Newsquawk European Market Wrap - 8th October 2025

• European stocks edged higher throughout the session; Dutch AEX lagged amid tech losses.


• Spot gold surged above USD 4,000/oz to a near USD 4,050/oz, spot silver reached levels last seen in 2011.


• EU sees new US trade demands hollowing out deal struck by US President Trump, according to Bloomberg citing sources

EQUITIES

• 
  European Bourses continued grinding higher since the open, with FTSE 100 (+0.8%), DAX (+0.8%), CAC 40 (+0.9%), and Euro Stoxx (+0.4%) all looking to close higher. However, the AEX continues to operate in the negative but isn’t nearly as soft as the initial opening. The AEX continued to be weighed down by ASML (-3.6%) following the US House committee announcing threats of tighter policy on the company due to its chip sales to China.


• 
  European sectors have also remained mostly in the green. Consumer Products and Services (+1.7%) has taken the number one spot with strong performances in companies like LVMH (+2.2%), Kering (+1.8%) and Adidas (+3.1%). No clear driver for the recent uptick, but increased risk sentiment in their wider market has raised sentiment for the sector. Basic Resources is in second place following broker upgrades for some of the biggest companies in the industry, like Rio Tinto (+1.4%), Anglo American (+2.4%) and Antofagasta (+2.8%), driving up their share prices and lifting the basic resource sector. Automobiles and parts continue to slump since the opening. Trump’s tariff has weakened sentiment for the sector, and weak BMW (-7.1%) shares following cuts in the 2025 earnings forecast and weaker-than-expected growth in the Chinese market have weighed on the sector.


• 
  US equities have opened slightly firmer with upticks in the NQ (+0.3%) and S&P 500 (+0.2%), whilst the Dow Jones has opened flat. NVIDIA shares have risen following news that the company is investing in Elon Musk xAi, and CFLT (+8%) gains following news that the company is reportedly exploring a sale have given the NQ some momentum. Elsewhere, there’s been no major macro news, and all eyes will be on the Fed’s minutes later.

FX

• 
  USD - DXY was up for a third session in a row with WTD gains thus far of 1.1%. It remains the case that the price action is not being driven by outright bullish calls on the USD but is more a case of weakness elsewhere, mainly JPY and EUR, with NZD the latest of its major counterparts to take a tumble. If anything, the macro narrative surrounding the US remains a downbeat one as the government shutdown continues to drag on, delaying economic data releases and threatening a hit to domestic growth. Additionally, the labour market could be dealt another blow if President Trump proceeds to enact mass layoffs of Federal workers. For today's docket, the standout highlight is the minutes from the FOMC's September meeting, in which it cut the FFR by 25bps (subject to dovish dissent from Miran). Focus will be on the level of apprehension on the board over additional easing in the face of concerns over tariff-induced inflation. DXY ventured as high as 98.99 with focus on a test of the 99.0 mark; not breached since 5th August.


• 
  EUR - EUR remained pressured vs. the USD and just about held onto a 1.16 handle after delving as low as 1.1605. French political turmoil remains a key part of the Eurozone macro narrative with PM Lecornu (due to speak @ 19:00BST) focusing his efforts on negotiations with the Socialists. The likely price for Macron will be a left-wing PM, which could make parliamentary arithmetic easier for passing a budget, given that the Socialist Party holds the most seats in the National Assembly. Failing that, markets will likely cement calls for fresh legislative elections (priced at 47% vs. 53% yesterday). Albeit, as we mentioned yesterday, this may also likely fail to solve the stalemate and could trigger an early Presidential election - the most risk-averse scenario for the market. Aside from France, Germany saw further woeful data earlier in the session with Industrial Orders falling well short of consensus and subsequently stoking concerns over a contraction in the domestic economy. On the speaker front, ECB's Rehn talked up the possibility of inflation slipping below the Bank's 2% target. EUR/USD trimmed some of its downside in the European afternoon. However, if losses resume and 1.16 gives way, the next target comes via the 27th August low @ 1.1573.


• 
  GBP - Flat vs. the USD and stronger vs. the EUR. At the risk of sounding like a broken record, in the absence of any tier 1 UK data, the macro narrative has failed to evolve beyond ongoing angst ahead of the November 26th Budget. On which, there has been no material update over the past 24 hours. BoE Chief Economist Pill is due to give remarks at 16:00BST. He last spoke in September, noting that inflation in the UK has proved to be more stubborn than expected and the Bank may need to maintain restrictive policy. This is a view reflected in market pricing with just 6bps of loosening seen by year-end. GBP/USD briefly tripped below yesterday's low @ 1.3391 before returning to a 1.34 handle.


