US President Trump said Iran had asked for a halt to US attacks; European bourses set for a firmer open after the recent tech sell off - Newsquawk EU Market Open

• US President Trump said Iran had asked for a halt to US attacks and negotiations are still ongoing. Trump mentioned that he would not use nuclear weapons, but warned that they may have to go to Pickaxe Mountain.
• APAC stocks traded mostly higher, attempting to rebound from the recent tech selloff; European equity futures are set for a positive cash market open.
• DXY is essentially flat, and was largely unreactive to Fed Chair Warsh who avoided any forward guidance; Antipodeans leads, whilst the CHF underperforms.
• Crude benchmarks are in the red as the Middle East situation remains tense; Trump mentioned that Ukrainian President Zelensky is not a good guy to deal with.
• Looking ahead, highlights include EU Final Inflation (Sep), Italian Final Inflation (Sep), US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy.

SNAPSHOT

LOOKING AHEAD

• Highlights include EU Final Inflation (Sep), Italian Final Inflation (Sep), US Import/Export Prices (Sep), Industrial Production (Sep), Credit Ratings update from Morningstar DBRS on Italy.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT/MIDDLE EAST

• US President Trump said he wouldn't use nuclear weapons on Iran and stated they may have to go to Pickaxe Mountain, but does not see troops on the ground in Iran. Trump said Iran has asked for a halt to US attacks and negotiations are still ongoing. Furthermore, Trump said he is talking to Russia and China regarding denuclearisation and answered that he doesn't trust anyone when was asked if he trusts Israeli PM Netanyahu
• US issued fresh Iran-related sanctions.
• US CENTCOM rejected the IRGC's claim that it controls the Strait of Hormuz, saying the US and regional partners control the waterway and commercial vessels continue to transit despite what it described as unwarranted IRGC aggression. CENTCOM also denied the IRGC's claim that a Singapore-flagged container ship struck a naval mine, saying the civilian vessel M/V GFS Pride was hit by an IRGC projectile and sank while being towed to shore. It also denied Iranian claims that hundreds of US service members had been killed in Jordan.
• Israeli PM Netanyahu spoke with US Secretary of State Rubio and security officials, saying that if Tehran does not come to its senses, military action is a realistic scenario.
• US Secretary of State Rubio spoke with Israeli PM Netanyahu and spoke with Lebanon's President Aoun regarding recent developments, including the seizure of a truck carrying Hezbollah explosives. Rubio also urged direct military-to-military communication between Lebanese and Israeli forces for deconfliction.
• Iran's Army Commander said the Strait of Hormuz would remain closed until the rights of the Iranian people are respected, warning that any threats to Iran's infrastructure would trigger a response several times greater. He said Tehran had established an equation whereby threats to Iran's infrastructure would result in multiple-fold damage to the infrastructure and interests of its adversaries, the "criminal Zionist regime" and anyone cooperating with it.
• Iranian senior diplomat said they are considering withdrawing from the NPT, while the Lebanese case is an integral part of any possible future agreement, according to Tasnim.
• Iran's PGSA blacklisted multiple vessels, bringing the total number of blacklisted ships to 120.
• Chinese Foreign Minister told Israel's President that promoting peace and reconciliation in the region is the cornerstone of China's Middle East policy and China consistently held that the Palestinian question is greatest historical injustice of this century. Furthermore, he stated that the immediate priority is to fully open access to the Gaza Strip and that Israel should stop and reverse its forced establishment of settlements in the West Bank.
• Saudi-led coalition said it intercepted and destroyed a drone launched towards Saudi Arabia's eastern region, while several explosions were heard in Jeddah.
• Saudi army conducted a missile attack on areas of Amran and Saada provinces in northern Yemen, while sources reported that an explosion was heard in Sanaa.
• Yemen Houthi official said Saudi Arabia must answer for the massacre of civilians in Yemen and called for an independent international probe into the Saudi war on Yemen.
• Yemeni armed forces targeted military positions in Aden, hitting a military operation headquarters managed by Saudi officers, which killed four.

