Newsquawk European Market Wrap - 7th October 2026

European bourses were pressured throughout the session; US equity futures followed suit, with the Mag-7 broadly in the red. DXY gained on higher energy prices and elevated yields; EUR was pressured as French fiscal woes returned. Senior Iranian official said US VP Vance's comments on Iran's nuclear programme are American "ideas and requests"; US ideas are at opposite with Iran's demands. EQUITIES European bourses held onto its earlier losses, with the upside in the USD and yields weighing on equities. Italy's FTSE MIB (-2.5%) was the clear laggard, given the weakness across the banking sector while semiconductor names Technoprobe (-6.6%) and STMicroelectronics (-3.3%) fell as they followed weakness in South Korean peers. Sectors lacked a clear bias. Health Care topped the sector pile, followed by Optimised Personal Care and Telecoms. The laggards include Banks, Tech and Basic Resources. Top stories included: Remy Cointreau +4.0%, reassured analysts on its sales outlook and US trends; Bridgepoint +4.2%, raised its 2027 EBITDA margin guidance; Pennon -19.5%, announced a capital raise of GBP 550mln via fully underwritten rights issue; Forvia +5.8%, signed a JV agreement with ANAND to strengthen its presence in India; EU Autos, as Bloomberg reported that the EU is preparing a temporary import cap on Chinese hybrid cars. US cash equities opened entirely in the red, with the SPX pulling back from the fresh ATHs made on Tuesday. Well-known investor Paulson highlights that the last time oil was above USD 100/bbl, US yields were above 5% and the USD was elevated, the S&P 500 dropped as much as 15% in the following three to five months. In terms of corporate news: SpaceX (-0.7%) is reportedly looking for USD 40bln financing to buy Nvidia chips, while Webull (-19%) has been found guilty of having China ties that creates a national security risk. Heading into Thursday's trade, focus will be on preliminary Q3 figures from Samsung Electronics. Markets are expecting Q3 operating profit of KRW 106.1tln (prev. 12.17tln Y/Y); however, focus will be on chip margins to see if it can calm investor concerns that margins have peaked and quell questions about the durability of the AI spending boom. FX G10s were lower against the USD throughout the session, thanks to firmer energy prices and elevated yields. EUR pressure also factored, with renewed focus back on the French fiscal situation. JPY held towards the top of the G10 pile alongside CHF, on haven flows, and potentially an unwind of recent short-bets on the two currencies. DXY strengthened throughout the session, and is set to end the London session at the upper end of a 101.88 to 102.49 range. Really not much to drive the action this morning aside from the continued strength in energy prices/yields; commentary from Iranian officials today saw both punchy and diplomatic language, but ultimately not enough to materially shift sentiment. Ahead, focus will be on the FOMC Minutes, which will be eyed to see how policymakers view tightening in the months ahead. EUR resumed its recent selling pressure, after finding some reprieve in the prior session. To remind, French fiscal woes appeared to ease as Le Pen provided markets with a friendly alternative budget, but failed at expressing how she would achieve it. French fiscal concerns have re-emerged; for reference, OATs underperformed, and the OAT-Bund spread has widened back towards 141bps (vs yesterday’s close at 130bps). JPY outperformed vs peers, but was still pressured. Strength came despite widening yield differentials, and after Yomiuri reported that Japan is considering a second supplementary budget. Sticking with the fiscal side of things, PM Takaichi said that she would review policies and spending amidst elevated yields – which could help ease debt concerns within the region. Nonetheless, JGBs remained fairly unchanged overnight, which means that the JPY action may be subject to other factors. That could potentially be the region’s Labour Cash Earnings data, which showed a deceleration but still printed firmer-than-expected. Overall, a report which keeps BoJ hikes on the table by year-end. FIXED A bearish session for fixed, with underperformance seen in OATs after the strength on Tuesday from the relatively pragmatic approach taken by Le Pen. Action that has been enough to push the OAT-Bund 10yr yield spread to a 141bps peak, vs a sub-130bps move on Tuesday after eclipsing 150bps beforehand. More generally, energy has driven yields higher today with Brent firmer by over USD 1.20/bbl at the time of writing, and almost USD 2.00/bbl at the peak. Lifting yields higher across the curve, with bear-steepening seen stateside into the FOMC Minutes and a 10yr auction. OATs-aside, Gilts underperformed across the day. Hit by the mentioned energy move, usual outsized reaction and fresh budget speculation, a point that may be drawing more focus than it otherwise would have given the recent French rout. Hit an 83.27 base, just off that now, but down by over a point into the close. Generally, the session has been focused on geopolitical newsflow, but with fiscal concerns/worries factoring in the background, which have in turn dictated much of the price action seen elsewhere in FX and metals, for