Newsquawk European Market Wrap - 22nd October 2026

• European bourses were pressured; NQ -2% with pressure seen in TSLA -0.6% and META -6.6%.
• DXY traded with mild gains; JPY outperformed on haven demand, whilst Kiwi lagged post-CPI.
• Crude benchmarks gained after the IRGC warned US military bases; focus also on punchy rhetoric from Israeli officials.

EQUITIES

• European bourses held onto their earlier losses, albeit off worst levels. Worries of the AI trade emerged after Tesla lowered its FY26 capex guidance due to AI initiatives and investments in infrastructure and manufacturing. In terms of performance, the FTSE 100 was the outperformer, given its lack of tech exposure, while Italy’s FTSE MIB was the underperformer.
• Sectors are set to end negatively. Food, Beverages & Tobacco topped the sector pile, with Health Care and Energy rounding out the top 3 sectors. To the downside remained Basic Resources, Banks and Travel & Leisure.
• Key stories include: LSEG +7.5%, acquired Octus for USD 3.535bln; Hermes -5%, Q3 sales disappointed due to sluggish Chinese demand; SAP +2.4%, Q3 metric beat and saw FY26 cloud revenue at the upper end of its guided range; Nestle +1.1%, Q3 sales beat and reaffirmed its FY26 sales growth target; Roche -0.9%, despite Q3 sales topping estimates and reaffirming FY outlook.
• US cash equities opened entirely in the red, with the NDX hit the hardest. For some key US stories: Meta -6.6%, despite Q3 earnings beat and lifted its FY capex; Lam Research -10.8%, guidance underwhelmed expectations; Comcast +2.2%, its quarterly Adj. EPS and revenue beat consensus.

FX

• G10s were initially stronger against the USD in early morning trade, but the USD climbed higher as the session progressed. Into the London close, G10s are set to end mixed; the JPY outperformed, benefiting from haven demand, whilst the Kiwi lagged on the back of cooler-than-expected CPI metrics.
• DXY reversed earlier losses. Early pressure came on the back of lower yields, but as that stabilised, the index managed to clamber higher. DXY traded within a 101.44 to 101.83 range, with the high of the day a couple of pips short of its 21-DMA. No move was seen in the index following a lower-than-expected jobless claims figure.
• JPY benefited from its haven status, given the risk tone and narrowing yield differentials. Flows returned into the JPY, on the back of growing demand for Japanese debt – as reflected in this week’s exceptional 20yr auction. As for newsflow, the RENGO union is demanding wage increases of 6% next year, though this will likely be tempered as negotiations get underway.
• The Kiwi underperformed following cooler-than-expected inflation metrics, though inflation still remains at elevated levels. Therefore, money markets continue to price in a hike at next week’s RBNZ meeting, a view backed by analysts at Westpac.

FIXED

• Global fixed benchmarks were firmer today, despite stronger energy prices. Strength appears to be some typical haven demand, amidst growing AI funding-related woes. Moreover, markets may have now begun assessing the potential growth impact of elevated oil prices, rather than just the near-term monetary policy implications.
• The flight-to-quality trade was mostly reflected in USTs today, which are set to end the European session stronger by 22+ ticks, at the upper end of a 105-07+ to 105-29 range. US-specific newsflow was lacking this morning, and lower jobless claims figures had little impact on the benchmark.
• Bunds also gained throughout the day, +60 ticks into the European close. Once again, the German benchmark was a beneficiary of the FTQ trade mentioned above; a recent trend which no doubt will continue to put pressure on peers which have been subject to fiscal-related issues, namely OATs. For reference, the OAT-Bund spread has widened to its widest since 2011 (178bps).
• Gilts moved higher, albeit to a lesser degree vs peers. Gilts are set to end the London session up by c. 15 ticks, and within an 84.42 to 84.97 range. The mild underperformance vs USTs/Bunds is potentially a function of fiscal-related tentativeness heading into next week’s Budget, and the UK’s typical sensitivity to stronger energy benchmarks.

