Newsquawk European Market Wrap - 15th October 2026

European bourses were mostly lower; NQ was dragged by the ongoing tech sell off. A tech sell-off which has spurred a flight-to-quality into bonds/gold; crude benchmarks are lower. US is reportedly mulling using the "Mother of All Bombs" against Iran. EQUITIES European bourses remained mixed, with defensives extending on their earlier gains while the cyclical-heavy indices rebounded slightly but still printed modest losses. Driving cyclicals lower was mostly the tech sector amid worries of AI financing. Sectors held their slight positive tilt. Telecoms topped the sector pile, followed by Food, Beverages & Tobacco and Retail. On the other hand, Tech underperformed, with Basic Resources and Industrials rounding out the sector laggard. Key stories included: Pernod Ricard +1.5%, Q1 organic sales beat estimates and expected underlying trends in China to improve; TomTom -2.0%, Q3 revenue missed expectations and announced organisational changes that will impact 200 roles; Ericsson +9.5%, Q3 revenue topped consensus, helped by solid demand for mobile network equipment; Nordea -7.0%, slightly missed in Q3 metrics and paused share buyback as it awaits ECB authorisation. US cash equities opened mixed, with the NDX and SPX continuing to be weighed by chip and memory names. Anthropic’s Q3 revenue reportedly came in shy of bullish expectations, while CoreWeave continues to extend on Wednesday’s 15% losses. FX G10s were broadly firmer against the USD, with the exception of the Aussie, which was pressured by the region’s downbeat jobs report. The CHF was the best performer this morning, benefiting from narrowing yield differentials, as US yields slumped amidst a recent FTQ. DXY was pressured early morning, amidst lower yields and AI debt concerns. Into the afternoon, a hot PPI report (which confirmed the narrative seen post-CPI) and strong Retail Sales metrics led to hawkish reaction in the index, but remained within the earlier confines of 101.87-102.39. Nonetheless, the upside in the USD reversed soon after, potentially as the hawkish narrative was already largely baked in following the CPI report yesterday. Moreover, the ongoing AI debt concerns will likely weigh on the USD (at least in the short-term). Aussie was the clear underperformer this morning, and currently holds at the lower end of a 0.6895 to 0.6980 range. This comes after a very poor regional jobs report, which showed an unexpected contraction in headline Employment Change, which was solely due to part-time work, while the Unemployment Rate rose, although it coincided with a fall in the Participation Rate. A report which saw money markets pare back their bets of a hike in November (16%); c. 40% chance of a hike is assigned by year-end. GBP benefited from the softer USD, whilst attention remains on the looming Autumn Budget (Oct 28). On that note, recent source reports about Chancellor Healey’s plans have been taken in the market’s stride. Most pertinently, he 1) does not intend to equalise income tax and CGT, 2) will fund the package without fresh borrowing. Into the Budget, the August GDP M/M reading saw the UK grow 0.1%, topping expectations of -0.1%, but beneath the prior 0.4%. So whilst Healey will welcome the growth in August, the slight slowdown will no doubt lessen some of the breathing room he would have liked to have. Cable knee-jerked higher on the series itself, but then pared back given it has little impact on monetary policy in the near-term. On this subject, a couple of BoE members have spoken today; Greene reiterated that she sees risks of second round effects as “pretty significant”, whilst Breeden questioned whether the energy shock is gone or just delayed. A stark contrast between the two MPC members. GBP/USD currently holds within a 1.3186 to 1.3259 range. FIXED The post-CPI rebound continues, as the tech/AI selloff extended and a FTQ ensued. This narrative was briefly hit by the US data deluge which was hot/strong across the board, and sent USTs down to 105-10+, though still clear of the morning’s 104-28 low, from the APAC session before the tech-led rally in havens occurred. As mentioned, the move proved fleeting, with USTs since back towards the 105-24+ peak. Potentially as Wednesday’s CPI did much of the heavy lifting for Fed pricing, and as participants now await further input in the near-term and Fed commentary (Warsh due tonight) before making