Trump and Netanyahu reportedly discussed launching operations against Iran before elections; DXY softer, whilst crude benchmarks gain - Newsquawk EU Market Open

• US President Trump said he will make a decision on Iran very soon; Israeli PM Netanyahu and Trump reportedly discussed launching a major new operation against Iran before the US and Israeli elections.
• Iran reportedly stepped up attacks on shipping ahead of the US midterms. Saudi Arabia and the Houthis continued exchanging strikes.
• APAC stocks were mixed as the region clawed back some recent tech-related losses; US equity futures mildly rebounded, European futures briefly dipped on ASML earnings.
• DXY remained softer following yesterday's decline alongside lower US yields; crude futures climbed amid continued Middle East tensions, while spot gold lacked firm direction.
• Looking ahead, highlights include German Wholesale Prices (Sep), Spanish Final Inflation (Sep), US Inflation (Sep), IEA OMR. Speakers include US President Trump, Fed’s Bowman & Barkin, BoE’s Pill & Breeden, BoC’s Macklem, ECB's Lagarde, Zigman, Elderson & Schnabel. Supply from the UK & Germany. Earnings from Bank of America, BlackRock, Morgan Stanley, Progressive & State Street.

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IRAN CONFLICT

• US President Trump said he will make a decision on Iran very soon and that he spoke with the Saudi Crown Prince, while he responded "I might" when asked if he would ask Turkey to join the Yemen response. Furthermore, Trump stated that the Houthis are behaving very badly and that somebody should explain to them that he is not running in the elections and has already won, but will be there after the elections and will never forget.
• US President Trump said during a rally in Alaska that they've been taking more oil out of the Strait of Hormuz than before the war, while he reiterated that the war with Iran will end soon and that Iran will not possess a nuclear weapon. Trump also commented "Wait and see what we do to Iran. We're going to hit them hard. Wait and see what we do to Iran, because we've had enough".
• US Central Command rejected a claim by the IRGC Navy Commander that the Strait of Hormuz is under Iranian control and that any approaching US warships would be sunk, while it stated that "IRGC's navy commander has no navy. American forces and regional partners clearly control the Strait of Hormuz. Just yesterday US forces assisted Gulf partners in shipping more than 19mln barrels of crude oil through the strait."
• IRGC Navy Commander challenged the US claim that the Strait of Hormuz is open and under its control, stating "they should step into the field and see who is in control of it". IRGC Navy Commander also said Iranian forces were waiting for American ships to approach the entrance to the Strait of Hormuz so they could sink them, adding that they were counting down the days until this happens, according to Tasnim.
• Israel's N12 News reported that Iran conducted a series of ballistic missile firing tests in recent days, although there was no intelligence that justifies an Israeli-US move in the coming weeks, while Israel, the US and Gulf states are coordinating and preparing for a variety of scenarios.
• Iran is reportedly shifting tactics to step up attacks on shipping ahead of US midterms, according to two Iranian officials cited by Reuters.
• Iran and Oman Foreign Ministers held a call and discussed latest regional developments, including developments in Yemen, and examined ways to achieve peace and stability in the region.
• Israeli PM Netanyahu spoke with US President Trump last week about renewing the war on Iran, according to reports. US officials were reportedly impressed that Netanyahu wanted to attack before the elections. Netanyahu discussed renewing the war with Iran with Trump several times, while Trump reportedly told him, "Well, you know what, Bibi, go ahead and get ready." However, Trump did not make a firm commitment, saying it could happen now, be too late or never happen.
• Israeli PM Netanyahu and US President Trump discussed last week the possibility of launching a major new operation against Iran before the Israeli and US elections, according to Axios citing officials. Netanyahu and Trump spoke about a potential joint US-Israeli operation that would hit military and nuclear targets, while Netanyahu was concerned about Israeli intelligence indicating Iran was taking troubling steps to reconstitute its nuclear program, although his call with Trump about the possible attack took place before Trump said he would not strike Iran ahead of the Midterms.
• Israeli Defence Minister warned anyone who attacks Israel "before or after the elections" will have their hand cut off and will pay the price, according to Al Hadath.
• UKMTO said it received a report of an incident within the Strait of Hormuz on October 13th in which a container ship was struck by an unknown projectile.
• Saudi-led coalition said it intercepted a missile in Al-Kharj and destroyed two drones and three missiles in Riyadh and the southern region, although the Saudi Energy Ministry announced that Saudi Aramco's Dhahran headquarters was struck in a Houthi missile attack and a limited fire broke out at the facility, but there were no casualties recorded.
• Saudi-led coalition said it had attacked an oil facility in Sanaa used by the Houthis to support their attacks in Yemen.
• Houthi official warned that Saudi oil and vital installations will be visited overnight.
• Yemeni Deputy Defence Minister said the battle with the Houthis was "open" on all fronts, according to Al Hadath.
• France's Foreign Ministry said France was participating in efforts to protect navigation in the Red Sea and the Bab al-Mandab Strait, according to Al Arabiya.

