Hawkish Schnabel comments weighed on European markets as equity futures point to a softer open - Newsquawk EU Market Open

• EUR/USD gained, while DAX and Bund futures fell as ECB's Schnabel said she is 'comfortable' on bets that next move will be a hike.
• APAC stocks were mixed following a lack of major macro drivers over the weekend and with markets tentative ahead of this week's risk events, while participants also digested data, including the latest Chinese trade figures.
• USD/JPY briefly retreated beneath the 155.00 handle amid a softer buck and as the latest wages data from Japan supported the case for a December BoJ rate hike, although Q3 GDP revisions were disappointing and showed a wider-than-feared contraction.
• Chinese trade data showed a stronger-than-expected recovery in Exports, but Imports disappointed.
• European equity futures indicate a slightly softer cash market open with Euro Stoxx 50 futures down 0.2% after the cash market closed with gains of 0.1% on Friday.
• Looking ahead, highlights include German Industrial Output, EZ Sentix, Comments from ECB’s Cipollone, BoE’s Taylor & Lombardelli, Supply from the US.

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US TRADE

EQUITIES

• US stocks were mixed on Friday but ultimately finished the session with an upward bias, as the SPX, NDX and DJI closed in the green, but RUT lagged and finished lower. Sectors were also mixed, in which Communication, Tech and Consumer Discretionary led the gains, although Utilities, Health Care and Industrials underperformed, while focus was largely on US data, in which PCE leaned softer than expected in September, while UoM beat forecasts with declining inflation expectations. Nonetheless, the data had little impact on Fed expectations.
• SPX +0.19% at 6,870, NDX +0.43% at 25,692, DJI +0.22% at 47,955, RUT -0.38% at 2,521.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said we'll work it out, when asked if he would restart trade talks with Canada, while it was separately reported that the Canadian PM’s office said PM Carney agreed with US President Trump and Mexican President Sheinbaum to keep working together on the trade deal.
• US Treasury Secretary Bessent said during a constructive call on Friday with Chinese VP He Lifeng and USTR Greer that they discussed the ongoing implementation of the Busan arrangement between Presidents Trump and Xi, which is going well, while they also reaffirmed US commitment to continued engagement with China.
• USTR said China’s trade commitments are going in the right direction and that they are seen to be in compliance so far.
• French President Macron warned that the EU could hit China with tariffs if nothing is done to reduce its widening trade deficit with the EU, according to Les Echos.
• EU is to expand the carbon border tax to garden tools and washing machines, as it seeks to close loopholes in the law to prevent carbon-intensive imports, according to FT.
• US Embassy in India said US Under Secretary of State for Political Affairs Allison Hooker will visit New Delhi and Bengaluru, India on December 7th-11th.

NOTABLE HEADLINES

• US President Trump said the Netflix (NFLX)-Warner Brothers (WBD) deal has to go through the process, while he will be involved in the decision and said it represents a big market share, which could be a problem.
• US President Trump signed a Presidential Memorandum directing the HHS to fast-track a comprehensive evaluation of the vaccine schedules from other countries around the world, and better align the US vaccine schedule.
• White House said it will establish food supply chain security task forces to protect competition.
• US Treasury Secretary Bessent said the US will finish the year with 3% GDP growth.

APAC TRADE

EQUITIES

• APAC stocks were mixed following a lack of major macro drivers over the weekend and with markets tentative ahead of this week's risk events, while participants also digested data including the latest Chinese trade figures.
• ASX 200 was subdued amid somewhat mixed trade data from Australia's largest trading partner and as the RBA kick-started its 2-day policy meeting.
• Nikkei 225 traded indecisively following a slew of mixed data from Japan, including firmer-than-expected Labour Cash Earnings and disappointing revisions to Q3 GDP, while sentiment was also clouded by geopolitical tensions after Japan accused Chinese fighter jets of aiming military radar at Japan's Self-Defence Force jets.
• Hang Seng and Shanghai Comp were mixed with the Hong Kong benchmark underperforming as gains in tech were overshadowed by losses in the big banks, while participants also digested the latest Chinese trade data, which showed a stronger-than-expected recovery in Exports but Imports disappointed.
• US equity futures gradually edged higher but with the upside limited ahead of this week's main risk events and central bank rate decisions, including the FOMC on Wednesday.
• European equity futures indicate a slightly softer cash market open with Euro Stoxx 50 futures down 0.2% after the cash market closed with gains of 0.1% on Friday. DAX futures dipped this morning after ECB's Schnabel said she is 'comfortable' on bets that next move will be a hike.

