Futures Rise As Hynix-Fueled Memory Mania Revives AI Trade Ahead Of Fed, Big Tech; Oil Jumps
Futures Rise As Hynix-Fueled Memory Mania Revives AI Trade Ahead Of Fed, Big Tech; Oil Jumps
US futures are higher, if only in Nasdaq terms, as a memory-chip frenzy sparked by SK Hynix's blowout results revives the AI trade ahead of today's Fed decision and tonight's Alphabet and Microsoft earnings, while oil jumps after the WSJ reported the US told Gulf allies to prepare for a short, intense military campaign against Iran after the midterms; as a result the 10Y yield is back above 5%. As of 8:00am ET, S&P futures are up 0.2% while Nasdaq futures rise 0.6% and Dow futures slip 0.1%, a day after the S&P closed 0.6% higher at 7,723 and the Nasdaq 100 jumped 1.3% for its best day in over a month (even if roughly 60% of S&P names closed lower ). In premaret trading memory names lead the way, with Micron and Sandisk both up about 4%, while Alphabet tops the Mag 7 after a report that OpenAI intends to buy Google's AI chips; on the other side, Robinhood, NXP and Enphase tumble after disappointing earnings. The day's driver is the Fed (and then the hyperscalers): a hold at 3.75%-4.00% is all but certain, so the focus is on the vote split and how hawkish Chair Warsh sounds with a December hike nearly fully priced, while the AI rebound gets its real test after the close . Treasuries are slightly cheaper with yields within a basis point of Tuesday's close as rising oil puts upward pressure on yields; the 2Y is at 4.74%, up for a fourth day. The Bloomberg dollar index is up 0.1%, edging toward a 17-month high, the euro sits near a 17-month low around 1.1125 and the kiwi tumbles after the RBNZ unexpectedly held rates. Brent rises toward $115.6 and WTI trades near $102, European gas hovers near a four-year high, gold slips 0.7% to about $4,030 and copper dips. Bitcoin is up 0.9% and back above $81,000. US economic data slate includes advance goods trade balance, wholesale and retail inventories (8:30am) and the FOMC rate decision (2pm), followed by Chair Warsh's press conference (2:30pm); the Bank of Canada decides at 9:45am, and Treasury sells $30 billion of 2-year FRNs and $75 billion of 17-week bills at 11:30am. In premarket trading, Alphabet is leading gains among Mag 7 stocks as OpenAI intends to buy artificial intelligence computing chips from Google, according to a person familiar with the matter (Nvidia +0.8%, Meta Platforms +0.2%, Tesla +0.2%, Amazon +0.2%, Apple -0.4%, Microsoft -0.3%) Axogen (AXGN) climbs 13% after the provider of medical and surgical instruments boosted its revenue forecast for the full year. Boston Scientific (BSX) falls 6% after the medical-device maker gave an adjusted earnings per share guidance for the full year that fell short of the average analyst estimate. Enphase Energy (ENPH) tumbles 18% after fourth-quarter guidance from the solar energy equipment manufacturer missed the average analyst estimate. Etsy (ETSY) rises 7% after the online retail company reported third-quarter results that beat expectations on key metrics. F5 Inc. (FFIV) drops 7% after the software company’s first-quarter forecast for adjusted earnings came in below expectations. GE Healthcare (GEHC) rises 8% after the maker of X-ray equipment boosted its adjusted earnings per share guidance for the full year and posted results for the third quarter that beat the average analyst estimate. GE Vernova (GEV) is up 2% after boosting its revenue forecast for the full year. The company also agreed to pay $9 billion to acquire Trench Group in a deal that will expand its capacity to supply high-voltage power grid equipment to help meet the surging demand for electricity. Icon (ICLR) jumps 7% after the contract research organization lifted revenue guidance for the year, with midpoint beating the consensus estimate. Intapp (INTA) is down 15% after the software company reported its first-quarter results and gave an outlook for second-quarter revenue that was weaker than expected. LCI Industries (LCII) gains 8% after the RV supplier confirms an unsolicited bid from Monomoy Capital Partners at $101 per share in cash. Lennox International (LII) falls 5% after the heating and cooling systems company cut its adjusted earnings per share forecast for the full year. NXP Semiconductors (NXPI) falls 7% after the chipmaker’s outlook was seen as underwhelming. O-I Glass (OI) slides 11% after the manufacturer of packaging products reduced its full-year adjusted Ebitda guidance. The company also reported a bigger-than-expected loss in the third quarter. PPG Industries (PPG) gains 5% after the paint and coating manufacturing company raised the low end of its adjusted earnings per share forecast for the year. Robinhood (HOOD) drops 7% after the brokerage’s third-quarter revenue and earnings per share missed consensus estimates. Stellantis (STLA) rises 5% as JPMorgan notes a “modest” third-quarter net revenue beat. Ultra Clean (UCTT) gains 16% after the semiconductor equipment company’s third-quarter results were much stronger than expected, even in the face of supply constraints. Vertiv (VRT) surges 16% after third-quarter adjusted earnings per share and a fourth-quarter outlook topped analyst estimates. In other corporate news, OpenAI intends to buy Google's AI chips, according to a person familiar with the matter, which is just what Alphabet bulls needed hours before earnings (and a day after Oracle announced that Google TPUs will be available through Oracle Cloud Infrastructure); Anthropic has picked JPMorgan to run the US retail leg of its IPO, even as Senator Warren is reportedly demanding answers on risks disclosed in its filing. GE Vernova agreed to acquire Trench Group for $9 billion. LCI Industries confirmed an unsolicited bid from Monomoy at $101 a share in cash. EnerSys agreed to acquire Ultralife for $16 a share in cash, sending ULBI up 144% premarket. CoStar will buy Vexcel for about $730 million in cash. TPG is in talks to buy Ark Data Centres at a $5 billion valuation, according to the FT. Biogen now sees full-year adjusted EPS of $12.20 to $13, compared with $12 to $13 previously. Globally, it is the AI trade that is back in the driver's seat: the tech rally led Asian stocks higher, with South Korea's Kospi jumping nearly 7% following blowout results from SK Hynix , Nasdaq-100 futures outperforming S&P 500 and European contracts, and the MSCI Emerging Markets index up 2%, its biggest intraday gain since Aug. 20. SK Hynix reported September-quarter operating profit of 83.3 trillion won ($62.5 billion), above projections, and said memory is sold