Newsquawk European Market Wrap - 12th October 2026

Crude futures reversed earlier losses and extended gains amid renewed Middle Eastern escalation and Russia-Ukraine uncertainty. Global fixed benchmarks are mixed; G10s were broadly lower against the USD, which gradually moved higher alongside stronger energy prices. European bourses managed to hold onto their earlier gains, despite energy benchmarks continuing to climb; US cash equities opened mixed. EQUITIES European bourses managed to hold onto their earlier gains, despite energy benchmarks continuing to climb, to print gains of around 2%. Focus now turns to LVMH earnings after the close, with Q3 revenue expected at EUR 18.49bln while core fashion & leather goods revenue is seen at EUR 8.4bln. Analysts will be eyeing any clues on how the Co. is navigating its struggles in China. Sectors maintained their positive bias. Banks topped the sector pile, closely followed by Health Care and Industrials. To the downside remained Chemicals and Telecoms. Key stories included: ASML U/C, reportedly plans to hike prices by 10% on all replacement parts shipped to South Korea; Inwit +3.4%, following Reuters reports that its top shareholders are arranging the financing to take the Co. private; Nordex +2.4%, announced a 30% Y/Y rise in orders and points to further growth; Var Energi U/C, lowered its FY26 production guidance. US cash equities opened mixed, as Q3 earnings season gets officially underway with multiple US banks, including JPMorgan, expected to report tomorrow. FX G10s were broadly lower against the USD, which gradually moved higher alongside stronger energy prices. This was facilitated by two factors: 1) Houthis striking Saudi Arabia’s Riyadh airport over the weekend, and 2) Trump announcing an “energy ceasefire”, which surprised both Russia and Ukraine – as such, Russia continued its strikes on Ukraine. As for other currencies, the GBP was buoyed by a weaker EUR, as markets await PM Burnham’s speech later, in which he is set to speak on improving UK-EU relations. To the downside sits the CHF. DXY held within a 102.10 to 102.44 range, and is set to end the London session at the upper end of that range. Continued upside will see a retest of near-term peaks at 102.53, which would put the index in the vicinity of Liberation Day levels. Strength today was facilitated by the geopolitical risk tone, with pressure in the EUR also playing a role. Nothing fresh for the single currency, but perhaps an extension of recent pressure; net non-commercial futures positioning indicates that traders are net-short the EUR, the most since 2020. Markets await the beginning of the French draft budget debate, which begins tomorrow, and then the final vote next week. CFTC Positioning (w/e 6th Oct): USD net long; EUR net short; JPY net long; GBP net short; AUD net short; NZD net short; CAD net short; CHF net short. Currency. Speculative Net Positions. Weekly Change. Z-Score. Leveraged Funds Net Positions. USD. $+35.5bn. $+8.9bn. –. –. EUR. -99.3k. -36.1k. -1.90. -44.3k. JPY. +62.3k. +6.9k. +1.39. -25.0k. GBP. -97.6k. -6.5k. -1.72. +12.4k. AUD. -98.6k. -35.3k. -1.68. +54.1k. NZD. -29.3k. -12.0k. +0.54. -0.8k. CAD. -90.2k. -11.5k. -0.10. -79.6k. CHF. -23.7k. +0.9k. +1.76. -11.3k. Note: The Z-Score measures how far the current speculative net position sits from its 52-week average, expressed in standard deviations. Readings beyond ±2 indicate historically stretched positioning. Source: CFTC, futures only, net contracts. Speculative = Legacy non-commercial; Leveraged Funds = Traders in Financial Futures. USD is the inverse of the seven currencies combined, in notional terms at current spot. FIXED INCOME Global fixed benchmarks are mixed. USTs were off by a couple of ticks, whilst Bunds (+17 ticks) and Gilts (+17 ticks) resided in the green. Energy price action was bullish throughout the London session, but unable to materially pressure the fixed complex. To remind, US cash bond trading was shut on account of Columbus Day. Bunds are set to end the EU session towards the mid-point of a 120.90 to 121.29 range. Aside from energy, focus has been on ongoing budget deliberations, with Politico reporting that Germany is to push for cuts to agriculture and cohesion, two of the most high-profile funding points. Gilts also waned off earlier highs, to trade around 83.84, within an 83.72 to 84.17 range. Attention for UK paper will be on PM Burnham, who is expected to deliver a statement in relation to improving relations between the UK and the EU. COMMODITIES WTI Nov and Brent Dec futures reversed earlier losses and extended gains amid renewed Middle Eastern escalation and Russia-Ukraine uncertainty. The Saudi-led coalition detected drone and cruise missile threats, while explosions were reported in the Kingdom. Meanwhile, the IRGC warned that vessels disabling navigation systems in Hormuz would be treated as adversaries. On supply, Saudi Aramco's CEO warned that global crude supply remains severely tight. Furthermore, Saudi Arabia said expanding pipeline capacity to 10mln BPD could take 2-3 years. On diplomacy, Iran was finalising its response to US comments on Tehran's seven conditions. Elsewhere, in Russia-Ukraine developments, the proposed energy ceasefire and diesel deal remained unconfirmed, with Germany