COMMODITIES

• Crude benchmarks gradually climbed overnight and in the early part of the European morning, with WTI and Brent finding a ceiling of USD 100.09/bbl and USD 112.68/bbl respectively, as the cash session got underway. The main driver was the punchy rhetoric from the IRGC Navy, warning of strikes on US bases in the Gulf if the US continues to encourage passage through an “illegal” passage. Additionally, there were reports regarding the next round of strikes, with the NYP pointing to plans of US-Israeli strikes after the US midterms.
• Spot gold held onto its earlier losses, with the yellow metal briefly extending below the key range low of USD 4066/oz before regaining the level heading into US trade. The bout of weakness came amid strengthening of the dollar, heading into a Fed decision next week for which markets are pricing in a 10% chance of a 25bps hike.
• 3M LME Copper slid overnight, falling from a high of USD 14.37k/t to a trough at USD 14.04k/t, before regaining the USD 14.1k/t handle as the European session came to a close. The red metal is tracking the losses in the equity space, over continued worries of the AI trade.
• Goldman Sachs still sees upside risks to its year-end benchmark forecast for Dutch TTF gas of EUR 70/MWh.
• Gazprom is ready to resume gas supplies to Europe if there is a desire on its part, Tass reported.
• EU Parliament has approved a 3yr delay to the bloc's methane rule.
• Libya's NOC said unidentified people have entered the crude-receiving station near the Zawiya refinery (120k BPD) and closed the pipeline valves. Continued shutdowns would inflict significant losses on crude production and revenue.
• Russian Envoy Dmitriev said restarting of the Nord Stream is inevitable, IFX reported.
• Saudi Aramco CEO expects oil demand to increase by 3mln BPD once the Middle East conflict ends. Oil could have been higher during the crisis, one factor that offset it was the east-west pipeline. Seeking to speak with other nations to increase strategic reserves.
• Iraq is looking to charter tankers to ship fuel oil outside of the Strait of Hormuz.
• An Aramco facility in Saudi Arabia is on fire, Sabereen News reported; post includes a video.

EUROPEAN DATA

• UK CBI Business Optimism Index (Q4) -1 (Prev. -36).
• UK CBI Industrial Trends Orders (Oct) -32 vs. Exp. -20 (Prev. -9).
• French Business Climate Indicator (Oct) 98 vs. Exp. 96 (Prev. 96).
• French Business Confidence (Oct) 105 vs. Exp. 101 (Prev. 101).
• Norwegian Industrial Confidence (Q3) 3.4 (Prev. 2.5).
• Norwegian Unemployment Rate (Sep) 5.0% (Prev. 4.5%).

NOTABLE HEADLINES

• German tax panel said federal tax revenue for 2026-2030 is projected to be EUR 3.3bln above the May forecast. Federal tax revenue for 2026-2030 is projected to be EUR 3.3bln above the May forecast. State tax revenue this year is projected to be EUR 0.1bln above the May forecast. Municipal tax revenue this year is projected to be EUR 0.8bln above the May forecast.
• Italy said to pass emergency aid for the transport sector.
• French President Macron said France will bar protests that are not organised by unions in the coming days.
• French government is reportedly considering a minimum wage adjustment, Les Echos reported citing sources; Labour Minister is to meet with unions on the subject of purchasing power, and minimum wage will be discussed.

TRADE/TARIFFS

• China's MOFCOM said they are to improve trade friction response mechanism.

CENTRAL BANKS

• Turkish TCMB Interest Rate Decision 36% vs. Exp. 36% (Prev. 37%).
• SNB Minutes (Sept):. Inflation:. The rise in inflation since the beginning of the year has been largely attributable to the increase in oil product prices. There are still no signs of second-round effects, and core inflation has risen only slightly. At the same time, medium-term inflationary pressure is only slightly higher, and the new conditional inflation forecast shows that inflation is within the range consistent with price stability over the entire forecast horizon. FX:. The SNB is also willing to be active in the foreign exchange market as necessary to ensure appropriate monetary conditions. An increased willingness to intervene is no longer necessary in the current environment.

RUSSIA-UKRAINE

• Russian Kremlin said there are no current plans for a conversation between President Putin and US President Trump, but it could be organised quickly if required.
• Russian Envoy Dmitriev said restarting of the Nord Stream is inevitable, IFX reported.