out until 2029, with shortages expected to last until at least 2030 ; its shares rose more than 10% in Seoul, Samsung gained more than 8% and Kioxia roughly 14%. Meanwhile in Europe, the Stoxx 600 slipped as higher oil proved a drag. The reporting season so far shows that “the underlying trend in the AI trade is still strong,” Elfreda Jonker, a portfolio manager at Alphinity Investment Management, said in a Bloomberg TV interview, adding that AI stock trading has not quite reached a bubble level as investors continue to scrutinize valuations and financing. “We are now entering a phase where central banks in most of EM will have no choice but to hike interest rates. They can’t wait for the Fed to change their mind, especially as markets continue to price in more Fed hikes than the Fed DOTS imply,” said Simon Quijano-Evans, head of strategy at Macro Hive. AI themes are seeing a comeback this week: solid gains amid some deep October drawdowns , with Goldman's AI pair, the Kospi, AI data centers and the SOX leading the bounce off their October lows. Which brings us to the Fed: a hold is the call, with swaps pricing a 9.4% chance of a hike today and 82% for December , per Bloomberg. Treasury positioning has flipped long into the meeting, with JPMorgan's client survey showing the biggest net long since Sept. 8, and as Bloomberg notes, a Warsh who leans harder on inflation turns that crowd around. As we noted in our FOMC preview , the hard part is explaining why the committee is skipping after a hot CPI: JPMorgan's Michael Feroli expects two hawkish dissents from Hammack and Logan (with a risk that Kashkari also dissents) and says "Chair Warsh will have to explain why the committee hiked after a two-tenths core PCE print in September but is now holding after an expected three-tenths outturn." Goldman's economists agree the FOMC appears to have settled on hiking every other meeting: skip in October, hike in December . And while everyone is watching the Fed, it is really the bond market that matters: "The level to watch is the 10-year Treasury at 5.02%. Falling yields have done as much as Hynix to fuel the AI rebound, and tonight decides whether that support holds," writes Bloomberg's Jan-Patrick Barnert in Before the Bell, adding that Alphabet and Microsoft report after the US close, with Amazon following tomorrow, testing whether the AI rebound can spread beyond the chipmakers . JPMorgan's Market Intelligence desk remains Tactically Bullish and notes that parts of the AI trade are already rallying, with DRAM up 10.2% over the last 3 sessions and indicated 4% higher premarket , while Semis are up 6.9% over three sessions. TMT trader Brian Heavey says "we are starting to clear some, not all, of the hurdles" holding back the AI picks and shovels trade, with financing pressure easing after Meta raised $97.5 billion and Broadcom set up a $63 billion SPV for custom chips for a frontier lab; curiously, he adds that GOOG continues to be used as a source of funds after another negative third-party check pointing to a Search miss . Factor specialist Manish Sinha is less enthused by the "junk" rally: the market looks like it is pricing "a dovish Fed, some resolution to geopolitical conflicts, and a renewed AI capex upcycle without incremental funding needs. That feels like a low-probability combination." Over at Goldman, Rich Privorotsky says the desk saw "among the largest two week institutional tech liquidations on record" and that "People have barely begun to re-risk. What we've really seen so far is the abatement of supply, rather than meaningful fresh demand." His verdict: "The hyperscalers are absolutely critical today." The buyside bar is Azure growth in the high 40s% and Google Cloud in the mid 90s%, and Azure "probably needs a guidance raise." Goldman's Tony Pasquariello points out that the momentum basket has had 39 one-day moves of more than 5% this year, the most of any full year since at least 1999 except 2020, all while the S&P "is still going nowhere -- here we are again within a whisker of 7700" (which is also where Goldman's risk appetite indicator broke below zero ). Meanwhile, the FOMC straddle is priced at 62bps, the lowest since April, per Goldman's vol desk, which may be underpricing what comes next . Then there is the oil overhang: the WSJ reported that the US has told several Gulf Arab countries to be prepared for a short, intense military campaign after the midterms , and the US told ships to avoid unnecessary transits through Hormuz. Reuters then reported that Qatari mediators presented Iran with a new draft deal, only for a senior Iranian official to deny that any new proposal was presented. Israel's election, meanwhile, remains deadlocked with neither bloc near a majority, which matters for Iran if tensions re-escalate after the US midterms. In the UK, Chancellor John Healey presents his first budget at 12:30pm London time, with the fiscal buffer expected to be left near £15 billion, about half what he inherited , and a bigger surcharge on bank profits, which Bloomberg reports will be temporary and less than 8%. In France, consumer confidence fell to 80, the lowest since June 2013 , and the OAT-Bund spread widened back to 156bps, per DB. In Europe, the Stoxx 600 falls 0.3% to 641.94 with 305 members down, as investors study a slew of bank earnings from UBS, Standard Chartered and BNP Paribas and prepare for the UK budget; Spain's IBEX underperforms, down 1.4% as Santander weighs, while chip names get a lift from SK Hynix and ASM's higher 2027 target. JPMorgan notes the top baskets include MidEast Escalation Longs, Semis and Power, while the biggest laggards include Defense, AI Dislocation Shorts and Ceasefire plays. Here are the biggest European movers: Valmet shares rise as much as 12% in Helsinki, the most since July 24, after the Finnish industrial technology firm reported third-quarter orders above expectations and signaled progress toward a potential separation of its businesses. Standard Chartered shares gain as much as 5.2% in London, the most in three months, after the Asia-focused lender delivered third-quarter results ahead of expectations and raised its full-year guidance, with analysts highlighting broad-based strength across the group. ASMI shares rise as much as 5% after the Dutch chip-tool maker said next year’s sales will exceed €5.7b, eclipsing previous guidance of €4.6b and arriving sooner than analysts had expected. Telenor shares rise as much as 4.3% after the Norwegian telecom operator affirmed its full-year outlook, reassuring investors after cutting guidance twice earlier this