Newsquawk European Market Wrap - 29th October 2026

Semafor reported the US remains in talks on a temporary peace deal with Iran, while Trump is seriously considering resuming strikes after the midterms if diplomacy fails. European bourses were broadly firmer; Shell announced a USD 5bln buyback; US indices mostly lower, led by the Nasdaq as Alphabet slumps. ECB held rates as expected; Lagarde said the situation could have warranted a hike, and will step down on 7th February 2027. EQUITIES European bourses look set to end Thursday’s trade in the green, with slight underperformance in the IBEX 35 but off worst levels. The upbeat tone in Europe seems to come at the detriment of US tech names, as the Eurozone is widely seen as an alternative to park money away from tech. Sectors highlight the positive bias, with the majority of sectors in the green. Outperformance is seen in Health Care, with Financial Services and Industrials rounding out the sector gainers. At the bottom were Food, Beverages & Tobacco, Banks and Optimised Personal Care. Key movers include: Renault +6.5%, reaffirmed its FY26 operating margin outlook; Airbus +3.3%, maintained its aircraft delivery target and FY financial outlook; BBVA -2.7%, net income beat however, the metric missed for the Spanish region; ING -1.8%, metrics missed consensus across the board and plans 400 job cuts; Shell +1.8%, adj. profit beat and announced a USD 5bln share buyback programme; Lloyds -4.5%, PBT beat estimates but disappointed investors by not lifting guidance. US cash equities opened mixed, with underperformance in the NDX as Alphabet (-12%) weighs on the index, following a miss in its EPS and revenue metrics. Neoclouds (CoreWeave -1.8%, Iren -6.0%) are also lower as Microsoft’s lower-than-expected capex points to infrastructure partners taking longer to deliver capacity. Focus now turns to Amazon earnings after-hours. FX G10s were mixed against the USD; the GBP was the relative outperformer, while the AUD lagged, with the EUR also lower following the ECB. DXY was firmer in the European morning, paring some of Wednesday's post-FOMC losses, but gave up those gains in the afternoon to end flat within a 102.06-102.46 range. US yields fell across the curve after in-line PCE data and soft Personal Income (0.2% vs exp. 0.3%) and Spending (0.5% vs exp. 0.6%), with the move accelerating as Alphabet shares sank at the open; this came despite Q3 GDP beating at 3.4% (exp. 3.2%), while Core PCE was in line at 0.3% M/M and 3.1% Y/Y. EUR/USD was marginally lower within a 1.1104-1.1161 range. It was soft heading into the ECB, after the ECB confirmed President Lagarde will step down on 7th February 2027. The ECB then held rates at 2.50%, as expected, and said financing conditions have tightened and are likely to weigh on inflation and growth. EUR/USD fell from 1.1130 on the decision, before finding support near its 200 WMA (1.1105). It then pared losses during the press conference: a modest hawkish reaction came when Lagarde spoke on the early stages of the pricing chain pointing to upward pressures, lifting EUR/USD from 1.1125 to 1.1137, and a further hawkish move followed when she said the situation could have warranted a hike, adding that today's decision does not indicate the ECB will not hike at its next meeting. GBP/USD was a touch firmer, at the upper end of a 1.3296-1.3339 range, while EUR/GBP was lower within a 0.8348-0.8373 range, with the EUR weaker following the ECB. There was little UK-specific news today. USD/JPY traded within a 157.60-158.13 range. The JPY strengthened as fixed income climbed after the US data and the ECB, taking USD/JPY back beneath 158.00. Tokyo CPI is due tonight, ahead of Friday's BoJ decision, where rates are expected to be held at 1.25%, with focus on the BoJ's language around achieving its 2% price target. Antipodeans were lower, with AUD/USD at the bottom end of a 0.7015-0.7068 range, with losses across metals not helping, and NZD/USD within a 0.5607-0.5637 range. RBNZ Governor Breman said chances of a December rate hike are high, after Wednesday's surprise hold. FIXED INCOME Fixed income benchmarks were choppy throughout Thursday’s trade, but ultimately look set to end the European session higher. USTs currently reside in a 105-26 to 106-13+ range, as cash trade gets underway. The latest leg higher came amid downside across the energy complex, but also at the start of the US equity cash trade, as investors look for safety amid Alphabet’s 12% drop. On the data front, modest upside was seen following the PCE figures, which came in broadly as expected. Bunds mostly lacked direction with focus being on the ECB policy announcement. Preceding the decision