US TRADE

EQUITIES

• US stocks were mixed, with the Nasdaq 100 pressured again by weakness in memory names, highlighted by the memory ETF DRAM closing with losses in excess of 3%. The move follows a sharp decline in the Kospi overnight, following the recent concerns regarding competition from China. Overall, sectors were varied as Health underperformed and was hit on poor JNJ results, while Energy sat atop of the pile. Furthermore, US Q3 earnings season got underway and has been a mixed bag so far, in which JPM, GS, WFC, JNJ, and C all saw losses, while the highlights on Wednesday include ASML, BAC, and MS.
• SPX -0.01% at 7,806, NDX -0.31% at 30,569, DJI -0.35% at 51,671, RUT -0.39% at 2,784.
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TARIFFS/TRADE

• Vietnam's Deputy PM said Vietnam and the US have basically almost completed negotiations for a trade deal and Vietnam sent the final text of a trade deal to the US.
• China's Customs Vice Minister said in the first three quarters, China's foreign trade has effectively dealt with various external shocks and China's foreign trade has kept good development momentum, while it has shown resilience despite rising international changes, risks and challenges. However, the official also stated that China's trade development still faces many challenges, and for full-year trade, there are many uncertainties globally, including geopolitical conflicts.

NOTABLE HEADLINES

• Fed's Williams (voter) said there was no need for a rate hike in 2027 at this time and that disinflationary forces remained in play, while he added that the economy was not overheating and that one more interest-rate hike this year was appropriate. Furthermore, Williams saw no evidence that the labour market was contributing to inflation and noted that broad price pressures were not evident outside of AI and energy.
• Fed's Barkin (2027 voter) said 2% inflation is not some unicorn, and is something they can hit.
• Fed's Collins (2028 voter) said tightening monetary policy will help return inflation to 2%, and she expects the Fed to raise interest rates 'a bit further' by the end of the year, while she expects inflation to stay above 2% due to high energy prices. Furthermore, she supported the Fed raising rates at the September meeting and stated the future path of monetary policy in the new year will depend on data.
• Fed Governor Cook's lawyer denounced the Trump administration's new investigation and said she will not be able to attend the hearing on November 5th, according to The New York Times.

APAC TRADE

EQUITIES

• APAC stocks were ultimately mixed as the region clawed back some of the recent tech-related losses, while participants also digested key releases from China, including inflation and trade figures.
• ASX 200 declined with the index dragged lower by underperformance in the top-weighted financials sector, while sentiment amongst miners was not helped by the indecision in Rio Tinto following its quarterly production update.
• Nikkei 225 reclaimed the 68,000 level as tech stocks got some reprieve from recent selling.
• KOSPI was among the biggest gainers as tech rebounded from the recent underperformance.
• Hang Seng and Shanghai Comp were flat as participants digested a slew of data, including stronger-than-expected trade figures and mixed inflation numbers in which CPI printed softer-than-expected, while PPI was hot and showed a faster-than-anticipated acceleration in factory gate prices.
• US equity futures mildly rebounded alongside the mostly improved sentiment in Asia, although gains were capped with US inflation data on the horizon.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.2% after the cash market closed with losses of 0.6% on Tuesday. Futures initially dipped following ASML earnings before paring most of the move.