US TRADE

EQUITIES

• US stocks saw mixed price action on Thursday, but ultimately rebounded, with the S&P 500 eking modest gains, the Nasdaq 100 was slightly lower, while the Dow and Russell 2000 outperformed. Nonetheless, the tech sector remained pressured on recent selling in AI, chip and memory stocks following a 7.5% drop in the KOSPI overnight, although sentiment steadily improved after the opening bell, with equities gradually recovering throughout the session as technology stocks pared losses and most sectors closed in the green, led by Health Care, Materials and Financials.
• SPX +0.34 at 7,745, NDX -0.05% at 29,936, DJI +1.08% at 51,178, RUT +1.37% at 2,767.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Commerce Secretary Lutnick throws the future of US-Mexico trade talks into further doubt as he has objected to significant reductions in tariffs on Mexican steel, aluminium and automobiles, according to WSJ.
• EU is reportedly open to developing a new trade instrument featuring a potential "kill switch" that would allow the EU to quickly exclude Chinese companies from its market, according to discussions among EU leaders on Thursday.
• Germany's Finance Minister said he is not against China and that China is an important partner, but stated it is not playing by the rules and that they should not be naive.
• UK Trade Minister Anas Sarwar indicated that the UK could be prepared to align with EU tariffs on Chinese electric vehicles, according to Politico. France and Germany were previously reported to be willing to include the UK in the EU's "Made in Europe" policy if London aligns with the bloc's China tariffs, according to the Financial Times, citing a draft.
• Japan is to open an anti-dumping probe on Chinese pigments, while rutile titanium dioxide was specifically mentioned.

NOTABLE HEADLINES

• Fed Chair Warsh said he may be over-scarred from the Global Financial Crisis and stated that since the September FOMC, the world has broadly conformed to our expectations. Warsh said they currently have structural growth and an investment surge, while they will make judgements at the October and December meetings, and noted the Fed made clear they would deliver price stability, but he does not believe in prejudging meetings and does not believe in signalling what he might do at meetings for the rest of 2026.
• Fed's Hammack (2026 voter) said she is hearing more from lower-income Americans struggling with inflation and stated that anecdotal information provides important economic guidance. Hammack said businesses are seeing a lot of input cost price pressures and worries about formation of inflation mentality, and noted that the formation of inflationary mindset might force more aggressive Fed policy action. Furthermore, she said it is hard to know what a neutral rate is and that financial conditions do not appear restrictive right now. Fed's Goolsbee (2027 voter) said it is a discouraging month regarding inflation and still feels some optimism if drivers of inflation can go away in short order, but if inflation is from overheating demand from AI, that's more disturbing and have to address it.
• WSJ's Timiraos noted September CPI and PPI translate into a core PCE projection of around 0.34%, which would be the highest monthly reading since January, while that would push the 12-month change to 3.1% (from 3% in August) and the 3-month annualised rate to 2.9% (from 2.0%).
• US Treasury's liquidity-support buyback for 20–30-year securities accepted USD 6bln of USD 40.84bln in offers, accepting 3 of the 42 eligible securities.
• Some investors dialled back Anthropic valuation expectations amid disappointing results and market sell-off, while investors were said to discuss USD 1.5tln valuation vs prev. expected of around USD 2.0tln following the previous night's meeting, according to sources.
• Taiwan Minister of Economic Affairs said Taiwan is to fund a USD 4bln US industrial park for Nvidia (NVDA) suppliers, while the Texas complex may be the first of several US sites for AI producers.

APAC TRADE

EQUITIES

• APAC stocks were mostly higher as global markets regained composure following the recent tech bloodbath. Elsewhere, Indonesian stocks are the outlier with double-digit percentage losses as the MSCI consults on a proposal to reclassify Indonesia from Emerging Market to a Standalone Market Status.
• ASX 200 gained with the upside led by tech and miners, while recent weak jobs data also supported the case for a pause from the RBA at the next meeting.
• Nikkei 225 recouped some of the losses from the prior day's turmoil.
• KOSPI outperformed but still has far to go after falling by as much as 8% yesterday.
• Hang Seng and Shanghai Comp conformed to the broad recovery in risk assets, while PBoC Governor Pan also recently reiterated that China would maintain a moderately loose monetary policy.
• US equity futures were contained following yesterday's recovery.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.7% after the cash market closed with losses of 0.4% on Thursday.