rejecting the latter and the Kremlin saying contacts were continuing but it had nothing to announce on a ceasefire. WTI rose to a USD 93.91/bbl high from a USD 89.61/bbl low (vs Friday's USD 90.01-92.17/bbl range), while Brent climbed to USD 106.99/bbl from USD 102.33/bbl (vs Friday's USD 102.33-105.09/bbl range). Dutch TTF extended gains amid Middle Eastern supply concerns and approaching winter demand, while Russian strikes on Naftogaz facilities in Ukraine added to energy infrastructure risks. TTF rose to a EUR 83.57/MWh high from a EUR 80.63/MWh low. Precious metals remained softer as rising energy prices reinforced inflation concerns and Fed tightening expectations, despite geopolitical tensions. Spot gold fell to a USD 4,155/oz low from a USD 4,217/oz high (vs Friday's USD 4,131-4,208/oz range), while spot silver declined to USD 60.41/oz from USD 61.45/oz. Elsewhere, BofA forecast gold at USD 4,000/oz in Q4 2026 and an average of USD 4,813/oz in 2027. Base metals remained firmer, with copper extending Friday's rebound following the return of Chinese buyers and supported by hopes of further Chinese policy stimulus, despite high energy prices. 3M LME copper rose to a USD 14,691.53/t high from a USD 14,545.55/t low, while COMEX copper climbed to USD 6.78/lb from USD 6.69/lb. BofA forecasts gold at USD 4,000/oz in Q4 2026 and an average of USD 4,813/oz in 2027. Asian refiners bought up 12mln bbls of November Saudi crude in the spot market, some at a USD 20 premium per barrel to the official November selling prices. Saudi Aramco CEO said global crude supply is severely tight, while surging refined fuel prices are exacerbating the challenge. Saudi Aramco CEO said Co. is exploring additional export routes and working to expand its overseas storage capacity, Asharq reported. Saudi Energy Ministry expects it will take 2-3 years to increase oil pipeline capacity to 10mln BPD. Kingdom is seeking international participation in developing alternative oil pipelines. French President Macron said they need to do all they can to ensure petrol pump prices can be reduced as much as possible. OPEC Secretary General said oil demand growth is expected at 400k BPD this year. Saudi Energy Minister said developments in recent weeks require a measured and serious response. A sudden fire reportedly broke out in an oil field in Saudi Arabia, Ali Bk reported citing satellite imagery. Europe's Socialists & Democrats, Renew Europe and Greens have all outlined an intention to combat the EU proposal to relax carbon pricing rules, Politico reported citing sources. NOTABLE HEADLINES Italian PM Meloni said tax breaks for software investment will be included in the 2027 budget. Italian PM Meloni said Italy will raise the need for greater budget flexibility to ease consumer and energy prices at this week's EU summit. German Chancellor Merz said CDU party wants to lower electricity tax for everyone to the minimum level required by European regulations; on US-Russia deal, said diesel deal is out of the question for Germany; sanctions must be tightened. Germany, and allies, have informed European Council President Costa that cohesion and agriculture funding will "definitely" need to be cut in the next budget draft, Politico reported citing sources. TRADE/TARIFFS EU Commission Official said the EU has agreed the limit China hybrid imports to 350k/year, with a 6% annual increase. China's MOFCOM, on EU trade talks, said under the trade and investment consultation mechanism has yielded several achievements and consensuses. Based on the principles of mutual respect and equal consultation, both sides conducted intensive consultations on trade in hybrid and electric vehicles, balancing trade differences and mutual concerns. No measures will be specifically targeted at Chinese products, let alone discriminatory treatment of Chinese companies. China's quota will not be lower than that of any other EU import source. On the basis of equality and mutual benefit, the above consensus effectively safeguards the actual interests of Chinese enterprises, prevents the escalation of trade frictions between China and the EU. CENTRAL BANKS ECB's Stournaras said the ECB may continue raising rates gradually. BoE's Mann said the stage is set for a potential wage-price drift. BoE's Breeden said a digital pound may not be needed as quickly as previously thought. Indian CPI (Sep MM) 0.69% (Prev. 0.73%). Indian CPI (Sep YY) 5.54% vs. Exp. 5.4% (Prev. 4.82%). Swiss Weekly Sight Deposits (w/e Oct 2) Total: 456.39bln (prev. 464.24bln); Domestic 432.59bln (prev. 433.12bln). Poland Central Bank member Wnorowski said could raise the base rate at the November MPC meeting and awaiting updated staff projections. GEOPOLITICS RUSSIA-UKRAINE Ukraine President Zelensky said that Ukraine is ready for an energy truce, but not sure that Russian President Putin is. Today alone, the Russians have attacked six energy facilities in Ukraine. NATO Deputy Supreme Allied Commander Stringer said the alliance must adopt a more hard-edged defence strategy to restore deterrence against Russia and would "fight to win" if pushed, BBC reported. German domestic spy chief Selen said Russia is using virtually every tool at its disposal as part of hybrid operations, including assassinations planned in Germany; We expect