to hold rates steady, the Bank announced that President Lagarde is to leave her role early, which was widely expected. Turning to the policy announcement, rates were left unchanged, as expected. The lack of any forward guidance or explicit acknowledgement of the recent rise in energy pressures in the press release sparked a brief dovish reaction, as Bunds ticked higher to a peak of 122.47. In the press conference, Lagarde did acknowledge the upside in energy prices, presenting upside risks to inflation and downside risks to growth. In terms of second-round effects, she observed that the Bank does not see risks of material second-round effects at the moment, which led to the decision to hold rates steady. To cap it off, Lagarde did reiterate the meeting-by-meeting approach and that they are well-positioned. Barclays (BARC LN) announces USD 3-parter: 4yr NC3, 6yr NC5 and 11yr NC10 fixed-to-floating, IFR reported. Microsoft (MSFT) kicks off its USD-denominated 10-part bond offering. Italy sold EUR 6.5bln (exp. 5.0-6.5bln) BTP. 3.5% 2031: b/c 1.78x (prev. 1.88x), average yield 3.9% (prev. 3.23%). 3.95% 2032: b/c 1.71x (prev. 1.54x), average yield 4.02% (prev. 4.08%). 4.00% 2036: b/c 1.56x (prev. 1.56x), average yield 4.49% (prev. 4.58%). COMMODITIES Crude benchmarks declined overnight amid mediation hopes, after reports of a lot of back and forth between Iran and the US via mediators, and US VP Vance's outreach to Iranian hard-liner Rezaei to restart peace talks. In the European morning, Semafor reported the US remains engaged in negotiations over a temporary peace deal, though Trump is seriously considering resuming strikes after the midterms if diplomacy fails; Brent fell from USD 110.90/bbl to USD 109.90/bbl on the headline, before paring around USD 0.40/bbl as focus turned to the punchier rhetoric. Thereafter, Iran reportedly agreed in principle to the proposed mechanisms, but rejected any nuclear concessions. Benchmarks ultimately recovered from worst levels. WTI Dec'26 was lower by almost 2% within a USD 99.79-102.31/bbl range, while Brent Jan'27 was lower by c. 1.2% within a USD 109.02-111.00/bbl range. Dutch TTF was lower within a EUR 95.46-99.10/MWh range. The EU Energy Commissioner said the bloc is better able to handle the crisis than in 2022, with gas use 18% below 2022 levels, while ENI's chief of global portfolio trading said he does not expect European gas prices this winter to reach their 2022 peak. Spot gold was lower within a USD 4,016-4,069/oz range, having faded the post-FOMC knee-jerk uplift overnight, while spot silver fell to new YTD lows. 3M LME copper was lower by over 1% within a USD 14,293.28-14,506.45/t range, having stalled after its recent advances amid mixed risk sentiment. QatarEnergy CEO said Qatar is purchasing US LNG and holding discussions with other suppliers to establish trading and arbitrage hedges against potential future disruptions to shipping through the Strait of Hormuz, according to reports. French official said France is cutting diesel stock requirements to free up supply. France's Finance Minister said Europe will release 42mln barrels of oil over the next three months. ENI's (ENI IM) chief of global portfolio trading said he does not expect European gas prices this winter to reach their 2022 peak. EU Energy Commissioner said the bloc is better able to handle the crisis than in 2022 after cutting gas consumption; current gas use is 18% below 2022 levels. US EIA Natural Gas Stocks Change (Oct/23) 80BBcf vs. Exp. 75BBcf (Prev. 77BBcf). EUROPEAN DATA European Consumer Inflation Expectations (Oct) 33.9 (Prev. 34.7). European Economic Sentiment (Oct) 96.9 vs. Exp. 97.5 (Prev. 97.5). European Selling Price Expectations (Oct) 24.8 (Prev. 20.8). European Services Sentiment (Oct) 5.3 vs. Exp. 5.9 (Prev. 5.9). European Industrial Sentiment (Oct) -3.4 vs. Exp. -3.8 (Prev. -3.9). European Consumer Confidence Final (Oct) -17.9 vs. Exp. -17.9 (Prev. -16.5). Spanish Business Confidence (Oct) -0.7 (Prev. -1.6). Spanish Retail Sales (Sep YY) -1.4% (Prev. -0.4%). Spanish Retail Sales (Sep MM) -0.4% (Prev. 0.3%). Irish GDP Growth Rate Prel (Q3 YY) 3.9% (Prev. -0.4%). Irish GDP Growth Rate Prel (Q3 QQ) 5.5% (Prev. 10.2%). Italian Consumer Confidence (Oct) 90.3 vs. Exp. 90.9 (Prev. 91.2). Italian Business Confidence (Oct) 91.9 vs. Exp. 92 (Prev. 91.9). Italian Unemployment Rate (Sep) 6.3% vs. Exp. 6.2% (Prev. 6.2%). UK Net Lending to Individuals (Sep MM) 5.800B vs. Exp. 6.2B (Prev. 6.874B). UK BoE Consumer Credit (Sep) 1.914B vs. Exp. 2.2B (Prev. 2.683B). UK Mortgage Approvals (Sep) 53.44K vs. Exp. 54K (Prev. 54.81K). UK Mortgage Lending (Sep) 3.87B vs. Exp. 4.2B (Prev. 4.17B). UK M4 Money Supply (Sep