a firmer assessment on whether the skew should shift towards October from December for the next hike. EGBs in-fitting, with drivers much the same. ECB speak and data from the region have had no real impact on the market thus far. Bunds, despite being dragged lower briefly on the US data, have also rebounded and are set to end the European day near the top of a range in excess of 150 ticks, with gains of over 120 at the time of writing. Gilts opened higher by 50 ticks, before extending to a point in the European morning and since to c. 130 ticks, at an 85.18 peak, the highest since early-October. A move primarily driven by the discussed FTQ, with no real follow through to the morning’s data or BoE speak. France sold EUR 12bln vs Exp. EUR 10-12bln 2.70% 2031, 0.00% 2031, 3.25% 2032 and 3.50% 2033 OAT. Spain sold EUR 5.436bln vs Exp. 4.5-5.5bln 2.35% 2029, 2.60% 2031 and 3.55% 2033 Bono. COMMODITIES Crude futures are mixed, with Brent underperforming its US peer. Reasons behind this divergence were two-fold: 1) the US reportedly considered easing Russian shadow-fleet sanctions, and 2) Russian diesel possibly reaching the US before the midterms. Elsewhere, strikes continue in the Hormuz Strait, with a vessel reportedly catching fire. In terms of price action, WTI is set to end the European session at the upper end of its USD 93.58-96.29/bbl range, while Brent regained the USD 105/bbl mark. Precious metals held onto their overnight gains, helped by the broader risk-off tone. Spot gold is set to end European trade at the top end of its USD 4,100-4,168/oz range. Amid the flurry of US data at 13:30BST, choppy price action was seen in the yellow metal. To recap, the PPI figure printed hotter-than-expected while Retail Sales held strong. 3M LME Copper fell amid the risk-off tone and is set to finish at the bottom end of its USD 12.27k-14.48k/t range. French Foreign Ministry said they are beginning to put into place some of the operational agreements to assist in the protection of Saudi Arabian oil infrastructure. US reportedly informs IEA nations it’s unhappy with emergency oil release, and has suggested supplementing oil release with extra 100mln barrels. US President Trump said he may support federal diesel tax exemption. Saudi Aramco offered more spot crude oil cargoes into the European market for late October to mid-November delivery, according to reports, citing sources. Strict Indian customs scrutiny has rerouted around 11kT of Niger soybeans to Asia; African sellers reportedly offered steep discounts to Asian buyers to avoid India’s high import tariffs, sources say. Russia's Rosatom said that a truce agreement is in place to repair a thermal station supplying power for the Zaporizhzhia nuclear power plant. Russia's Kremlin said that diesel exports have started to reach global markets, will have a positive impact but not able to fully stabilise it. Spanish Energy Ministry said they will release 4.4mln barrels from its strategic reserves in October. China is reportedly open to still approve rare earth licenses to Europe, CNBC reported. Chinese State Planner said that domestic gasoline and diesel retail prices will not be adjusted on Oct 15, 2026. EUROPEAN DATA UK GDP (Aug MM) 0.1% vs. Exp. -0.1% (Prev. 0.4%). UK GDP (Aug YY) 2.1% vs. Exp. 1.7% (Prev. 1.8%). UK GDP 3-Month Avg (Aug) 0.7% vs. Exp. 0.5% (Prev. 0.5%). UK NIESR Monthly GDP Tracker (Sep) 0.7% (Prev. 0.5%). UK Trade Balance (Aug) -0.920B (Prev. -3.450B). UK Goods Trade Balance Non-EU (Aug) -5.29B (Prev. -8.19B). UK Goods Trade Balance (Aug) -18.01B vs. Exp. -21.8B (Prev. -19.30B). UK Manufacturing Production (Aug YY) 3.0% vs. Exp. 2.3% (Prev. 2.2%). UK Construction Output (Aug YY) -1.8% vs. Exp. -1.6% (Prev. -1.9%). UK Industrial Production (Aug YY) 1.6% vs. Exp. 0.7% (Prev. 0.8%). UK Industrial Production (Aug MM) 0.8% vs. Exp. -0.1% (Prev. 0.3%). UK Manufacturing Production (Aug MM) 1.2% vs. Exp. -0.1% (Prev. 1.0%). European Industrial Production (Aug YY) -1.1% vs. Exp. -0.1% (Prev. -0.3%). European Industrial Production (Aug MM) -0.5% vs. Exp. 0% (Prev. -0.3%). French CPI Final (Sep YY) 3.1% vs. Exp. 3% (Prev. 2.4%). French CPI Final (Sep MM) -0.3% vs. Exp. -0.3% (Prev. 0.7%). French HICP Final (Sep YY) 3.4% vs. Exp. 3.4% (Prev. 2.6%). French HICP Final (Sep MM) -0.3% vs. Exp. -0.4% (Prev. 0.4%). NOTABLE HEADLINES French PM Lecornu announces EUR 1.3bln emergency plan for farmers, reported TF1. Swedish Parliament