year, with 3Q Ebitda and revenue coming in slightly ahead of estimates. Deutsche Bank shares advanced 3.4%, the second-best performer on the Stoxx 600 Banks Index, after reporting earnings that surpassed estimates and beating US peers on fixed-income trading revenue. Bank of Ireland shares rise as much as 3.3% after the Irish lender reported results and raised its net interest income guidance for the full year, with Davy Research noting potential upside from higher rates going forward. Danone shares rise as much as 2.7% to the highest level since Sept. 9 after the packaged food firm reported pricing-led organic sales growth ahead of expectations, though volumes were weaker; the group reiterated its full-year growth outlook. Heineken rose as much as 2% after reporting third-quarter sales that analysts reacted positively to, citing a volume beat at the group level with Asia Pacific a particular highlight, while Europe was a little weaker. BNP Paribas shares gain as much as 1.8% after the French lender reported a surge in revenue from equities trading and announced a new share buyback. Barclays says lower restructuring charges and a one-off gain from a disposal boosted the print. Adyen shares drop as much as 13% after the payments firm said it will discontinue its medium-term profit guidance, citing a need to retain flexibility for investments. Its FY26 Ebitda margin guidance missed expectations, which analysts say will likely drive downward revisions to earnings estimates, overshadowing better-than-expected processed volumes and revenue growth for 3Q. Symrise slumps as much as 12%, the most in 18 years, as the German chemical manufacturer’s third-quarter print failed to satisfy high expectations after recent results from peers including Givaudan. Analysts generally see consensus in the right place, but see a hit to the company’s momentum from tougher comps ahead. Thyssenkrupp shares fall 11% on Tradegate as the spinoff of the company’s former materials services business takes effect, with TK Accelis beginning trading in Frankfurt today. Acciona Energía shares fall as much as 5.2% after El Confidencial reportedly reported that EQT, Norges and Ardian have decided not to go ahead with their offers to buy the company. GSK shares drop as much as 5.2%, the most since April, after the drugmaker reported lower-than-expected profit guidance, with analysts flagging a miss in its vaccines division. Unilever fell as much as 3.2% after reporting results that analysts said demonstrated why the company wants to focus on emerging markets and HPC, as performance in food and developed markets was weaker. Ryanair shares fall 0.7% after being cut to underperform from neutral at Oddo, with analysts citing less favorable fuel hedging for FY28 and greater price sensitivity of customers. Asian stocks climbed as US tech gains and SK Hynix's strong quarterly results eased concerns about the AI trade, with the MSCI Asia Pacific Index gaining as much as 1.5% as Samsung Electronics and SK Hynix provided the biggest boost. South Korea's Kospi surged 6.6% for its best day since July, after SK Hynix's operating profit rose 632% Y/Y to a record KRW 83.3 trillion and it unveiled plans to return about $45 billion more to shareholders ("KOSPI spiking overnight up 663bps as evidence of offense / risk on seen across markets," as Goldman's Ryan Novak put it). Japan's Nikkei rose 1.1% and briefly climbed back above 64,000, while the Topix lagged. China's CSI 300 added 0.8% (even though, as the FT notes, the index is in a technical bear market, about 20% below its June peak) and the Hang Seng rose 0.2%, with the PBoC continuing its liquidity efforts and the FT reporting the "National team" is buying stocks, although Pop Mart dropped after flagging a big sales decline. Taiwan's Taiex gained 1.5% in early trade. Australia's ASX 200 was flat after hotter-than-expected CPI boosted bets on an RBA hike next week, now more than 80% priced. In India, Jio Platforms surged in its trading debut after raising a record $3.1 billion. Indonesia's rupiah neared a record low and the Philippine peso hit a record low of 64 per dollar. In FX, the Bloomberg Dollar Spot Index is up 0.1%, edging toward a 17-month high touched earlier in the month, while the DXY is flat in a narrow 102.31-102.49 range. The kiwi is the big loser, falling as much as 1.9% to 0.5585 after the RBNZ unexpectedly held the OCR at 2.75% via a 4-3 split when a hike was more than 90% priced. The Aussie is the best G-10 performer after hotter-than-expected CPI, followed by the yen, with USD/JPY at 157.72. EUR/USD is little changed at 1.1126 after falling for a fifth session to a 17-month low of 1.1125 yesterday; Goldman's desk sees the euro staying heavy with a retest of 1.1113. The pound is slightly lower at 1.3295 ahead of the budget, with overnight options implying a move of about 101 pips in either direction (the budget may be "uneventful", but someone is paying up just in case). The Canadian dollar looks ahead to the BoC, which is expected to hike to 2.50%. In rates, Treasuries are off session lows and remain slightly cheaper on the day, outperforming European bonds but broadly steady ahead of the Fed , with yields within a basis point of Tuesday's close and the 10Y back above 5% at 5.01%. The 2Y is at 4.74%, rising for a fourth straight day. Rising oil prices put upside pressure on yields as traders weigh potential US strikes on Iran after the midterms. Just 3bps of tightening is priced for today, while a 25bp hike is almost fully priced for December, which leaves newly-formed long positions vulnerable to a hawkish Warsh. European bonds open lower, led by the short end, as oil and natural gas prices rise on the Iran report, with periphery debt underperforming : the Bund yield is up 2bps at 3.38%, the French 10Y is up 4bps at 4.95% and the BTP-Bund spread widens 1bp to 117bps, as traders slightly boost ECB hike bets ahead of tomorrow's meeting. Germany's 10-year auction drew a bid-to-cover of just 1.1. Gilts are slightly lower, with the 10Y up 2bps at 5.37%, ahead of the budget. Elsewhere, Australian 10Y yields rose 5.6bps to 5.21% and Japan's 40-year yield rose 7bps to 4.015%. The IG dollar slate includes only a couple of deals so far, after seven names priced $6.2 billion Tuesday; the calendar is expected to pick up Thursday, when the Treasury auction cycle concludes with $44 billion of 7-year notes. Today Treasury sells $30 billion of 2-year FRNs and $75 billion of 17-week bills. Goldman's govt trading desk sees the 10Y in a 4.80%-5.30% range, with CTAs still short, hedge funds light and real money moving