EU Market Open: US President Trump warns that he won't hesitate to take military action against Iran; DXY awaits more Fed speak

Crude under modest pressure with newsflow relatively light and familiar.
APAC equity trade was choppy, given the ultimately negative US handover amid the Nvidia fallout.
European futures point to a modestly lower open, US futures choppy post-earnings.
USD paused for breath into Fed speak and PPI. FX rangebound as such.
Fixed benchmarks extended to the downside, in a continuation of the week's trade.
Looking ahead, highlights include German Wholesale Prices (Oct), EZ Employment (Q3), Trade Balance (Sep), GDP 2nd Est. (Q3), US PPI (Oct), IEA OMR; Informal Meeting of EU Leaders (Dublin); speakers including Fed's Daly, Collins, Bowman & Jefferson; Earnings from Richemont; Credit Ratings including Fitch on Germany, S&P on Italy and Morningstar DBRS on the UK.

SNAPSHOT

LOOKING AHEAD

Highlights include German Wholesale Prices (Oct), EZ Employment (Q3), Trade Balance (Sep), GDP 2nd Est. (Q3), US PPI (Oct), IEA OMR; Informal Meeting of EU Leaders (Dublin); speakers including Fed's Daly, Collins, Bowman & Jefferson; Earnings from Richemont; Credit Ratings including Fitch on Germany, S&P on Italy and Morningstar DBRS on the UK.
Click for the Newsquawk Week Ahead.

IRAN CONFLICT

US President Trump said Iran had lost control of Hormuz and that he won't hesitate to take military action unless current measures deliver what the US wants.
US President Trump said the Iran war may have been unpopular because of gas prices, which seemed to have the biggest impact on the midterms. Trump also commented that the US is ending the war a little more "civilly" and is taking the long way at the request of some nations, with Qatar, the UAE and Bahrain preferring a waiting period.
US CENTCOM said it was implementing President Trump's instructions regarding the naval blockade on Iran and was working to increase the flow of commercial vessels through Hormuz. It was also reported that CENTCOM informed the IDF that it must prepare for the possibility of renewed war, according to Kan citing a US official.
Israeli senior Defence Ministry official said there is currently no urgency for action in Iran, and that while there is a return to escalation, there are no moves in Iran that justify a hasty response.
Iranian Foreign Ministry spokesperson Baghaei said any direct or indirect involvement in acts of aggression or "economic terrorism" against Iran would be regarded as a hostile and unlawful act, while he warned that any state participating in such actions, in whatever form, would bear full responsibility for the repercussions.
Explosions were heard at several points in Sirik, eastern Hormozgan province, according to Fars, with some sources attributing them to warning shots fired at offending ships. Iran's state news agency later reported that official sources confirmed "the enemy" had carried out a military strike on Sirik.
IRGC said it destroyed a US early-warning radar on Bahrain Island in retaliation for an attack on a telecom tower in Sirik.
Following US airstrikes on Sirik, two large explosions were reportedly heard in Bandar Lengeh, southern Iran, with an air defence site reportedly targeted, according to a source on X.
Saudi King Salman insisted that Crown Prince Mohammed bin Salman maintain a hard line against the Houthis and warned him to be wary of Tehran's overtures during a visit on November 3rd, according to a Saudi royal source cited by Channel 14.
Saudi-led coalition said a Houthi drone was intercepted in the Riyadh area.
Houthi spokesperson said the group carried out two military operations, targeting pumping station No. 7 on the East-West pipeline and the Yanbu oil facility. A Houthi spokesman later said its forces targeted Saudi Aramco in Riyadh with a drone and that the operation achieved its objective.

US TRADE

EQUITIES

US stocks were choppy as attention centred on Nvidia (NVDA), geopolitical developments and the neocloud sector. Indices ultimately closed lower, with the Russell 2000 underperforming, while the equal-weight S&P 500 ETF also declined, highlighting negative breadth. Sectors were mixed, with Energy and Communication Services outperforming, though Materials and Technology lagged. The main focus was the immediate resignation of Nvidia CEO Jensen Huang, which saw shares tumble as much as 14% pre-market; NVDA pared a substantial portion of its losses during the session but still closed firmly in the red. Huang's departure appeared to benefit competitors AMD (AMD) and Broadcom (AVGO), while disappointing guidance from Nebius (NBIS) weighed on neocloud stocks, reversing some of the sector's gains following CoreWeave's (CRWV) earnings on Tuesday.
SPX -0.35% at 7,593, NDX -0.30% at 28,289, DJI -0.36% at 52,299, RUT -1.61% at 2,800.
Click here for a detailed summary.

