 213.6 (Prev. 227.3). US MBA Mortgage Refinance Index (Sep/25) 557.8 (Prev. 611.0).