MM) 0.1% vs. Exp. 0.3% (Prev. 0.4%). Dutch Business Confidence (Oct) 2.3 (Prev. 4.2). Swedish Consumer Inflation Expectations (Oct) 7.7% (Prev. 6.3%). Swedish Consumer Confidence (Oct) 94.3 (Prev. 102.3). Swedish Economic Tendency Indicator (Oct) 108.1 (Prev. 107.2). Swedish Business Confidence (Oct) 110.7 (Prev. 109.3). Swedish GDP Growth Rate Flash (Q3 YY) 2.8% vs. Exp. 2.9% (Prev. 3.3%). Swedish GDP Growth Rate Flash (Q3 QQ) 0.4% vs. Exp. 0.3% (Prev. 1.6%). Swedish Retail Sales (Sep MM) -0.4% (Prev. 0.9%). Swedish Retail Sales (Sep YY) 5.5% (Prev. 7.2%). Swedish GDP (Sep MM) -0.7% (Prev. 1.2%). TRADE/TARIFFS European Commission President von der Leyen said the EU is discussing Canada becoming its first associate member, adding that Canada cannot become a full EU member due to geography but that both sides want to deepen ties to the highest possible level. The US administration reportedly pledges to ease tariffs on automakers committing to increased US manufacturing, amid discussions aimed at securing a USD 4bln Audi (VOW3 GY) assembly plant in Georgia, according to WSJ sources. Indian Trade Minister said a trade deal with the US will not compromise any sensitive interests of farmers or other stakeholders. CENTRAL BANKS ECB maintains its rates as expected, Deposit Rate at 2.50%; said financing conditions have tightened since the Governing Council’s last meeting which is likely to weigh on inflation and growth. ECB President Lagarde (post-meeting statement) said energy prices have continued to rise, presenting risks to the inflation outlook and downside risks to growth. Underlying inflation has been broadly stable and wage pressures remain moderate, with the wage tracker pointing to 2.5-2.8% growth in the remaining months of the year; longer-term inflation expectations are around target. Energy inflation will rise in the near term; thereafter, a decline in energy inflation and higher rates should help bring inflation down. Financing conditions have tightened since the last meeting. Risks to growth are to the downside, while risks to inflation are to the upside due to the Middle East conflict and the Russia-Ukraine war. ECB President Lagarde (Q&A) said the Governing Council debated whether a hike was appropriate, but on the basis of uncertainty and unchanged underlying inflation decided to hold; the situation could have warranted a hike, and today's decision does not indicate the ECB will not hike at its next meeting. Policymakers believe they are in a good position to wait for incoming information, with the inter-meeting period information rich, including staff projections, two new inflation prints, GDP data, Q3 wages and unemployment, and November PMIs; underlying inflation will take a particular standing at the next decision. Unless there was a major development, the direction of travel is clear. The ECB does not see risks of material second-round effects at the moment, and the cost of long-term financing has clearly increased since September. On French bonds, the ECB looks at 10yr maturities as well as the entire curve; debt issuance by some hyperscalers is also playing a role in the rise in yields, and should market developments threaten the transmission of monetary policy, the ECB has instruments to respond. She also said there is not a case for only quarterly meetings, and that the ECB is not changing its policy on bond redemptions, with no arrangements to rebalance; price stability is the compass. On her future plans, Lagarde said she wants the freedom of speech and the freedom to engage on matters not related to monetary policy, adding that ECB policymakers have an obligation of neutrality and she cannot be comfortable in that neutrality at the current time. She added that she will be replaced in her role, and the process to identify a successor has already started, with plenty of good candidates. She said there should be no worries about the continuity of business, and that the ECB as an institution is solid, “like a rock”. ECB President Lagarde will step down on 7th February 2027, the ECB confirmed; sources said she could no longer be neutral on the French political situation. GEOPOLITICS RUSSIA-UKRAINE Russian Defence Ministry reported 1,214 Ukrainian drones were downed overnight. MIDDLE EAST Iran and Belarus sign an agreement to expand bilateral cooperation in the energy sector, IRNA reported. Yemeni Houthi leader said the Saudi regime openly declares itself an ally of the US and the West in its approach, while some other regional regimes and forces also publicly align themselves with Washington and Western countries, Al Masirah reported. Iran has not yet responded to the message from US VP Vance, Al Jazeera's