rejects the appointment of Social Democrat leader Andersson as PM. UK Chancellor Healey said the budget will meet the fiscal rules, will give the UK some breathing room, will take steps to reinforce the resilience of the economy. Will not comment on tax ahead of the budget. Banks are very important in the UK. CENTRAL BANKS BoJ's Koeda said that the monetary environment has been accommodative; no pace of hikes in mind, sees neutral rate "significantly" above 1%. WEF could appoint ECB President Lagarde as the next Chair as soon as 2nd November, sources suggest. ECB's Moulin said France can cut the deficit to 3% in three years. ECB's Kazaks said that there is no immediate rush on interest rates, inflationary pressure remains strong in the near term. BoE's Breeden said they are looking to whether the energy shock is gone or just delayed; the loosening of the labour market hopefully means that there will not be wage price pressure like in 2022. BoE's Greene said the risks of second-round effects are quite significant. PBoC Governor reiterates that they will be maintaining moderately loose monetary policy. GEOPOLITICS RUSSIA-UKRAINE Russia suspected of striking two tankers in NATO waters, FT reported. Russia's Rosatom said that a truce agreement is in place to repair a thermal station supplying power for the Zaporizhzhia nuclear power plant. Russia's Kremlin said that diesel exports have started to reach global markets, will have a positive impact but not able to fully stabilise it. Russia's Kremlin said Ukraine refinery talks contradict peace efforts by US. Dutch PM said that "we need to step up our game and make sure Ukraine wins the war". Russia's Ryazan refinery was reportedly attacked overnight by drone. MIDDLE EAST Saudi-led coalition said the Houthis attempted to attack dozens of airports, oil facilities and ports in Saudi Arabia. The coalition has destroyed more than 120 arms depots in Yemen's mountains and many launchers. "A few hours ago, the Iranian Navy's surveillance teams, while patrolling and controlling the eastern part of the Strait of Hormuz, identified a trespassing tanker that had caught fire in the restricted area", Fars reported. "This trespassing tanker was attempting to cross the restricted area in the Sea of Oman by turning off its tracking systems.". "The Islamic Republic of Iran's Navy announced that the Strait of Hormuz is under the full control and supervision of the brave men of this force and the IRGC Navy". Telegram also posted a video of the ship on fire. Israeli PM Netanyahu to hold a security meeting tonight, in relation to Iran, Al Hadath reported. Iran's Army Chief of Staff said the Strait of Hormuz is closed; passage must be coordinated, IRIB reported. Saudi reportedly requested, through Oman, that they arrange a new round of negotiations between Ansar Allah (the Houthis) and the Riyadh-backed government, Al Akhbar reported citing sources. "This offer was previously rejected by Sana'a, which demands that the Saudi regime fulfill its obligations as a principal party in the aggression against Yemen, not as a mediator.". Houthi military sources say that investments within Saudi Arabia are unsafe, Saba reported. NORTH AMERICAN DATA US PPI PCE Components (Sep):. Portfolio Management PPI: 0.35% (prev. -1.58%). Air Passenger Transport PPI: 4.97% (prev. -0.43%). Physician Care: 0.06% (prev. 0.07%). Home Health & Hospice Care: -0.64% (prev. -0.37%). Hospital Outpatient Care: 0.04% (prev. 0.35%). Hospital Inpatient Care: 0.32% (prev. 0.33%). Nursing Home Care: 0.50% (prev. -0.19%). US Retail Sales (Sep YY) 6.3% (Prev. 6%). US PPI (Sep) 159.78 (Prev. 157.411). US Retail Sales Ex Autos (Sep MM) 0.9% vs. Exp. 0.5% (Prev. 1.4%). US Retail Sales Control Group (Sep MM) 0.1% vs. Exp. 0.3% (Prev. 1.2%). US Retail Sales Ex Gas/Autos (Sep MM) 0.2% (Prev. 1.1%). US Retail Sales (Sep MM) 0.8% vs. Exp. 0.3% (Prev. 1.3%). US PPI Ex Food, Energy and Trade (Sep MM) 0.5% (Prev. 0.3%). US PPI Ex Food, Energy and Trade (Sep YY) 5.0% (Prev. 4.8%). US PPI (Sep MM) 1.3% vs. Exp. 0.5% (Prev. 0.5%). US PPI (Sep YY) 6.3% vs. Exp. 5.3% (Prev. 5.6%). US Core PPI (Sep MM) 0.7% vs. Exp. 0.3% (Prev. 0.2%). US Core PPI (Sep YY) 5.0% vs. Exp. 4.4% (Prev. 4.8%). US Jobless Claims 4-week Average (Oct/10) 198.5K (Prev. 198.25K). US Continuing Jobless Claims (Oct/03) 1710.0K vs. Exp. 1710K (Prev. 1714.0K). US Initial Jobless Claims (Oct/10) 199.0K vs. Exp. 200K (Prev. 198.0K).