instance. Evidenced by the US 10yr yield hitting 5.36%, another multi-year high. Netherlands Debt Agency to sell up to EUR 3.5bln of January 2031 bonds on October 13th. UK sold GBP 1.5bln 0.125% 2028 Gilt via Tender: b/c 3.76x (prev. 5.35x), average yield 4.272% (prev. 4.090%). Germany sold EUR 1.912bln vs Exp. 4bln 2033 Bund: b/c 1.42x, average yield 3.36%, retention 52.2%. UK sold GBP 1.0bln 0.25% 2031 Gilt via tender; b/c 4.39x (prev. 2.65x), average yield 4.842% (prev. 1.144%). COMMODITIES WTI Nov and Brent Dec futures look to end the session firmer but off best levels in what has been a choppy session. In terms of today's notable supply headlines, Qatar’s North Field East LNG project is reportedly ready to begin first gas in November, while Iraq is set to send hundreds of crude trucks through Syria each day. Nonetheless, on the flip side, Iran reiterated that Hormuz remains closed and warned that routes used by violators would be destroyed, while its military said it had shifted from a defensive to an offensive doctrine and could launch pre-emptive attacks. WTI rose from a USD 89.33/bbl low to a USD 90.61/bbl high, while Brent rose from a USD 100.76/bbl low to a USD 102.35/bbl high. Dutch TTF came off highs following reports that the first LNG train at Qatar’s North Field East expansion is ready to start with first gas expected in November. TTF rose to a EUR 78.20/MWh high from a EUR 75.52/MWh low before easing from best levels. Precious metals extended their downside as the USD and global yields strengthened, with the US 10yr yield rising above 5.34% to its highest since 2002. Spot gold fell below USD 4,100/oz to a USD 4,067/oz low from a USD 4,170/oz high, while spot silver similarly declined to a USD 58.99/oz low from a USD 61.50/oz high. Focus now turns to the FOMC Minutes later today. Base metals remained subdued amid the firmer USD, higher yields and softer risk tone. COMEX copper traded within a USD 6.59-6.68/lb range, while 3M LME copper traded within a USD 14,339.60-14,471.80/t range. Iraq to send hundreds of trucks carrying crude across Syria each day, reported suggest. Kalshi files proposal with the CFTC for a never-expiring oil contract. First LNG train at Qatar's Northfield east expansion project is ready to start, and first gas expected in November, according to source reported. DR Congo uncovers USD 20bln in payments to ineligible mining suppliers, reported Semafor; These findings at mining businesses, among them subsidiaries of Glencore (GLEN LN). Standard Chartered reported oil flow in Hormuz is not back to normal. Iranian Parliament Commission head said no gas supply problems are expected following recent incidents at South Pars, while the recovery process is promising and consumption management does not mean cutting supply, SNN reported. Polish Energy Minister said Poland is ready to release stocks if collective consensus is reached; does not expect IEA decision on oil or diesel today. Satellite imagery, cited by Sabereen, confirms that there is still a fire at Saudi's Khurais oilfield. EU states expect no new oil release obligations following the G7 agreement. IEA governing board to hold an informal meeting at 13:00 local time (12:00 BST) today to discuss proposals to release oil and diesel reserves, EU diplomats say. EUROPEAN DATA UK BBA Mortgage Rate (Sep) 6.58% (Prev. 6.58%). UK Lloyds House Price Index (Sep YY) 0% (Prev. -0.4%). UK Lloyds House Price Index (Sep MM) 0% vs. Exp. 0.2% (Prev. -0.3%). French Foreign Exchange Reserves (Sep) 370.203B (Prev. 380.694B). French Imports (Aug) 60.3B (Prev. 61.2B). French Current Account (Aug) -1.50B (Prev. -3.90B). French Exports (Aug) 54.2B (Prev. 54.6B). French Trade Balance (Aug) -6.1B vs. Exp. -6.5B (Prev. -6.6B). Swedish Core CPIF (Sep MM) 0.1% (exp. 0.3%), Y/Y 0.5% (exp. 0.7%). Swedish CPIF Prel (Sep MM) 0.9% (Prev. -0.3%). Swedish CPIF Prel (Sep YY) 1.5% vs. Exp. 1.6% (Prev. 0.7%). Swedish CPI Prel (Sep MM) 0.9% (Prev. -0.3%). Swedish CPI Prel (Sep YY) 1.1% vs. Exp. 1.3% (Prev. 0.3%). German Industrial Production (Aug MM) 2.0% vs. Exp. 0.5% (Prev. -1.1%). NOTABLE HEADLINES German Chancellor Merz sees a path of compromise in coalition talks. German pension reform to be finalized by next Spring. Senior Euro Zone official does not see contagion from the rise in French bond yields so far; French yields are responding to news out of Paris; France is as an economy that is fundamentally solid and has all the capacity to tackle its challenges. Norway's Finance Minister said aim to cut income taxes further. Hungary's DMO head said its budgetary room is sufficient to support rapid convergence to the Euro. Italy's Economy Minister said they will ask the EU to consider inflation as a significant factor that can justify deviation from budget goals. German coalition committee to meet from 15:30BST today, Politico reported. TRADE/TARIFFS UK government to impose a new anti-dumping measure on imports of rutile titanium dioxide from China; UK government finds rutile titanium dioxide is being dumped into the UK and poses an imminent threat of injury to domestic industry. China and the EU could monitor trade within hybrid autos but also use trade probe tools against the EU, CCTV reported. Talks between the EU and China will focus in on autos, as the EU looks for a commitment