FX

• DXY remained softer after weakening yesterday alongside lower US yields and choppy crude prices, while there were several Fed comments, with the highlight coming from NY Fed President Williams, who sees one more rate hike as appropriate in 2026 and doesn't see a need for a rate hike in 2027 at this time, citing an optimistic view on inflation returning to 2% and is not seeing broad price pressure outside AI and energy, while the focus turns to the incoming US CPI report later today.
• EUR/USD benefited from the softer buck and reclaimed the 1.1200 level. There were some comments from ECB officials, including Lane, who stated that the increase in long-term interest rates constitutes a material tightening and is relevant for the ECB in setting policy stance, while Lagarde said inflation has been rising predominantly, but not exclusively, as a result of energy prices, but added they are not seeing any second-round effects yet.
• GBP/USD extended on the prior day's rebound but with price action remaining at the 1.3200 handle, while the latest comments from BoE Governor Bailey provided very little incrementally.
• USD/JPY was contained in the absence of tier-1 data from Japan and following a previous source report that the BoJ is to lean against back-to-back hikes in October, but could adjust the language regarding the inflation target to "approx. 2%" from "approaching 2%".
• Antipodeans edged higher amid an improvement in risk sentiment and after stronger-than-expected Chinese trade data.
• PBoC set USD/CNY mid-point at 6.7249 vs exp. 6.6922 (prev. 6.7298).

FIXED INCOME

• 10yr UST futures slightly gained in range-bound trade as participants await the US inflation report, while there were also recent comments from Fed officials, including Williams, who said one more interest-rate hike this year was appropriate and that there was no need for a rate hike in 2027 at this time.
• Bund futures eked mild gains after pulling back yesterday, although the rebound was limited with little reaction seen to several ECB comments and as German supply looms.
• 10yr JGB futures eventually climbed with support seen in the aftermath of the 5yr JGB auction, which showed moderately improved results compared with the previous auction.

COMMODITIES

• Crude futures climbed higher as geopolitical headlines remained abundant and continued to show no signs of abating, with further exchanges of strikes between Saudi and Houthis, including an attack on the Aramco HQ in Dhahran. Furthermore, both the US and Iran asserted their control over the Strait of Hormuz, while there were reports that Israeli PM Netanyahu and US President Trump had discussed the possibility of launching a major new operation against Iran before the Israeli and US elections, although the call occurred last week before Trump declared that he would not strike Iran ahead of the Midterms.
• US President Trump said they are going to announce two deals today and stated every permit needed has been granted regarding Alaska LNG, while Trump then stated that Taiwan has agreed to buy 30% of gas coming off Alaska pipeline and is to invest USD 4.4 billion in the project, on top of the USD 50bln South Korea committed to invest. Trump later posted that "Massive Oil, Gas, and Mineral Exploration is getting ready to begin in our new and beautiful Greenland!"
• Spot gold lacked firm direction following the prior day's indecision and as US CPI data looms.
• Copper futures climbed higher as stock markets got some reprieve from the recent tech selling.

CRYPTO

• Bitcoin gained in a somewhat choppy manner with prices remaining beneath the USD 84,000 level.

NOTABLE ASIA-PAC HEADLINES

• Monetary Authority of Singapore kept its FX-based policy settings unchanged, with the rate of appreciation of the policy band maintained (exp. very slight tightening), while it made no changes to the width and level the band is centred. MAS said Singapore's economy is expected to continue expanding steadily in the quarters ahead and core inflation should remain slightly elevated in the immediate quarters ahead, but is projected to ease discernibly from the middle of next year. MAS expects Singapore's economy to continue to expand at a firm pace in the immediate quarters ahead, but stated there continues to be significant uncertainty surrounding the macroeconomic outlook and that for now, risks to inflation remain tilted to the upside.