FX

• DXY marginally softened against its peers ahead of the FOMC mid-week, where the Fed is widely anticipated to cut rates, while weekend newsflow from the US was relatively quiet, although there were comments from US President Trump who said that they will work it out when asked if he would restart trade talks with Canada.
• EUR/USD eked marginal gains in quiet trade and with recent comments from ECB’s Rehn providing very little to shift the dial after he stated that they must be aware of upside and downside inflation risks, while he added that inflation risk is slightly tilted to the downside in the medium-term and that they should not impose unnecessary bars or floors on policy. The pair later gained as ECB's Schnabel said she is 'comfortable' on bets that the next move will be a hike.
• GBP/USD was little changed in the absence of any major pertinent drivers, with very little newsflow from the UK, aside from reports that former Deputy PM Angela Rayner will return to the cabinet after resigning in September.
• USD/JPY briefly retreated beneath the 155.00 handle amid a softer buck and as the latest wages data from Japan supported the case for a December BoJ rate hike, although Q3 GDP revisions were disappointing and showed a wider-than-feared contraction.
• Antipodeans traded marginally higher with AUD kept afloat ahead of tomorrow's RBA decision, in which the central bank is widely expected to keep rates unchanged, while participants will be eyeing any hawkish clues to justify current money market pricing that the next move will be a hike in H2 next year.
• PBoC set USD/CNY mid-point at 7.0764 vs exp. 7.0747 (Prev. 7.0749)

FIXED INCOME

• 10yr UST futures lacked conviction after slipping on Friday amid pressure in global peers and despite the slightly softer-than-expected Core PCE data, while the main focus this week is on the FOMC meeting on Wednesday, where the Fed is expected to cut rates by 25bps and will provide its latest dot plot projections.
• Bund futures remained subdued after slipping to a three-month low heading into German Industrial Production, with downticks seen after ECB's Schnabel said she is 'comfortable' on bets that next move will be a hike.
• 10yr JGB futures struggled for direction amid a slew of data releases from Japan, including firmer-than-expected wages and the worse-than-feared downward GDP revisions for Q3.

COMMODITIES

• Crude futures traded rangebound with demand contained amid a lack of major energy-specific catalysts and after the UAE’s ADNOC slightly lowered January Murban OSPs to USD 65.53/bbl (prev. USD 65.79/bbl in December).
• Qatar’s Energy Minister said there will be a lot of demand for LNG going forward and that 600-700 MTPA will be required by 2035, while AI energy needs will drive growth in gas demand. Furthermore, he said plenty of oil capacity is available, and the first LNG train of Qatar’s North Field will come online in Q4 2026.
• UAE’s ADNOC set the January Murban crude official selling price at USD 65.53/bbl (prev. USD 65.79/bbl in December).
• Spot gold eked slight gains in a mild rebound from Friday's trough and heading into a widely expected Fed rate cut on Wednesday, while data over the weekend showed that the PBoC increased its gold reserves for a 13th consecutive month.
• PBoC increased its gold reserves for a 13th consecutive month with its bullion holding increasing by 30k troy ounces in October to around 74.12mln troy ounces, according to Bloomberg.
• Copper futures were lacklustre amid the mixed risk appetite in the region and as participants digested the latest Chinese trade data, which showed a stronger-than-expected rebound in Exports but Imports missed forecasts.

CRYPTO

• Bitcoin gained overnight and returned to above the USD 91,000 level.

NOTABLE ASIA-PAC HEADLINES

• China's Politburo held a meeting on the economy and reiterated its stance that monetary policy is to be moderately loose, with fiscal policy being more proactive, while it stated that the economic operation is generally stable and it will implement more active macro policies. Furthermore, it will continue to prevent and resolve risks in key areas, as well as stabilise employment, markets, and enterprises' expectations.
• Hong Kong held its legislative election on Sunday to elect 90 Legislative Council members from the 161 government-vetted candidates.
• Australia Treasurer Chalmers said they will not extend electricity rebates and that the mid-year review will not be a mini budget, while he added that the review will include savings.

DATA RECAP

• Chinese Trade Balance (USD)(Nov) 111.68B vs. Exp. 100.15B (Prev. 90.07B)
• Chinese Exports YY (USD)(Nov) 5.9% vs. Exp. 3.8% (Prev. -1.1%)
• Chinese Imports YY (USD)(Nov) 1.9% vs. Exp. 3.0% (Prev. 1.0%)
• Chinese Trade Balance (CNY)(Nov) 792.57B (Prev. 640.49B)
• Chinese Exports YY (CNY)(Nov) 5.70% (Prev. -0.80%)
• Chinese Imports YY (CNY)(Nov) 1.70% (Prev. 1.40%)
• Japanese GDP Revised QQ (Q3) -0.6% vs. Exp. -0.5% (Prev. -0.4%)
• Japanese GDP Rev QQ Annualised (Q3) -2.3% vs. Exp. -2.0% (Prev. -1.8%)
• Japanese Labour Cash Earnings (Nov) 2.6% vs Exp. 2.2% (Prev. 1.9%, Rev. 2.1%)
• Japanese Real Cash Earnings YY (Oct) -0.7% vs Exp. -1.2% (Prev. -1.4%, Rev. -1.3%)