TARIFFS/TRADE

US Senate Finance and House tax committees are set to launch an investigation into the Trump administration's approval of Nvidia (NVDA) chip exports to China, according to lawmakers.
US Senate Banking Chair Scott called on former Nvidia (NVDA) CEO Jensen Huang and Commerce Secretary Lutnick to testify before the panel next month regarding Huang's relationship with a potential Chinese spy, according to POLITICO. It was later reported that Lutnick had agreed to testify, according to a spokesperson cited by NBC.
US is reportedly probing whether Alice Huang helped smuggle Super Micro (SMCI) products.
A Chinese official said China is very concerned about the EU's protectionist measures, while urging Belgium and Luxembourg to play an active role in ties.

NOTABLE HEADLINES

Fed's Williams (voter) said the economy has been resilient and growth strong, adding that the US economy is getting stronger but not overheating and that inflation is too high. He said inflation is stubbornly persistent, the Fed has been in a steady cadence of collecting data, will need to take action over time to return inflation to 2%, and still has work to do to get policy to the right place.
Fed's Daly (2027 voter) said there was no doubt of AI-fuelled price pressures, though AI was only directly contributing a modest amount to inflation, and that her bias was that further tightening would be needed. Daly also commented that tighter financial conditions were most welcome, but markets don't do the Fed's work and that keeping prices stable is the Fed's job.
Fed's Goolsbee (2027 voter) said there was plenty of room for the Fed to discuss its policy options and that he did not want to prejudge the outlook, while he stated that the Fed was failing on the inflation side of its mandate.
Fed's Schmid (2028 voter) said the Fed still hasn't beaten the inflation enemy, adding that hiring faces a perfect storm, with AI, uncertainty and rising input costs all holding it back.
White House is discussing Commerce Secretary Lutnick's future in the role, according to sources.
Nvidia (NVDA) plans to keep investigating former CEO Huang's possible involvement with a person alleged to be a Chinese spy, according to The Information. It was also reported that Huang had a relationship with a second employee, according to sources.
US Senate Democratic leader Schumer said he has the votes to continue as Democratic leader.

APAC TRADE

EQUITIES

APAC stocks traded mixed following the choppy and ultimately negative performances stateside in the fallout from Nvidia and co-founder Jensen Huang's resignation.
ASX 200 declined with nearly all sectors subdued, while only energy and telecoms showed resilience.
Nikkei 225 rallied back above the 61,000 level with mixed price action seen in tech stocks following the Nvidia fallout, as Jensen Huang's exit and the appointment of an interim CEO reduced some uncertainty.
KOSPI swung between gains and losses amid tech headwinds and as the latest Export and Import Prices from South Korea slowed from the previous, but continued to show double-digit percentage growth.
Hang Seng and Shanghai Comp were lower amid some concerns regarding China's future access to NVIDIA chips in the fallout from Huang's extramarital affairs scandal, while downside in the mainland was somewhat cushioned after the PBoC injected liquidity via both overnight and 7-day reverse repo operations.
US equity futures saw two-way price action with initial momentum following encouraging earnings from Applied Materials and Cisco, while Anthropic’s IPO was reported to be around six times oversubscribed, although the gains were then faded with futures returning to near-flat territory.
European equity futures indicate a lower cash market open with Euro Stoxx 50 futures down 0.4% after the cash market closed with gains of 0.1% on Thursday.

FX

DXY took a breather after gaining yesterday as higher US yields continued to offer an attractive rate differential environment for the buck, while the moves were an extension of the impact from the hawkish comments from Fed's Waller and the hotter-than-expected CPI readings earlier in the week. Meanwhile, there was plenty of Fed speak during the prior day, including from Hammack, who said rates need to move higher to reach a restrictive stance, while Daly noted her bias is that further tightening will be needed, and Goolsbee stated the Fed should be mindful of signs the economy is overheating, with participants now turning their attention towards the incoming PPI data.
EUR/USD was contained after recent weakness, while prior hawkish comments from ECB's Kazaks that a December rate hike was likely and further tightening was necessary did little to spur the single currency.
GBP/USD lingered near its lowest levels in almost a month after recent dollar strength and despite the acceleration in quarterly GDP in the UK, which printed in line with expectations.
USD/JPY looks to retest the 160.00 level to the upside, which it briefly breached through yesterday before suddenly retreating, sparking some intervention and rate-check speculation, while there was some recent jawboning from Japanese officials with both PM Takaichi and Finance Minister Katayama reaffirming communication with US financial authorities regarding FX.
Antipodeans were lacklustre amid the uneventful mood across the FX space and mixed risk tone.
PBoC set the USD/CNY midpoint at 6.7152 vs exp. 6.6756 (prev. 6.7174).