FX

• DXY got some reprieve from the recent selling despite the bout of hot inflation metrics, while the latest rhetoric from Fed officials regarding price pressures did little to spur the dollar, and Fed Chair Warsh continued to refrain from giving any clues on future policy.
• EUR/USD paused overnight and held on to its recent gains after returning to the 1.1200 level.
• GBP/USD mildly extended on its gains after relatively outperforming yesterday, with reports noting that UK Chancellor Healey is set to raise taxes on banks, while there was also better-than-expected UK GDP data and previous comments from BoE officials, in which Greene reiterated that she sees risks of second-round effects as “pretty significant”.
• USD/JPY lacked direction in the absence of tier-1 data and after recent oscillations through 158.00.
• Antipodeans strengthened overnight with tailwinds amid the mostly improved global risk sentiment.
• PBoC sets USD/CNY mid-point at 6.7220 vs exp. 6.6947 (prev. 6.7253)

FIXED INCOME

• 10yr UST futures were little changed following the choppy reaction to a slew of US data, including another hot inflation metric, in which PPI showed the fastest pace of increase since early 2022, while the comments from Fed Chair Warsh provided very little to spur price action.
• Bund futures lacked direction despite the mild retreat in energy prices and rebound in stocks.
• 10yr JGB futures retreated as the relief rally in stocks dampened haven appeal.

COMMODITIES

• Crude futures retreated overnight after yesterday's mixed price action, in which US crude outperformed its North Sea counterpart following the large weekly US headline inventory drawdown, while the US told IEA member countries it is unhappy with the planned emergency oil release and suggested supplementing it with a further 100mln barrels.
• US EIA crude oil stocks fell by 8.557mln barrels in the week ended October 9th, compared with an expected decline of 0.3mln barrels and a previous fall of 3.186mln barrels. Strategic Petroleum Reserve was unchanged at 283mln barrels.
• Spot gold was indecisive as the dollar took a breather from recent selling.
• Copper futures steadily climbed amid the mostly positive risk sentiment in Asia.

CRYPTO

• Bitcoin marginally declined in choppy, range-bound trade on both sides of the USD 82,000 level.

NOTABLE ASIA-PAC HEADLINES

• Japanese Finance Minister Katayama said she can't comment on whether we would need an extra budget or not, but even if needed, the extra budget would be limited to urgent policy priorities.
• Japanese MoF official said G7 and G20 meetings did not specifically debate recent stock market moves, while they are always monitoring market moves carefully but will not comment on each stock, forex or bond market move.
• US Treasury Undersecretary said Japan no longer faces the deflationary environment that existed for more than a decade, and the level of its currency and monetary policy must change accordingly.
• MSCI consults on reclassifying Indonesia from Emerging Market to Standalone Market status.

GEOPOLITICS

RUSSIA-UKRAINE

• US President Trump said Ukrainian President Zelensky is not a good guy to deal with and is more difficult than Russian President Putin to deal with, while he said there are plenty of other targets besides refineries to hit and need an election in Ukraine. It was separately reported that Trump said Ukraine's resumption of strikes on Russian refineries is a disgrace.
• US senators are demanding an investigation into the disruption of a satellite system supporting Ukraine, according to an Al Jazeera correspondent, while it was reported that the order to limit Ukraine's access to the Starshield system came from inside the White House, according to sources
• Russian President Putin said no significant damage has been caused by recent Ukraine’s strikes on Russian refineries, while Russia will respond to Ukraine’s strikes on oil refineries, logistics and energy facilities. Furthermore, Putin said Ukraine failed to grasp the consequences of returning to targeting refineries.
• Russian local governor said drones hit industrial facilities in Russia's Rostov region.
• Ukrainian drones attacked Russia's Moscow region, hitting industrial warehouse facilities.
• Ukraine's Air Force said jet drones were spotted over Kirovohrad region heading west.
• Massive fire broke out in Ukraine's Khmelnytsky region following a reported strike on a fuel depot.

OTHER

• South Korea-US ties are said to be straining over intelligence sharing restrictions, trade disputes, and reduced military cooperation, raising concerns about Seoul's ability to counter North Korea's nuclear threat. Furthermore, South Korean President Lee is seeking to rebuild trust with Washington while improving ties with Beijing as trade tensions and potential Trump-Kim talks add uncertainty.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Healey is poised to raise taxes on banks in the Budget, according to The Guardian.
• BoE Governor Bailey said it is too early to form strong views on the strength of second-round effects and that so far, the signs of second-round effects are subdued and businesses are emphasising cost-cutting. Bailey stated the UK economy is more resilient than we expected and not as strong as we need, as well as noted that news from the Middle East is the biggest factor moving UK gilt yields.
• ECB's Rehn said the growth outlook is better today than at the start of the year and he is not seeing second-round effects on inflation, while he added that the labour market is not as tight and wage moderation is ongoing, as well as noted that they must show vigilance on the inflation outlook.