Eddine reported. Iran reportedly agreed in principle to the proposed mechanisms but rejected any nuclear concessions. Tehran maintains that negotiations over its nuclear programme can take place only after the war ends, the siege is lifted and the Strait of Hormuz reopens. US President Trump is reportedly seriously considering resuming military strikes against Iran shortly after the US midterms if diplomacy fails, while the US remains engaged in negotiations over a temporary peace deal, Semafor reported. Trump downplayed VP Vance's efforts and suggested it was about humanitarian needs, while many inside the administration are sceptical about resuming military operations against Iran. Iran's IRGC Navy claims three tankers struck naval mines, exploded and caught fire while travelling through an unauthorised southern route of the Strait of Hormuz over the past 24 hours, with the vessels subsequently abandoned. Iran's IRGC Navy claims to have intercepted and safely landed a US MQM-170 reconnaissance and decoy drone west of the Strait of Hormuz. Saudi Civil Defence said the danger has passed in Najran City, urging residents to continue following safety instructions. Saudi Civil Defence said the National Early Warning Platform has issued an alert in Najran City warning of a potential danger and urging residents to follow safety instructions. Iran FM Araghchi said they will continue close, sustained contacts with mediators to give diplomacy a chance. Israeli Central Elections Committee Chair Sohlberg has asked Shin Bet to investigate allegations of foreign interference in the election. UKMTO reported a vessel is on fire 9 nautical miles north of Khasab, Oman. NOTABLE NORTH AMERICAN NEWS US President Trump said it was a great morning from the standpoint of GDP. US VP Vance will hold a press conference in St. Cloud, Minnesota, on Friday to announce a new finding in the administration’s fraud investigation in the state, accompanied by members of the White House fraud task force, according to CNN, citing a source. US Treasury Secretary Bessent said the GDP number was great. US NEC Director Hassett said inflation was broadly in line with expectations, comments via Fox Business; GDP is headed towards 4% growth; supply-side boom is putting downward pressure on prices. He said that if October inflation is really high, the Fed will probably act. He declined to comment on the Fed’s Cook, said Fed Chair Warsh has done a good job and the committee appears to have made a data-driven decision, and said September inflation was above expected. He added that 30-year TIPS indicate the Fed will get inflation down to 2.1%. BofA total card spending rose 6.0% Y/Y in the week to October 24 (prev. +4.9%), with spending growth among lower-income households consistently outpacing higher-income households over recent weeks. US House Democrats demand President Trump preserve conversations with Grok and other AI bots, Politico reported citing a letter. NORTH AMERICAN DATA Atlanta Fed GDPNow (Q4) 3.2%. US Real Personal Spending (Sep MM) 0% (Prev. 0.5%). US GDP Growth Rate Adv (Q3 QQ) 3.4% vs. Exp. 3.2% (Prev. 2.2%). US GDP Price Index Adv (Q3 QQ) 2.2% vs. Exp. 3.2% (Prev. 6.1%). US Core PCE Prices Adv (Q3 QQ) 2.5% vs. Exp. 2.4% (Prev. 3.3%). US Real Consumer Spending Adv (Q3 QQ) 3.8% (Prev. 3.8%). US PCE Prices Adv (Q3 QQ) 2.1% vs. Exp. 3.4% (Prev. 5%). US GDP Sales Adv (Q3 QQ) 1.7% (Prev. 2.8%). US Core PCE Index (Sep YY) 3.1% vs. Exp. 3.1% (Prev. 3.0%). US PCE Price Index (Sep YY) 3.6% vs. Exp. 3.6% (Prev. 3.4%). US Core PCE Index (Sep MM) 0.3% vs. Exp. 0.3% (Prev. 0.3%). US PCE Price Index (Sep MM) 0.5% vs. Exp. 0.5% (Prev. 0.3%). US Personal Spending (Sep MM) 0.5% vs. Exp. 0.6% (Prev. 0.9%). US Personal Income (Sep MM) 0.2% vs. Exp. 0.3% (Prev. 0.3%). US Continuing Jobless Claims (Oct/17) 1701.0K vs. Exp. 1720K (Prev. 1722.0K). US Jobless Claims 4-week Average (Oct/24) 196.75K (Prev. 198.0K). US Initial Jobless Claims (Oct/24) 194.0K vs. Exp. 199K (Prev. 195.0K). Chicago Fed Labor Market Indicator (Oct) 4.19% (Prev. 4.18%). Canadian Average Weekly Earnings (Aug YY) 3.7% (Prev. 3.2%). LATAM NEWS/DATA US President Trump said he will talk to Brazilian President Lula, and reiterated his criticism of the recent election. Brazilian Bank Lending (Sep MM) 0.4% (Prev. 0.5%). Brazilian IGP-M Inflation (Oct MM) 1.47% vs. Exp. 1.6% (Prev. 1.57%). NOTABLE ASIA-PAC NEWS China to hold party congress in Beijing in H2 of 2027, Bloomberg reported. Japanese PM Takaichi said they will be commencing electricity and gas support measures from December, until February. Japan will raise its target pump price for gasoline by JPY 5 per litre each month from December through spring.