DATA RECAP

• Chinese PPI YY (Sep) 5.0% vs. Exp. 4.5% (Prev. 3.8%)
• Chinese CPI YY (Sep) 0.9% vs. Exp. 1% (Prev. 0.8%)
• Chinese Trade Balance (USD)(Sep) 133.53B vs. Exp. 118.1B (Prev. 119.09B)
• Chinese Exports YY (USD)(Sep) 36.3% vs. Exp. 25.5% (Prev. 25%)
• Chinese Imports YY (USD)(Sep) 31% vs. Exp. 24.5% (Prev. 28.2%)
• Chinese Yuan-Denominated Trade Balance (Sep) 906.0B (Prev. 809.3B)
• Chinese Yuan-Denominated Exports YY (Sep) 29.6% (Prev. 18.6%)
• Chinese Yuan-Denominated Imports YY (Sep) 24.6% (Prev. 21.7%)
• Singapore GDP Growth Rate Adv (Q3 QQ) 1.1% vs. Exp. 1.2% (Prev. 1.4%)
• Singapore GDP Growth Rate Adv (Q3 YY) 5.4% vs. Exp. 5% (Prev. 5.9%)

GEOPOLITICS

RUSSIA-UKRAINE

• Russian air attack hit energy facilities in Ukraine's capital Kyiv, according to the mayor.
• US President Trump said he was working with Russia and Ukraine to end the war and believes both Ukrainian President Zelensky and Russian President Putin want it to end. Trump said Russia was releasing diesel to the world and that both Russia and Ukraine were "a little bit off", while he said he would provide an update later when asked whether Russia had broken the ceasefire.
• UK PM Burnham will host Ukrainian President Zelensky in Downing Street on Wednesday as Ukraine and its allies scramble to respond to Trump's diesel deal with Putin, while Burnham will tell Zelensky that Britain's support is rock solid with faster delivery of lightweight, multi-role missiles to help Ukraine defend itself, according to Bloomberg.

OTHER

• China's PLA Navy organised the Liaoning aircraft carrier strike group to conduct training exercises in the waters of the Western Pacific, while it was stated that the routine exercise organised in accordance with the annual plan is aimed at enhancing troops' combat readiness.
• Japan's Foreign Minister said the Japanese embassy in Russia is requesting information from Russian authorities regarding a detained Japanese citizen and Japan is requesting fair treatment of the detained Japanese citizen from Russian authorities.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Healey is expected to pay for new giveaways in this month's budget, with higher taxes or spending cuts rather than more borrowing, according to FT
• UK Chancellor Healey is to target online marketplaces in a GBP 1bln tax crackdown, in which the UK plans to make them responsible for collecting tax owed by retailers selling on their platforms, according to The Times.
• BoE Governor Bailey said UK companies are focusing intensely on containing costs amid surging energy prices caused by the Iran war, while he reiterated that broader UK inflation pressure from the energy shock has remained subdued so far.
• ECB's Lagarde said inflation has been rising predominantly, but not exclusively as a result of energy prices, while she noted that they are not seeing any second-round effects yet and they cannot wait until they are in full view, but can anticipate and look for hints. Furthermore, she responded that the primary and first solution lies in French fiscal policy when asked about French debt, and stated that growth is not brilliant, but 1.1% growth in 2026 is not bad.
• ECB's Lane said the increase in long-term interest rates constitutes a material tightening and is relevant for the ECB in setting policy stance, while he said the potential for AI to replace some workers may weaken their bargaining power and moderate wage growth.
• ECB's Moulin said inflation is mainly due to conflict in the Middle East and energy-related, while he added that inflation expectations by corporates and households in the medium term are well anchored. Moulin also stated that a rise in yields may affect demand and prompt a more moderate response to an inflation shock.
• ECB's Wunsch said they are probably going to have to hike again, but he's not making any bets because they have so much uncertainty on the energy front and maybe also in AI, according to Bloomberg.

NOTABLE EARNINGS

• ASML (ASML NA) - Q3 2026 (EUR): Basic EPS 12.95 (exp. 10.68), Revenue 11.66bln (exp. 11.58bln), New lithography systems sold 113 (prev. 86 Q/Q), Gross margin 57.5% (prev. 54% Q/Q), Net Income 4.96bln (prev. 2.92bln Q/Q).