from China on stemming exports of hybrid vehicles, Politico reported citing sources. Germany’s foreign trade association raised its 2026 export growth forecast to 1%. CENTRAL BANKS ECB’s Pereira said current headline and core inflation levels are far below those seen during the 2022 energy shock; there are no second round inflation effects at present. Other goods prices show no signs of de-anchoring inflation expectations. France needs to cut its deficit/debt, pursue reforms and fiscal prudence. ECB's Dolenc said the ECB is not responsible for fiscal policy. ECB's Dolenc said that the current ECB rate level ensures flexibility for the central bank's upcoming rate decisions. said future policy action would depend on inflation expectations and how related risks evolve. Dolenc highlights geostrategic risks and elevated energy prices as key uncertainties contributing to persistent inflationary pressures. ECB's Moulin said the situation in the bond market is "complicated". France is not in an economic crisis yet. French economic situation is serious but "we can act". ECB is not there to respond to nations' budgetary problems. BoE's PRA proposes automatically increasing 128 regulatory thresholds for banks, insurers and credit unions in line with nominal GDP. GEOPOLITICS RUSSIA-UKRAINE Iranian President Pezeshkian and Russian President Putin stressed the need to continue and strengthen bilateral cooperation, IRNA reported. Russian Vehicle Sales (Sep YY) 0.0% (Prev. -7.3%). Russia's Kremlin said no call between President Putin and US President Trump has been agreed yet. Ukrainian President Zelensky said Ukrainian forces struck four targets supporting Russia’s war effort, including two oil facilities and a training ground in the Perm, Samara and Astrakhan regions. Ukrainian President Zelensky said Russia launched one of the largest attacks on Ukraine, directly targeting the country’s energy sector. The US sent a formal diplomatic request to Russia for information regarding the pneumonic plague deaths, according to WaPo. Russian Defence Ministry said forces carried out a massive strike on targets in Kyiv and other Ukrainian regions, according to IFX. MIDDLE EAST Senior Iranian official said US VP Vance's comments on Iran's nuclear programme are American "ideas and requests"; US ideas are at opposite with Iran's demands. There have been no negotiations between Iran and the US about Tehran's nuclear programme. The US must first meet Iran's conditions before the nuclear issue can be discussed. US recognition of Iran's right to enrichment is Iran's red line. Iran will never give up its right to enrichment, but enrichment details can be discussed later. Iran's Advisor to the Commander-in-Chief of the Revolutionary Guard said, "the routes created by violators in the Strait of Hormuz will soon be closed by blowing up some of the rocky routes located in the strait", Sabareen reported. IRGC commander adviser Naqdi said the Strait of Hormuz remains closed and under full control of Iran’s armed forces until Iran’s demands are met, while illegal routes used for oil smuggling will soon be blocked, Fars reported. Iranian Army spokesperson said Iran has shifted its military doctrine from a defensive to an offensive approach and applied the doctrine during the latest war, according to Al-Akhbar. If US ground aggression occurs and US forces enter Iran territory or islands, they will become more vulnerable to targeting. Iranian Army spokesperson said Iran will launch pre-emptive attacks if needed and used new offensive and defensive equipment during the 40-day war, Fars reported. Iran's Supreme Advisor to the Commander-in-Chief of the IRGC said that "Iran is ready to increase the range of its weapons", adding that "The Strait of Hormuz is closed, but some people are smuggling oil in small vessels and transferring it to tankers". US Secretary of State Rubio reiterates Iran cannot be allowed to have a nuclear programme. Iranian President Pezeshkian said a deal with the US is not out of reach if the US adheres to international legal frameworks, ISNA reported. The biggest obstacle to reaching a fair agreement is America's totalitarianism. US Secretary of State Rubio said the current situation in the Strait of Hormuz and the Red Sea makes a strong partnership with Greece essential. Regarding the overnight attack on Saudi Arabia, sources suggest oil facilities were also targeted, Nour News reported. NOTABLE NORTH AMERICAN NEWS US Interior Secretary Burgum said will solve budget deficit with growth, according to CNBC. NHC said Tropical Storm Isaias has formed from the depression and is forecast to strengthen rapidly over the next couple of days. Is expected to pass North of Yucatan on Thursday, and approach US Gulf Cost on Friday. Greek Foreign Minister said Greece is committed to further strengthening cooperation with the US on defense, energy and security. NORTH AMERICAN DATA Used Car Prices (Sep YY) -0.6% (Prev. 0.4%). Used Car Prices (Sep MM) -1.1% (Prev. -0.9%). US MBA Mortgage Applications (Oct/02) -4.2% (Prev. -6.0%). US MBA Purchase Index (Oct/02) 145.1 (Prev. 148.2). US MBA Mortgage Market Index (Oct/02) 204.7 (Prev. 213.6). US MBA 30-Year Mortgage Rate (Oct/02) 7.49% (Prev. 7.30%). US MBA Mortgage Refinance Index (Oct/02) 515.8 (Prev. 557.8).