further actions of a similar nature. Kremlin said Russian President Putin is prepared to order a halt to attacks on Ukraine on election day if Kyiv genuinely intends to hold elections, RIA reported. Russia's Kremlin spokesperson said the Kremlin has nothing to say yet about an energy ceasefire, adding that contacts are continuing, TASS reported; Russia wants a long-term peace rather than a 60-day ceasefire proposed by Ukrainian President Zelensky. Kremlin declines to comment on whether a potential energy ceasefire would apply only to oil refineries. said contacts are ongoing regarding the Russia-Ukraine energy ceasefire announced by US President Trump and that it will provide further information in due course. Russia struck Naftogaz gas production facilities in Ukraine's Kharkiv region overnight. EU Foreign Represenative Kallas said they have adopted over 1.5k Russian sanctions, targeting the missile-industrial complex. Ukrainian President Zelensky said Russia attacked Ukraine following US President Trump's announcement. In the winter, if Russia does not agree to an energy ceasefire, Ukraine will respond; said Russia has violated the Trump energy ceasefire. Ukraine is ready to sign ceasefire guarantees. EU will today sign off on the biggest set of sanctions against Russia since the start of the conflict, Politico reported; targeting missile production. NATO's top commander said the alliance has no plans, intent or ambition beyond protecting people and defending territory; Warned that if anyone is attacks, NATO will retaliate; any attack on an ally would be rendered completely ineffective. Does not believe a conflict is imminent or inevitable. NATO will respond to attacks by blockading, degrading and striking adversary forces. If necessary NATO will neutralize systems targeting its combat systems. The alliance will pair high-end precision-guided munitions with large-scale, low-cost, scalable systems. US envoys Witkoff and Kushner have not cancelled plans to visit Moscow but will arrive with a clear understanding of Kyiv's position, TASS sources report. MIDDLE EAST Iranian General said Iran will not allow the US and Israel's desired regional order to be restored in West Asia, urges regional countries to abandon the US security umbrella and warns that Washington cannot guarantee regional security. IRGC Navy Commander warns that vessels switching off their navigation systems in the Strait of Hormuz will be treated as adversaries, adding that Iran will not relinquish control over the security of the waterway, Telegram reported. Pro-Iran channel reported plumes of smoke rising from Iraq's southern Diwaniyah province, with unconfirmed reported suggesting an oil tanker explosion. Iranian Judiciary Chief said Iran is more determined than ever and will neither retreat nor surrender, adding that Iranians will witness the downfall of the US and Israel, Al Mayadeen reported. Iranian Defence Minister warns the US against "playing with fire", saying those who initiate a confrontation cannot control its escalation or consequences, and that Iran will respond decisively to aggression, IRIB reported. Iranian Foreign Ministry spokesperson Baghaei said the Yemen conflict should have been resolved much earlier through implementation of the roadmap and called for a resolution through dialogue. Iranian Foreign Ministry said security will not return to the Strait of Hormuz as long as the US blockade and economic war against Iran continue, Al Jazeera reported. Iranian MP Khezrian warns that any attack on Kharg Island will trigger a decisive response by Iran's armed forces at the source of the attack, adding that retaliation will not be limited to US bases, Defapress reported. Iranian Major General Rezaei said the US has accepted some of Iran's seven conditions, but Tehran considers Washington's response insufficient, adding that Iran's diplomacy has changed and will not return to the past, IRIB reported. Israeli military spokesperson said our forces moved to the site of an explosion in the north of the country to provide assistance and we are investigating the incident, Al Araby reported. Iranian Deputy Foreign Minister said they are finalising its response to American comments regarding their plan, reported Al Arabiya. Iranian Major General Safavi said Tehran's main strategy is the intelligent management of the Strait of Hormuz against the US' naval blockade, Defapress reported. Explosions in Saudi Arabia following a missile and drone attack, Sabereen News reported. Saudi-led coalition said it has detected and is tracking a drone and cruise missile threat against Saudi Arabia and is taking measures to address it, Al Arabiya reported. Explosions rock the strongholds in the Koya district of Erbil, Iraq, Sabereen reported. UKMTO reported a time late incident in the Gulf of Oman which occurred on 11 October 2026. "UKMTO has received a report of an incident involving a tanker in the vicinity of Sohar anchorage, Oman.". Iranian Foreign Ministry spokesperson Baghaei said exchanges of messages with the US continue via intermediaries; Tehran is still reviewing US positions and will respond via intermediaries once the review is complete. IRGC Navy said that this morning, the third offending supertanker was hit in the Strait of Hormuz and caught fire.