MIDDLE EAST

• Washington will determine the timing of the next attacks on Iran, reported Al Hadath citing sources telling Israel Hayom. Netanyahu said Mojtaba Khamenei has decided to complete the development of the "nuclear bomb detonation system". Iran is having difficulty controlling the "nuclear bomb detonation system".
• Houthi Spokesperson said that it carried out four qualitative military operations in the past 48 hours, using a number of ballistic missiles and drones; will continue their operations deep inside Saudi territory. The first of which targeted the Ministry of Defense headquarter building in the Saudi capital, Riyadh, and, thanks be to Allah, it was a direct hit. The second targeted King Fahd International Airport in Dammam, and caused a disruption of air traffic. The third targeted Aramco Co. in Yanbu, and, thanks be to Allah, it was a direct hit and caused a fire at the targeted site. The fourth operation targeted Abha International Airport, and, thanks be to Allah, it was a direct hit.
• Secretary of Iran's Supreme National Security Council said we are in talks with Gulf states regarding a security structure that could prevent the region from becoming an arena of confrontation, Al Jazeera reported.
• Israeli PM Netanyahu said "I will inform [US President] Trump of what we intend to do, but I will not ask him for the green light to strike Iran", Al Arabiya reported.
• Iran's Major General Rezaei said "We have presented 7 new conditions through mediators; until these conditions are met, Iran will neither open the Strait nor return to negotiations".
• Iran's Major General Rezaei said if the conflict starts again, we will have a broader plan, adding that enemy AI facilities are one of our targets.
• Israeli PM Netanyahu said 90% of the mission has been accomplished in Iran, Channel 7 reported; adds, striking Iranian nuclear facilities is not enough as long as the regime remains in power.
• "Israeli Defense Minister Katz said the army is prepared to carry out preemptive strikes against Iran", Al Araby TV reported.
• Iran's Major General Rezaei said If diplomacy can create this understanding, we prefer diplomacy; but warns that "Continuing the current situation will have strategic consequences; Including that energy markets will not calm down for the next 3 years".
• "The likelihood of a renewed war with Iran is increasing", Israeli Walla reported citing a security official.
• Pakistani opposition groups attack customs in Rimdan border customs post, SNN reported.
• Yemeni Army Spokesperson to provide an update at 13:00BST/08:00ET; "announcing a number of qualitative military operations deep inside Saudi territory, along with a statement regarding the Saudi enemy's threats against Yemeni tribes".
• Saudi Aramco has reportedly instructed staff to evacuate its Dhahran headquarters and work from home, according to sources.
• Saudi-led coalition is intercepting drones in the Riyadh region, Al Arabiya reported.
• "Yemeni drone attack targets Riyadh in Saudi Arabia", Sabereen News reported.
• Sound of an "explosion heard in Basra", Sabereen reported.

NOTABLE NORTH AMERICAN NEWS

• US Department of War announces that Dow (DOW) and Lockheed Martin (LMT) have finalised a 10yr deal relating to the F-35; now seeking USD 7bln in private investment.
• BofA Total Card Spending (week to October 17th) +4.9% Y/Y (prev. +5.1%); lower-income spending growth has consistently outpaced higher-income spending growth over the past several weeks.

NORTH AMERICAN DATA

• US Continuing Jobless Claims (Oct/10) 1728K vs. Exp. 1720K (Prev. 1703K).
• US Jobless Claims 4-week Average (Oct/17) 197.75K vs. Exp. 200K (Prev. 198.75K).
• US Initial Jobless Claims (Oct/17) 194K vs. Exp. 200K (Prev. 200K).

Daily wraps of this kind are less a signal in themselves than a map of which themes are doing the work, and the day's pattern is a textbook one: a capex disappointment at the heart of the AI trade taking down the most crowded equity exposure, with the more tech-light benchmarks outperforming, exactly the rotation signature seen in past episodes where a narrow leadership trade gets questioned at the funding end. The cross-asset coherence is the tell, haven JPY strength alongside firmer core duration and a widening OAT-Bund spread marks this as a flight-to-quality session rather than a rates story, and historically the OAT widening during risk-off has been the part of the tape that persists when the equity leg reverses. The crude bid off Gulf rhetoric fits the familiar sequence in which geopolitical premia build on threats to infrastructure and shipping and then decay unless physical disruption is confirmed, with tanker chartering out of Hormuz and evacuation reports the kind of follow-ons that separate headline risk from supply risk. What distinguishes the session from a routine risk-off day is the layering of a hiking central bank backdrop against haven demand, a combination that in comparable periods has tended to favour the front end of core curves over the long end. The calendar items flagged, the RBNZ decision, the UK Budget, the Fed meeting, are the natural catalysts for whether the move extends or fades, and in past instances wraps showing this degree of thematic concentration have been followed by mean reversion absent fresh news.