from underweight duration to "less underweight." Goldman's rates desk expects a "hawkish hold" and calls the probability of a hike today "nothing short of unfathomable." In commodities, oil climbs with Brent futures trading above $115 a barrel on the report the US may resume military strikes on Iran after next week's midterms , having earlier topped $116 before paring on the Qatari draft deal report; WTI is up about 2% near $102 after trading in a $99.75-$102.24 range. Oil had fallen yesterday, with Brent down 1.67% and WTI down 1.83% to $99.90, amid tentative diplomatic hopes, while refiners suffered their worst day since Liberation Day . Dutch TTF trades near €97-98/MWh, close to a four-year high, after QatarEnergy declared LNG force majeure on Edison and some South Asian clients until December. Private inventory data showed a 2.0 million barrel crude draw versus an expected build. Precious metals are lower: spot gold is down 0.7% around $4,030 and silver trades near $53.9, while copper trades around $14,450/t. US economic data slate includes advance goods trade balance, wholesale inventories and retail inventories (8:30am), and the FOMC rate decision (2pm), followed by Chair Warsh's press conference (2:30pm). Treasury auctions include $30 billion of 2-year FRNs and $75 billion of 17-week bills (11:30am). Earnings before the bell include Vertiv, GE Vernova, ADP, Amphenol, Boston Scientific, Biogen, GE HealthCare and Phillips 66; after the close, Alphabet, Microsoft, ServiceNow, KLA, Chipotle, Ford, FedEx, eBay and T-Mobile report. Market Snapshot Top Overnight News The U.S. has told several Gulf Arab countries to be prepared for a short, intense military campaign after the U.S. midterm elections, people briefed on the conversations said. WSJ Qatari mediators presented Iran with a new draft deal on Sunday to end the war, which Tehran is considering and expected to send a response to by the end of the week, an official briefed on the negotiations says. RTRS A senior Iranian official later said Qatar has not presented a new proposal to end hostilities between Iran and the US and that Tehran's policy of showing no flexibility over the nuclear issue remains unchanged. RTRS The US told ships to avoid unnecessary transits through the Strait of Hormuz. BBG The United Nations nuclear watchdog said it hasn’t detected any efforts by Iran to rebuild nuclear facilities damaged in US and Israeli strikes over the past two years, even as Tehran continues to block inspectors’ access to most of its atomic sites. BBG Israeli PM Benjamin Netanyahu edged ahead of opposition leader Gadi Eisenkot with more than 70% of the votes counted in the country’s tight election. Neither currently has a clear path to forming a government. The shekel and Israeli equities dropped. BBG Nasdaq futures climbed after SK Hynix’s blowout earnings and plans to return about $45 billion more to shareholders reignited the AI trade. Alphabet and Microsoft results and the Fed are next in focus. BBG The Reserve Bank of New Zealand held interest rates steady Wednesday, surprising financial markets that had priced in a near-certain hike, but signaled that further increases were likely. WSJ Beijing is rushing to shore up its struggling stock markets as China’s AI trade goes into reverse amid slowing economic momentum and a lack of large-scale fiscal stimulus. The CSI 300 index of Shanghai- and Shenzhen-listed stocks has entered a technical bear market, down 10% year to date and about 20% from a June peak. FT TPG is in talks to acquire UK group Ark Data Centres from Elliott Management at a valuation of about $5bn, in what would be one of the sector’s biggest deals of the year. FT Argentina’s government said Flávio Bolsonaro entered the country on Tuesday evening and then flew to Ecuador, countering media reports he had reached Miami. The US said it will issue entry visas to him and his family. BBG Being a close partner of the US no longer means funding its deficit. Countries and regions most aligned with the US bought the lowest amount of Treasuries in the first eight months of the year since 2021, down more than 60% from 2025. BBG OpenAI intends to buy Google's AI chips, according to a person familiar with the matter; separately, Oracle said Google TPUs will be available through Oracle Cloud Infrastructure. BBG Anthropic has picked JPMorgan to run the US retail leg of its IPO. BBG GE Vernova agreed to acquire Trench Group for $9 billion. BBG The UK bank tax hike is said to be temporary, with the surcharge less than 8%, according to people familiar with Chancellor Healey's plans. BBG UBS CEO Sergio Ermotti issued a thinly-veiled threat to relocate the bank amid Switzerland's plans to make it hold billions of dollars in extra capital. BBG Australia's trimmed mean CPI rose 1.0% q/q in Q3, lifting annual core inflation to 3.7%; a hike is now more than 80% priced for next week's RBA meeting. DB US Senator Warren (D) reportedly raised concerns over risks disclosed in Anthropic's IPO filings and is demanding answers to a series of questions ahead of its planned listing: WSJ US Transportation Secretary Duffy is to announce approval of a licence application for a USD 8.2bln deepwater LNG export port at Port Houston during a visit to Texas on Wednesday: Punchbowl South Korea fined Google (GOOGL) and Apple (AAPL) KRW 63.7bln for requiring in-app payments. Newsquawk Goldman expects the Fed to skip in October and hike in December, saying the tightening in financial conditions is "only a bit more than is usually associated with one rate hike." GIR JPMorgan's Feroli expects a hold with two hawkish dissents from Hammack and Logan, and sees a risk that Kashkari also dissents. JPM A more detailed look at global markets courtesy of Newsquawk APAC stocks were mostly higher as the region followed suit to the gains on Wall Street, where the Nasdaq outperformed as tech stocks continued to shrug off recent AI-related concerns, while participants digested SK Hynix earnings and awaited the looming risk events, including central bank decisions. ASX 200 pared initial gains and returned to flat territory as hotter inflation data and hawkish RBA rhetoric boosted rate hike bets for next week's RBA meeting. Nikkei 225 briefly climbed back above the 64,000 level, with the index led higher by tech strength. KOSPI outperformed on the tech momentum, which was also facilitated by SK Hynix shares rallying after its operating profit rose 632% Y/Y to a record KRW 83.3tln, while revenue rose 328% Y/Y to surpass KRW 100tln for the first time, and it also plans to return about KRW 100tln to shareholders