FIXED INCOME

10yr UST futures lacked demand after settling lower yesterday as the curve flattened amid the continued hawkish repricing of Fed expectations and with renewed geopolitical uncertainty after President Trump commented that the US does not need an Iran deal.
Bund futures tested the 122.00 level to the downside after recent selling pressure and with participants awaiting data releases including German Wholesale Prices, European Employment and EU GDP revisions.
10yr JGB futures tracked the downside in global counterparts as yields climbed higher and with very few fresh catalysts overnight amid a quiet calendar.

COMMODITIES

Crude futures mildly pulled back amid quiet pertinent overnight newsflow and after oil advanced yesterday as US-Iran updates were less conducive to improving relations, with US President Trump stating that they don’t need a deal with Iran, while he directed VP Vance to focus entirely on domestic issues, dampening the possibility of a Vance-Rezaei meeting. Furthermore, there were reports of explosions heard in Iran's Sirik, and the IRGC later announced it destroyed a US early-warning radar on Bahrain Island in retaliation for an attack on a telecom tower in Sirik.
US EIA Crude Oil Stocks Change (w/e Nov 6th) 4.657M vs. exp. -1.1M (prev. -0.865M).
Spot gold nursed some of the prior day's losses with the precious metal gaining traction on a reclaim of the USD 3,900/oz level and in tandem with the advances in silver.
Copper futures traded indecisively amid the cautious mood due to the Nvidia fallout.

CRYPTO

Bitcoin trickled lower throughout the session with prices slipping beneath the USD 69,000 level.

NOTABLE ASIA-PAC HEADLINES

Japan approved JPY 652bln reserve fund use for winter subsidies.
Japanese PM Takaichi said she won't comment on FX but stated they are in close contact with US financial authorities regarding FX and will work to maintain an orderly forex market.
Japanese Finance Minister Katayama said Japan is seeing one-sided, rapid FX moves and will communicate with the US Treasury and respond accordingly, while also confirming the decision to bring forward winter utility subsidies by tapping reserve funds.
Japan's Finance Ministry proposed five-year defence spending of JPY 50-60tln vs. the JPY 80tln sought, while Japan has warned arms suppliers of deep order cuts as the budget squeeze hits its military build-up, potentially including planned missile and aircraft purchases such as F-35s, according to sources.

GEOPOLITICS

RUSSIA-UKRAINE

US envoy Kushner said both sides have agreed to expand the next round of negotiations to include European partners, and the US is working towards what would be the largest prisoner exchange of the war. Kushner said he had good discussions with Zelensky and that there were very intense talks over the last three days, while he noted that they had a detailed and productive meeting with Russian President Putin, as well as stated that a deal cannot be concluded without the Europeans.
Ukrainian President Zelensky said the US side made progress regarding Europe, which will have a seat at the table at the next meeting, while he said Kyiv will work on the earliest possible time for the next meeting with all negotiators and hopes to make progress on de-escalation and ceasefires.
Kremlin said that Russian President Putin's talks with US envoys had been useful and that Moscow and Washington agreed to remain in contact, with Ukraine peace talks set to continue. It also said Russia hoped Europe would support agreeing a new security architecture for the continent and that Moscow had made clear NATO could not expand any further.

OTHER

US President Trump said the US is monitoring Cuba very closely and wants to "get Cuba done" before he leaves office, while Trump stated that he would "certainly consider it" when asked whether he would be okay with military force or a short campaign. It was separately reported that US pressure has cut Cuba off from global oil supplies, forcing it to rely on US fuel, according to the WSJ.
US Treasury Secretary Bessent said Chinese AI models are dangerous and have no guardrails, adding that Chinese models were involved in the commercial refrigerator hacking attacks in Europe.
China conducted unannounced Pacific drills in a "silent intimidation" of Taiwan, according to officials cited by Reuters.

EU/UK

NOTABLE HEADLINES

Britain's tech sector emerges as a key driver for UK economic growth and is expanding at its fastest pace in nearly half a decade, according to FT analysis of official statistics.
Germany's government denied a report that Chancellor Merz and French President Macron were backing Spain's de Cos for ECB President.