• 
  JPY - Once again the laggard across the majors with USD/JPY having risen five handles since Takaichi's victory in the LDP leadership race. The move has been relentless this week given the market's view that the fallout of Takaichi's win will lead to a mix of looser monetary and fiscal policy. Subsequently, markets only assign a circa 25% chance of a BoJ hike this month vs. roughly 70% last week. Further reason for caution in expecting additional tightening from the BoJ was presented overnight via the August real cash earnings data, which printed a deeper-than-expected contraction. Nonetheless, in a note published this morning, Oxford Economics expects the BoJ to hike rates by 25bps in December on account of the "surprisingly hawkish shift in the BoJ's view since its September policy meeting and upward revisions to our growth and inflation projections, driven by the US economy's resilience". USD/JPY climbed as high as 152.99 before pulling back to levels closer to 152.50. Focus remains on a move above 153; not breached since February. If the pair begins to approach 155, given the velocity of the move, expectations of potential intervention will likely increase.


• 
  Antipodeans - NZD was sold hard overnight after the RBNZ decided to opt for a deeper 50bps rate cut (views heading into the meeting were split between 25bps and 50bps). Additionally, the committee noted that it remains open to additional reductions. The minutes stated that the case for reducing the OCR by 50 basis points emphasised prolonged spare capacity and the associated downside risk to medium-term activity and inflation. Subsequently, NZD/USD extended its descent on a 0.57 handle and hit its lowest level since April 11th. This, allied with the ongoing rally in gold prices has continued to support AUD/NZD, which hit a multi-year high overnight @ 1.1446. Subsequently, AUD managed to outmuscle the USD, albeit AUD/USD failed to make its way back onto a 0.66 handle, topping out @ 0.6588.

FIXED

• 
  Global paper started the European session slightly higher and continued to hold an upward bias throughout the day. The bias was seemingly a continuation of the dovish implications of the new LDP leader Takaichi, soft German data and ongoing French political instability.


• In more detail, USTs looked to end the European day higher by a handful of ticks and towards session highs; traded in a 112-19+ to 112-27 range. A breach above 112-30 could see a potential retest of the prior weeks’ high at 112-31+; thereafter, 113-00 marks the high from 24th September 2025. US Government shutdown remains the focal point for traders – no real progress thus far, and President Trump is set to provide clarity on eliminating jobs “in four of five days”. Looking ahead, we await the FOMC Minutes (Sept) and Fed speak from Barr, Logan, Kashkari and Barr. UST traders will also keep an eye out for the 10yr auction, as a reminder, the prior outing received strong demand and a 1.3bps stop-through.


• 
  EGBs were also firmer across the board, albeit to varying magnitudes. The German benchmark was boosted by circa. 40 ticks, following on from weaker-than-expected German Industrial Output. The accompanying release suggested the decrease could be attributed to “annual plant closures for holidays and production changeovers”.


• 
  Over in France, OATs were the European outperformer as traders digest the modest optimism coming from the region. In brief, outgoing PM Lecornu said so far show a willingness to get this budget through by year-end. The PM provided the left with an olive branch, suggesting that he may suspend pension reforms – though Politico reported that French Socialists received “no assurances” from Lecornu. Nonetheless, traders await Lecorunu’s next appearance at 19:00 BST. As it stands, the 10yr OAT-Bund spread currently resides at 84.19bps vs the prior day’s close at 86.15.


• 
  UK paper also moved higher throughout the day and traded in a 90.69 to 90.93 range, next level to the upside would be the round 91.00 mark. All focus on the Autumn Budget, on which, the FT reported that Pimco and BlackRock have called Chancellor Reeves to build a larger buffer in the UK public finances in the November Budget to avoid years of uncertainty over tax and spending decisions. However, a factor boosting sentiment is the ONS revising down UK Government borrowing by GBP 2bln after a recent data error - which may alleviate some of the borrowing-related pressure the Chancellor faces.


• 
  UK sells GBP 5bln 4.00% 2029 Gilt: b/c 2.92x, avg. yield 4.095%, tail 0.8bps.