this year. Hang Seng and Shanghai Comp conformed to the positive mood after the PBoC continued with its firm liquidity efforts, although the upside was capped amid a slew of earnings results and with Pop Mart flagging as much as a 50% drop in Q3 revenue. Top Asian News China rushes to shore up struggling markets with the ‘National team’ of funds and brokers buying stocks as investors turn away from AI trade, according to FT. Taiwan Central Bank Governor affirmed that Taiwan has the capacity to establish a sovereign wealth fund and said the relative weakness of the TWD this year is due to foreign investors taking profits on Taiwan stocks. European bourses (STOXX 600 -0.2%) are lower across the board, with underperformance in Spain’s IBEX (-1.4%) as the heavy weighting of Santander hits the index. Little upside was seen following a geopolitical report from Reuters, which stated that Qatari mediators presented Iran with a new draft deal in Tehran on Sunday, with Iran considering the proposal and a response expected by the end of the week. However, this report was pushed back from a senior Iranian official, saying that Qatar has not presented a new proposal to end hostilities. A busy morning for European banking names. Starting in Switzerland, UBS (-2.0%) reported mixed results. Revenue and client inflows into the wealth unit beat estimates while net income and IB pretax income missed. The Swiss bank also declined to say whether it would expand its USD 3bln share buyback programme. BNP Paribas (-0.2%) had a more positive report, with a strong beat in its equity trading revenue, and announced a EUR 1.3bln share buyback for next month. Over in Spain, Santander’s (-3.5%) results came in broadly in line with estimates, and the bank said it is comfortably on track to meet 2026 targets. Germany’s Deutsche Bank (+3.2%) posted FIC Sales & Trading revenue that fell 3% in the period but outperformed its US peers, which is seemingly supporting shares this morning. Net income and pretax profit also beat consensus. To wrap up the banking earnings, Standard Chartered (+3.3%) reported pretax profit that beat estimates, raised its operating income growth forecast above a previous range of 5% to 7%, and now expects RoTE to reach about 14% in 2026, up from more than 12%. Other key earnings include: Mercedes-Benz +0.6%, revenue misses while adj. EBIT beat but points to continued growth in Europe and the US, as well as record EV sales; BASF -0.8%, despite lifting its 2026 EBITDA before special items guidance; Equinor -0.4%, despite adj. operating income beating estimates and raising its 2026 production growth guidance; Heineken +0.9%, total volume tops expectations and reiterates its guidance. US equity futures are mixed, with outperformance in the NQ given the upbeat SK Hynix earnings. Another busy earnings slate today, but focus will be after-hours when Alphabet and Microsoft report. SK Hynix (000660 KS) - Q3 2026 (KRW): Net Income 39.5tln (exp. 55.4tln), Operating Profit 83.3tln (exp. 76.7tln), Revenue 104.6tln (exp. 98.3tln). Announces shareholder return of c. KRW 100tln in 2026, with cash dividend of more than KRW 30tln and decides on a KRW 20tln share buyback. Shares rose 10.9% in Asia trade. Top European News UK confirmed it will be removing the standing charge on gas bills and Ofgem will be directed to do this in 2027, or as soon as possible. UK Chancellor Healey prepares to slash household gas bills by GBP 50, according to Telegraph. UK Chancellor Healey is to reverse cuts to cash ISA allowances, and he will use the Budget to maintain the tax-free limit at GBP 20,000 a year, reversing a plan by his predecessor, according to FT. UK Chancellor Healey is set to fund the Defence Investment Plan in full during the Budget , The Sun's Elsom reported citing sources. FX DXY is relatively flat this morning in a narrow 102.31-102.49 range (vs yesterday’s 101.99-102.40 range) ahead of the FOMC policy announcement (at 18:00 GMT) and press conference later today. The Fed is widely expected to hold rates at 3.75-4.00% in October despite hotter-than-expected inflation, as softer jobs data and dovish-leaning commentary from key officials support a pause, although a 25bps hike is widely anticipated in December and some policymakers may dissent in favour of immediate tightening (full Newsquawk preview available in the Research Suite). Analysts at ING also suggest that the key threat in recent weeks has been the AI woes, although earnings from large names in the space are watering down those fears, with SK Hynix reporting strong numbers overnight. GBP slightly subdued, as it looks ahead to the UK Autumn Budget. On the latter, the Budget is expected to be relatively uneventful, with Chancellor Healey likely to maintain fiscal headroom of around GBP 15bln (prev. GBP 23.6bln), potentially raise the bank surcharge and announce additional energy and defence spending, while higher Gilt issuance and persistent fiscal concerns pose downside risks to UK assets, although a further reduction in long-end issuance could cushion the market reaction (full Newsquawk Primer available). GBP/USD trades in a 1.3272-1.3312 range with the next downside level being the Friday 16th low at 1.3262. For the EUR , Dutch TTF prices remain near EUR 100/MWh as the ECB tomorrow is widely expected to hold rates at 2.50% and maintain its data-dependent, meeting-by-meeting approach, as French fiscal and political uncertainty alongside tighter financial conditions support a pause, despite elevated energy prices and hotter-than-expected inflation, with markets still pricing further tightening by year-end. EUR/USD resides in a narrow 1.1113-1.1132 range after finding some support not far from its 200 WMA (1.1106). NZD slumped overnight as the RBNZ unexpectedly held the Official Cash Rate at 2.75% (exp. 25bps hike to 3.00%) via a 4-3 split decision citing global uncertainty, although Governor Breman reiterated that tighter policy will likely be required depending on the economy. AUD outperforms after Australian inflation accelerated more than expected in September, with CPI up 1.3% Q/Q (exp. 1.3%; prev. 0.6%) and 4.3% Y/Y in September (exp. 4.2%; prev. 4.0%), while the RBA’s trimmed mean gauge rose 3.7% Y/Y (exp. 3.6%; prev. 3.6%), raising expectations of a fifth rate hike at its 3rd November meeting. CAD looks ahead to the BoC announcement later today (at 13:45 GMT), where the central bank is expected to hike rates by 25bps, with money markets pricing an 84% chance of an increase, as elevated energy prices, rising inflation expectations and hawkish commentary from Governor Macklem