GEOPOLITICS

MIDDLE EAST

• Israeli PM Netanyahu said he will meet with US President Trump this month, while he said they believe there is a path to a workable peace with their Palestinian neighbours and that the sovereign power of security from the Jordan River to the Mediterranean will always remain in Israel’s hands. Furthermore, he said political annexation of the West Bank remains a subject of discussion, and the status quo in the West Bank will remain for the foreseeable future, as well as noted that they are close to the second phase of Trump’s Gaza plan.
• Palestinian PM Mustafa said Israel is stepping up the ‘creeping annexation’ of the West Bank and is intensifying efforts to make the West Bank unlivable and drive people out of the occupied territory, according to FT.
• Turkey’s Foreign Minister said Hamas is ready to hand over the Gaza administration to the Palestinian committee to advance the Gaza ceasefire deal. He also commented that Hamas disarmament in the first phase of the Gaza deal may not be a realistic and doable objective, while other steps are needed first.
• US, Israel and Qatar were reportedly holding a trilateral meeting in New York on Sunday to rebuild relations, according to Axios.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said he had a substantive call with US envoy Steve Witkoff and Jared Kushner, while he stated they agreed on the next steps and format for talks with America, as well as noted that Ukraine is determined to continue working honestly with the US side in order to bring real peace. Zelensky separately commented that talks with US representatives on a peace plan were constructive but not easy.
• Ukrainian military conducted a strike on Russia’s Ryazan oil refinery.
• Russian Defence Ministry said Russian forces captured Kucherivka in Ukraine’s Kharkiv region and completed the capture of Rivne in Ukraine’s Donetsk region, while they carried out a group strike on Ukraine’s transport infrastructure facilities, fuel and energy complexes, and long-range drone complexes.
• Russia and China held their third joint anti-missile drills on Russian territory.
• Russia’s Kremlin said it welcomed the removal of Russia from the list of US direct threats in the new national security strategy.

OTHER

• Japanese Defence Minister Koizumi said Chinese military planes directed radar at Japan's self-defence forces twice. It was separately reported that Japanese PM Takaichi said the incident involving Chinese fighter jets directing radar at Japanese planes is extremely regrettable, while she said they will respond calmly and resolutely to the development.
• Japanese Chief Cabinet Secretary Kihara said China’s claims about the Japan Self-Defence Force’s dangerous flight are inaccurate, while he added it is very important to gain an understanding of other countries, including the US, regarding Japan's stance.
• Japan is reportedly frustrated at the Trump administration’s silence over the row with China and urged the US to give PM Takaichi more public support, according to FT.
• Australia’s Defence Minister Marles said they are deeply concerned about the actions of China following the air incident near Japan, while Marles discussed with Japanese Defence Minister Koizumi common serious concerns about the situation in the South China Sea and East China Sea. Furthermore, they discussed how to work together to maintain a free and open Indo-Pacific, while Marles also commented that they want the most productive relationship they can achieve with China.
• Pakistan and Afghanistan exchanged heavy fire in a border region on Friday.
• Thai Army spokesman said their military launched airstrikes in the disputed border area with Cambodia.

EU/UK

NOTABLE HEADLINES

• UK PM Starmer said former Deputy PM Angela Rayner will return to the cabinet after resigning in September, while he described her as “hugely talented”.
• Tony Blair is reportedly exploring alternative Labour leadership options amid frustration with UK PM Starmer’s direction, according to The Times.
• ECB's Schnabel said she is 'comfortable' on bets that next move will be a hike
• ECB’s Rehn said they must be aware of upside and downside inflation risks, while he added that inflation risk is slightly tilted to the downside in the medium-term. Furthermore, he said they should not impose unnecessary bars or floors on policy, and that the position on interest rates is not fixed.
• French President Emmanuel Macron called for a change in the ECB’s approach to monetary policy to boost the single market and protect it from the risks of a financial crisis, while he commented that reasserting the value of the European internal market means it can't let inflation be its sole objective, but also growth and employment.
• European Commission may announce a package to support the auto industry on December 16th, according to industry sources.
• German Chancellor Merz and French President Macron are set to discuss the fate of the Franco-German fighter jet project FCAS in the week of December 15th, according to an industry source.