• Germany sells EUR 0.733bln vs exp. EUR 1bln 2.60% 2041 Bund and EUR 0.853bln vs exp. EUR 1bln 3.25% 2042 Bund

COMMODITIES

• 
  Crude benchmarks continued to grind higher throughout the European session, despite any crude-specific newsflow. WTI and Brent peaked at USD 62.81/bbl and USD 66.47/bbl respectively before falling lower back to session lows at USD 62.11/bbl and USD 65.81/bbl respectively as the US cash session started. Crude benchmarks hold within the boundaries formed as the European session comes to an end. Commentary from the talks in Egypt between Israel and Hamas hinted that the talks are going well. However, comments from the Israeli side said that they insist on not accepting any ideas outside the Trump plan. WTI and Brent dipped c. USD 0.2/bbl to session lows following the positivity of the talks but was short-lived as comments from Israeli representatives lacked the same enthusiasm.


• 
  Spot XAU extended above the USD 4k/oz psychological level and continued towards USD 4050/oz before oscillating in a c. USD 20/oz range as continued US shutdown and growing fiscal concerns adds fuel to the rally. XAG peaked just above USD 49/oz before falling back lower as it follows the yellow metal rally.


• 
  Base metals remained subdued as markets wait for China to re-enter the markets tomorrow. 3M LME Copper briefly extended above USD 10.81k/t before snapping back into the week’s range and returning towards session lows at USD 10.68k/t. Copper prices weakened following reports from the ICSG saying world copper mine production is expected to rise by 1.4% in 2026 with growth of a 2.3% forecast in 2026.


• 
  HSBC raises the 2025/26 average silver price forecasts to USD 38.56/oz and USD 44.50/oz. End 2025: USD 49.00/oz. End 2026: 41.50/oz.


• 
  Russia's Deputy PM Novak announces increasing fuel output at Russian Refineries. They plan to increase oil output gradually. Russia is also committed to the OPEC+ agreement. Russia was close to the OPEC+ quota in September.


• 
  Argentina's government lifts export taxes on aluminium, steel and derivatives until the end of 2025, via the Official Gazette.

TARIFF/TRADE

• 
  EU sees new US trade demands hollowing out deal struck by US President Trump, according to Bloomberg citing sources. Earlier in the month, Trump admin reportedly sent the EU a fresh proposal for implementing “reciprocal, fair and balanced” trade.

EUROPEAN DATA

• Swedish CPIF Flash MM (Sep) 0.2% (Prev. -0.2%)


• Swedish CPI YY Flash (Sep) 0.9% (Prev. 1.1%)


• Swedish CPIF Flash YY (Sep) 3.1% (Prev. 3.2%)


• Swedish CPIF Ex Energy Flash MM (Sep) 0.1% (Prev. -0.5%)


• Swedish CPIF Ex Energy Flash YY (Sep) 2.7% (Prev. 2.9%)


• German Industrial Output MM (Aug) -4.3% vs. Exp. -1.0% (Prev. 1.3%)


• Hungarian CPI YY (Sep) 4.3% vs. Exp. 4.4% (Prev. 4.3%)


• Hungarian Core CPI YY (Sep) 3.9% vs. Exp. 4.0% (Prev. 3.9%)

NOTABLE EUROPEAN NEWS

• 
  Italy to apply a single 30% threshold for mandatory bid in listed companies, via Reuters citing draft decree.


• 
  French PM Lecornu says will present his findings to President Macron later this evening; says France must get a budget by year-end; talks so far showing a willingness to get this budget through by year-end. Sees possibility of dissolution of parliament as becoming more remote.


• 
  UK ONS says there's an error in public finances data between Jan-Aug, citing HMRC error; VAT data error means public sector net borrowing in current and prior FY is a combined GBP 3bln lower. UK borrowing in the past five months of FY was GBP 2bln lower than previously thought.


• French PM Lecornu to speak again at 19:00 BST.


• 
  French Socialist Leader Faure says the party cannot back the current budget plan, no guarantee that pension reforms will be suspended.

CENTRAL BANKS

• 
  ECB's Rehn has warned there is a risk that inflation slows below the ECB's 2% inflation target, according to Bloomberg, citing the Karon Grilli podcast. There are downside inflation risks in sight over the next couple of years; cites EUR strength, stabilisation of wages and services inflation.


• 
  ECB's Nagel says current monetary policy is appropriate; euro zone inflation close to 2% target, via Greek newspaper.


• 
  ECB's Escriva says he cannot pre-empt direction of future policy move; inflation expectations are very much anchored. ECB needs to be cautious. Outlook remains uncertain going forward. Wouldn't overemphasise a strong euro as a risk factor. European economy showing great deal of resilience. Trade disruptions from US are potentially inflationary. Inflation risks are very much balanced. Spanish housing supply lagging very much.