support tightening, despite weakening employment and headline CPI undershooting forecasts. Central Banks RBNZ kept the OCR unchanged at 2.75% (exp. 25bps hike) with the decision made by a 4-3 vote split (Breman, Hansen, Gai and Williams voted for a hold, while Conway, Gourley and Silk voted for a hike). RBNZ said members agreed on the inflation outlook but differed in their assessment of risks and the timing of the monetary policy response, while the committee agreed that tighter monetary policy is likely to be required, but remains dependent on the economic outlook. RBNZ also stated there is a risk that inflation becomes entrenched before conventional inflation expectations measures respond, despite the previous two OCR hikes, and the committee remains focused on the medium-term inflation outlook. RBNZ Governor Breman said during the post-meeting press conference that they agreed tighter policy will likely be required, conditional on the economy, while she added that the committee discussed a decline in NZD, which if sustained could add to imported inflation. Breman also stated that further tightening might be needed, even into restrictive territory and that they are likely to implement further rate increases at upcoming meetings. Furthermore, they discussed whether the OCR path will need to be lifted, and she commented that it is likely the OCR is to rise higher than the previous path. RBA Governor Bullock said a key question is whether monetary policy tightening so far will be sufficient to return inflation to target within a reasonable timeframe, while she added they remain committed to the mandate of delivering price stability and full employment. Bullock said she recognises that higher interest rates can be challenging, but cannot allow elevated inflation to persist, and that oil and related prices have risen sharply again and will contribute materially to inflation, with inflation likely to exceed the August base-case forecast. Furthermore, she said upside inflation risks are materialising and that inflation is far too high. Fixed Income Another relatively contained morning for USTs . Some two-way action on geopolitical updates, which resulted in the 105-26 to 106-03 confines USTs currently reside in, but the benchmark is near enough flat in that as it stands. The US day is dominated by the Fed , though with over a 90% implied probability of an unchanged outcome the risks are skewed to an uneventful announcement. Thereafter, scrutiny will be on the vote split, while Chair Warsh is unlikely to give too much away given his known disdain for forward guidance. Bunds are lower by around 15 ticks, but around 10 clear of a 121.76 base. Specifics for the bloc are light. Action has been a function of energy moves across the morning as crude and Dutch TTF tick higher once again, while we count down to Thursday’s ECB . Gilts are in line with EGBs into the UK Budget . They are holding just off an 84.72 WTD base. For the Budget, the expectation is a relatively uneventful affair; however, the risks are to pressure in Gilts and upside in yields from the speech and OBR forecasts, while the DMO remit could then serve to offset this, if there is as expected a further skew away from the long end. Commodities WTI Dec’26 and Brent Jan’27 are firmer, with the former in a USD 99.75-102.24/bbl range (vs yesterday’s USD 99.44-102.82/bbl range) and the latter in a current USD 109.62-111.77/bbl range (vs yesterday’s USD 109.02-111.91/bbl range). Downticks this morning were seen after Reuters sources reported that Qatari mediators presented Iran with a new draft deal on Sunday, with Tehran expected to respond by the end of the week; the proposal includes a seven-day timeline for daily confidence-building measures by both sides, potentially beginning early next week, with several countries acting as guarantors. However, more recently, this was pushed back from a senior Iranian official, reportedly saying that Qatar has not presented a new proposal to end hostilities. Further, overnight it was reported that the US told several Gulf Arab countries to be prepared for a short, intense military campaign after the US midterm elections, according to WSJ sources. Elsewhere, uncertainty remains in Israel following an inconclusive vote, as Israeli PM Netanyahu’s bloc and the opposition camp both failed to secure a majority (largely as expected). Final results are expected in the coming days. Dutch TTF is on a firmer footing and meanders in a current intraday range between EUR 96.75/MWh and 98.25/MWh at the time of writing, as Western storage woes continue to bite ahead of winter and with QatarEnergy yesterday declaring an LNG force majeure on Edison and some South Asian clients till December. Elsewhere, US Energy Secretary Wright said the suspension of sanctions on Russia was temporary and that the US was ramping up LNG exports, while he added that Russia could not currently export diesel and that flows of refined products through the Strait of Hormuz had increased. Wright also commented that the Iran war has come at a cost and that the war with Iran is unfortunate timing. Metals are lower across the board despite a relatively stable USD, but amid the rebound in energy prices ahead of the FOMC. Spot gold is subdued in a USD 4,028-4,070/oz range (vs yesterday’s USD 3,989-4,066/oz range). Spot silver is lower and resides in a USD 53.69-54.53/oz range (vs yesterday’s USD 52.66-54.55/oz range). 3M LME copper trades in a USD 14,448.43-14,503.00/t range at the time of writing. US Weekly Private Energy Inventory Data (bbls): Crude -2.0mln (exp. +0.5mln), Gasoline +2.4mln (exp. -1.3mln), Distillate +0.4mln (exp. -0.9mln), Cushing -0.5mln. US President Trump said he is terminating Biden's methane regulations. Trade/Tariffs Canadian official said limited progress was made in US trade talks, while it was separately reported that Canada and the UAE signed an economic partnership agreement. Geopolitics: Middle East Qatari mediators reportedly presented Iran with a new draft agreement on Sunday aimed at ending the conflict with the US and Israel, with Tehran expected to respond by the end of the week. The proposal outlines a seven-day timeline of daily confidence-building measures addressing both sides' concerns, potentially beginning early next week, with several countries acting as guarantors, according to Reuters citing an official briefed on the negotiations. However, according to Reuters citing a senior Iranian official, Qatar has not presented a new proposal to end hostilities between Iran and the US and that Tehran's policy of showing no flexibility over the nuclear issue remains unchanged. US President Trump replied anything is possible when asked if there will be strikes against Iran after the election. US told several Gulf Arab countries to be prepared for a short, intense military campaign after the US midterm elections, according to people briefed on the conversations cited by WSJ. Iranian Foreign Minister Araghchi said sustainable regional security requires collective responsibility, mutual respect for sovereignty and cooperation among regional countries without foreign military intervention . In later comments, Araghchi said the destructive consequences of any military adventurism provoked by Israel in the Persian Gulf region for international markets remain a serious concern for gas exporting and gas consuming countries. Iranian source denied a report of a Trump-backed plan being delivered via Pakistan's army chief, stating this was completely false and that no new proposal was presented to Iran. The source added that Tehran's conditions are clear, and without a convincing response and tangible implementation, the Strait of Hormuz won't reopen. Israeli PM Netanyahu and rival Eisenkot both claim a mandate to lead the country following Tuesday's inconclusive election . With 48.4% of votes counted, Netanyahu's bloc is projected to secure 55 seats, Eisenkot's bloc 50 seats and Arab parties 15 seats, according to Israeli media. Seat projections remain subject to change, with definitive results expected by Thursday. Geopolitics: Ukraine US President Trump said there will be a meeting with Russian President Putin and Ukrainian President Zelensky set up soon, while Trump also stated there will be a meeting on disarmament during his Asia trip. Russian Deputy Foreign Minister Ryabkov said Russia remains in the preparatory phase for negotiations on Ukraine , TASS reported. Ukrainian President Zelensky said Ukraine will not attack Russian ships carrying diesel for the US. Furthermore, he said that Western powers could eventually discuss Russia's demands for security guarantees, but insists Ukraine's own security needs must be addressed first. Crypto Bitcoin currently trades at the upper end of its USD 80.49k-81.69k range, as it continues to rebound from last week's trough of USD 79.11k. US Event Calendar 7:00am: Oct. 23 MBA Mortgage Applications, actual 3.4%, prior -5.3% 8:30am: Sept. Advance Goods Trade Balance, est. -$130.2b, prior -$132.6b, revised prior -$132.1b 8:30am: Sept. Advance Goods Exports MoM SA, est. 1.3%, prior 1.9%, revised prior 2.1% 8:30am: Sept. P Wholesale Inventories MoM, est. 0.5%, prior 0.5% 8:30am: Sept. Retail Inventories MoM, est. 0.3%, prior 0.3%, revised prior 0.2% 11:30am: US to sell $30 billion 2-year FRN 11:30am: US to sell $75 billion 17-week bills 2:00pm: FOMC Rate Decision (Upper Bound), est. 4.00%, prior 4.00% 2:00pm: FOMC Rate Decision (Lower Bound), est. 3.75%, prior 3.75% 2:00pm: Fed Interest on Reserve Balances Rate, est. 3.90%, prior 3.90% 2:00pm: Fed Reverse Repo Rate, est. 3.75%, prior 3.75% Central Bank Speakers 9:45am: Bank of Canada Rate Decision, est. 2.50%, prior 2.25%; Governor Macklem speaks afterward 2:30pm: Fed Chair Warsh holds post-FOMC press conference DB's Jim Reid concludes the overnight wrap Ahead of a busy day today that includes the Fed and BoC decisions and earnings from Microsoft and Alphabet after the US close, markets remained resilient, with the Nasdaq (+1.18%) and S&P 500 (+0.60%) advancing for a second day. The tech optimism has continued in Asia overnight, also supported by blowout results from SK Hynix, which is surging by +9.8% as I type. Yesterday’s gains were also helped by a pullback in oil as Brent fell -1.67% to $113.88/bbl. However, Brent is +1.48% higher again overnight as the WSJ reported the Trump administration warning Gulf states to be prepared for a new operation against Iran after the midterms. Oil markets have also been watching the outcome of yesterday’s election in Israel, which remains too close to call with preliminary results trickling in. Before we go through yesterday’s moves, let’s start with the main event of this week, which is the Fed decision at 6pm LDN today. As a reminder, our economists expect the Fed to leave rates unchanged, and futures are pricing less than a 10% chance of a hike. The interest will therefore be in Chair Warsh’s press conference and how the Fed balances still-elevated inflation and solid growth against the recent tightening in financial conditions. Our economists expect the statement itself to contain only limited changes, although dissents to a hold are possible. The broader message is likely to be hawkish: our economists think recent inflation data support the case for further tightening over time and foresee 50bp of further hikes across December and March. They also think Warsh is likely to make clear today that tighter financial conditions are not a substitute for rate hikes. You can find their full preview here. Ahead of that Fed decision, US Treasury yields edged slightly higher yesterday, led by the 2yr yield (+1.9bps). The 10yr rose +1.0bps to 5.00% and is another +2.3bps higher overnight. The marginal rise came as investors digested a large batch of economic data, which was on balance firmer than expected. Most notably, the Conference Board consumer confidence index rebounded sharply in October to 91.7 (vs 81.0), reversing the decline that it had seen since June amid the rise in energy prices. And while durable goods orders for September were a smidgen below expectations (+1.8% vs +1.9% expected), under the fold we saw some signs of strength, including new orders for computers and related products rising +3% mom. This also put their annual growth at +26.7% yoy, the highest since 1997. Finally, on the labour side, ADP payrolls showed US private job gains at a still solid average of 16.75k/week in the 4 weeks to October 10. The strong data yesterday also added to the resilience of US equities, which were already advancing amidst a continuing buoyant tech mood. Indeed, the Philly semiconductor index (+3.60%) posted a big gain, while the Nasdaq (+1.18%) and the Mag-7 (+0.94%) also marched higher. Notable tech moves came from CoreWeave (+7.94%), Nvidia (+0.90%), and Broadcom (+4.00%). European equities also continued this week’s advance, with the Stoxx 600 (+0.47%), DAX (+0.71%), and CAC 40 (+0.51%) all gaining. Only the FTSE 100 (-0.75%) underperformed, dragged by a fall in HSBC (-5.42%) after its Q3 earnings fell short of estimates. The true test of the tech-rally will be today, with Alphabet and Microsoft amongst those reporting their