• 
  BoE FPC Minutes: FPC decided to maintain the UK countercyclical capital buffer (CCyB) rate at 2%. Risks associated with geopolitical tensions, global fragmentation of trade and financial markets, and pressures on sovereign debt markets remain elevated. Despite persistent material uncertainty around the global macroeconomic outlook, risky asset valuations have increased and credit spreads have compressed. There have been some notable credit defaults in the US automotive sector since the last meeting. A sudden or significant change in perceptions of Federal Reserve credibility could result in a sharp re-pricing of US dollar assets, including in US sovereign debt markets, with the potential for increased volatility, risk premia, and global spillovers.


• 
  NBH Minutes (Sept): Decision to leave rates unchanged were unanimous. "Several Council members emphasised that in the baseline scenario, price stability could be achieved in a sustainable manner by ensuring tight monetary conditions".


• 
  Oxford Economics has brought forward their timing of the next BoJ 25bps rate hike to December from next year and have added another 25bps hike in mid-2026. "The timing of an additional rate hike to 1% in mid-2026 is subject to higher economic uncertainty. The BoJ will need time, probably around six months, to monitor the impact of the December hike before making its next move."


• 
  Polish NBP Base Rate (Oct) 4.5% vs. Exp. 4.75% (Prev. 4.75%)


• 
  Fed's Musalem (2025 voter) does not comment on monetary policy or the economic outlook in prepared remarks.


• 
  Fed's Barr (voter) does not comment on monetary policy or economic outlook in prepared remarks.

GEOPOLITICS

• 
  "There are outstanding issues among the negotiators in Egypt", according to Al Arabiya sources


• 
  Hamas says group positive is needed to reach a deal, citing optimism, says list of hostages' names exchanged on Wednesday according to agreed numbers, according to a statement.


• 
  Hamas leader tells AFP: "Optimism" dominates Gaza talks, via Sky News Arabia.


• 
  "An Israeli security source told Sky News Arabia: Israel insists on not accepting any ideas outside the Trump plan", according to Sky News Arabia.


• 
  Russian Defence Ministry says Russian forces have captured Novohryhorivka in Ukraine's Zaporizhzhia region, according to Al Arabiya.


• 
  "Russian Duma: The response to the delivery of Tomahawk missiles to Ukraine will be very harsh", according to Al Arabiya.


• 
  Russian Foreign Minister says maintaining Russia's obligations under the plutonium agreement with the US is no longer acceptable, via Tass.

NOTABLE NORTH AMERICAN NEWS

• 
  NVIDIA (NVDA) CEO says he did not know about OpenAI's deal with AMD (AMD) prior to its public announcement, via CNBC TV. For every gigawatt of AI factories will need USD 50-60bln. Says deal with OpenAI will help prepare startup for when OpenAI is "a self hosted hyperscaler". Asked about how Open AI will fund deal with NVIDIA (NVDA), says OpenAI does not have the money yet and will raise through revenues and equity or debt. Already an investor on Musk's xAI. Only regret is that he did not give xAI more money, it is an investment, not vendor financing. Today is dramatically different from 2000. Wants to be apart of almost everything that Elon Musk is involved in. Investment in OpenAI does not require the co. will use that investment to buy NVIDIA's technology.


• NVIDIA (NVDA) CEO says the US is not "that far ahead" of China in the AI industry; Demand for Blackwell is really, really high.


• 
  Cisco (CSCO) seeks to challenge Broadcom (AVGO) in connecting AI data centres, also unveils Silicon One P200 chip, and a 51.2T routing systems.

NORTH AMERICAN DATA

• US Mortgage Refinance Index w/e 1180.2 (Prev. 1278.6)


• US MBA Purchase Index w/e 170.6 (Prev. 172.7)


• US Mortgage Market Index w/e 323.1 (Prev. 339.1)


• US MBA Mortgage Applications w/e -4.7% (Prev. -12.7%)


• US MBA 30-Yr Mortgage Rate w/e 6.43% (Prev. 6.46%)

NOTABLE ASIA-PAC NEWS

• 
  Japanese Economy Minister Akazawa is expected to depart from his position, according to local reports via Mainichi newspaper.


• 
  Alibaba (BABA/ 9988 HK) is to form an in-house robot AI team, according to a Qwen Executive.

08 Oct 2025 - 15:00- ForexEU Research- Source: Newsquawk