earnings. There were a lot of other busy developments going on yesterday, including Israel’s election. This saw the highest turnout since 1999 at 77.7%, with the news of historically high turnout helping the shekel rise by +0.83% against the dollar yesterday as this was seen as potentially reducing the chances of Prime Minister Netanyahu retaining power. However, two exit polls put the Netanyahu-aligned coalition and the opposition bloc led by Gadi Eizenkot neck and neck at around 51 seats, well short of the 61 seats needed for a majority, while another has given Netanyahu’s coalition a marginal lead. The full seat distribution, including which parties reach the 3.25% entry barrier, may take a day or two to settle. Both Netanyahu and Eisenkot told their supporters overnight they would be able to form ruling coalitions. However, as I type, prediction markets see no successful government formation as the most likely outcome, which could then lead to a new election. Netanyahu is seen as slightly favoured to get the first mandate to form a government as his bloc leads in the partial results this morning. From a global macro perspective, Israel’s election has been seen as potentially important in terms of what it means on Iran. With Netanyahu having maintained that regime change in Iran is ultimately necessary, the distinction between Israel’s political blocs could matter considerably if tensions re-escalate after the US midterms. The risks of re-escalation are in focus again as the WSJ reported last night that the US has told several Gulf Arab countries to be prepared for a short, intense military campaign after the midterm elections. These overnight developments have pushed Brent crude +1.50% higher at $115.59/bbl this morning. Prior to that, Brent had declined by -1.67% yesterday, while WTI fell -1.83% to $99.90/bbl, amid tentative diplomatic hopes. Reported comments by Iran’s Supreme Leader Mojtaba Khamenei reiterated Iran’s conditions for ending the war, as he aimed for “ending the war and the ‘neither war nor peace’ situation”. This follows a regional push to avoid renewed escalation, including Monday’s news of Iran’s meeting with Saudi Arabia, Türkiye and Pakistan. In another positive oil market sign, we heard Bloomberg report that Saudi Aramco was offering spot oil cargoes to European buyers for both this month and next. The overnight news has also left European natural gas futures (+0.84%) on course for a new post-2022 high this morning. They had retreated by -0.64% yesterday, amid news that Russia’s president Putin spoke with Finland’s president and Norway’s Prime Minister, his first call with Western European leaders in over a year. Additionally, a localised temporary ceasefire in Southern Ukraine took effect, brokered by Melania Trump and the Pope. European rates saw muted moves yesterday ahead of tomorrow’s ECB decision. The 10yr bund yield fell -0.8bps, but yields on 10yr gilts (+0.2bps), BTPs (+0.8bps) and OATs (+2.2bps) edged higher. The OAT-bund spread widened back by +2.9bps to 156bps. That came as France’s consumer confidence fell to 80 in October (vs. 85 expected), the lowest reading since June 2013 and the joint lowest since the start of the data in the 1970s. This follows the recent protests in France, although it is worth noting that Euro Area consumer confidence also deteriorated in October. Staying in Europe, we saw a notable milestone in the FX space as the euro lost ground against the dollar (-0.44%) for a fifth session in a row, falling to a 17-month low of 1.1125. The euro’s continued slide came despite lower oil prices and stronger European equities yesterday, as well as stabilisation in the OAT-Bund spread since last Friday. Positioning factors may be at play, though concerns over the European growth story may also be playing a part. Indeed, our economists’ euro area surprise indicator has recently turned negative for the first time since June, while yesterday’s Bank Lending Survey from the ECB showed credit conditions at their tightest since 2023 (see our economists’ BLS reaction here). Asian equity markets are trading broadly higher this morning, building on Wall Street’s overnight gains amid renewed enthusiasm around AI-related stocks. Across the region, South Korea’s KOSPI (+6.80%) is surging after chipmaker SK Hynix (+9.84%) reported blockbuster third-quarter results, with net profit tripling from a year earlier. This has helped push US Nasdaq futures +0.35% higher. Japan’s Nikkei (+1.11%) is also extending its recent rally, while gains elsewhere are more modest, with the Hang Seng (+0.36%), CSI 300 (+0.76%), and Shanghai Composite (+0.81%) all in positive territory. The S&P/ASX 200 (-0.03%) is lagging regional peers, as stronger-than-expected inflation data reinforced expectations of another RBA rate hike next week. That data showed Australia’s headline CPI rise by +1.3% q/q in Q3 (vs. 1.2% expected) after +0.6% in Q2. The closely watched trimmed mean measure rose +1.0% q/q, lifting annual core inflation to 3.7% (vs. 3.6% expected and previous). And in September alone, annual headline inflation also edged up to 4.3% y/y from 4.0% (vs. 4.2% expected). Meanwhile, RBA Governor Bullock said today that “Some of the international and domestic upside risks to inflation have materialized or are materializing”. Markets have increased expectations for further tightening in response, with a hike now over 80% priced for next week’s RBA meeting. 10yr Aussie yields are +5.6bps higher at 5.21%. In New Zealand, the Reserve Bank of New Zealand (RBNZ) left its official cash rate unchanged at 2.75% in a narrow 4-3 decision, surprising markets that had widely expected a 25bp increase. The decision contrasted with market pricing and economist expectations, with a hike having been more than 90% priced ahead of the meeting. While policymakers cited easing headline inflation and a patchy economic recovery, they also signaled that additional tightening may still be required to ensure inflation returns sustainably to 2%. The unexpected pause has weighed on the New Zealand dollar, which is trading -1.2% lower against the US dollar as I type. Finally, to the day ahead now, in addition to the Fed’s decision, we’ll also get the BoC’s decision later this afternoon. Data releases include US September advance goods trade balance, retail inventories, France Q3 total jobseekers, Italy August industrial sales, September PPI. Notable earnings include Alphabet and Microsoft. Otherwise today the UK’s Chancellor Healey will present his first autumn budget under the new Labour administration.
Tyler Durden
Wed, 10/28/2026 - 08:11