European bourses and US futures are firmer into a quieter than initially scheduled session on account of the gov’t shutdown, ES +0.3%.
DXY underpressure, down to a 97.70 trough. JPY is the relative laggard after remarks from Ueda, NZD continues to climb.
USTs await ISM Services, Bunds unreactive to PMI revisions and remarks from Lagarde re. Knot. Gilts are attentive to the OBR’s first forecast round.
Crude saw fleeting upside on Hamas asking for more time to consult on Trump’s Gaza plan, XAU pauses for breath.
Looking ahead, US Final Composite PMIs (Sep), ISM Services (Sep), ECB’s Schnabel, Fed’s Williams, Jefferson, BoE’s Bailey.
Due to the US government shutdown, the following data will not be released: US NFP (Sep).
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TRADE/TARIFFS
US President Trump said he is considering taxpayer rebates of USD 1,000–2,000 funded by tariff revenue, according to Reuters.
China launches trade barrier probe into Mexico tariffs; vows necessary measures to defend companies’ rights.
EUROPEAN TRADE
EQUITIES
European bourses (STOXX 600 +0.4%) opened slightly firmer and have traded sideways throughout the morning. No real moves to EZ Final PMI revisions.
European sectors have opened slightly firmer with Banks (+1.0%), Basic Resources (+0.8%) and Retail (+0.6%) leading the way. The former benefits from upside in Raiffeisen Bank (+6.2%) after the FT reported that the EU is to lift sanctions on Deripaska to compensate the bank.
Towards the bottom of the pile; Technology has been the worst performing sector, with losses broadbased; ASML (-0.8%) and BE Semiconductor (-2.4%) both on the backfoot. This pressure can be attributed to commentary via Applied Materials (-3.8% pre-market) which stated that the US BIS Affiliates Rule will cut Q4 revenue by about USD 110mln and reduce FY26 revenue by about USD 600mln.
US equity futures (ES +0.3%, NQ +0.3%, RTY +0.4%) are modestly firmer across the board, awaiting US ISM Services. As a reminder, the US NFP report will not be released on account of the US Government shutdown.
Huawei reported used components from TSMC (TSM), Samsung (SSNLF/ 005930 KS), SK Hynix (HXSCL/ 000660 KS) in AI chips, via Bloomberg citing Techinsights. TSMC, Samsung and SK Hynix say they comply with all US regulations.
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FX
USD is flat today and currently trades within a very narrow 97.75 to 97.94 range; most recently, some modest pressure has been seen in the Dollar, but without a clear driver. Nothing really too pertinent for the Dollar by way of newsflow; some focus has been on President Trump, where he stated that he is considering taxpayer rebates of USD 1,000–2,000 funded by tariff revenue, according to Reuters. Elsewhere, the WSJ reported that Trump is looking to send billions in cash bailouts to farmers with taxpayer money. With the jobs report now shelved, focus will now be on US PMIs and ISM Services. The former is generally overshadowed by the ISM report; on that, the consensus expects the headline to fall slightly to 51.8 from 52.0 in September; the business activity gauge is seen falling to 51.8 from 55.0. Additionally, a handful of Fed officials are scheduled today.
EUR is on a slightly firmer footing today, but without a clear driver. The bulk of the marginal upside was seen around the European cash open and continued to trend higher on the releases of European PMIs. To recap those PMIs, Spain Services and Italian Services both beat expectations whilst the French, German, and then the EZ-wide metrics were revised a touch lower. The EZ release highlighted that the data will likely “confirm the stance” for those ECB members who opt for no more cuts. Sticking with the ECB, some very marginal upside was seen in the single-currency after ECB President Lagarde said former ECB member Knot would make a “good” President at the Bank, via ANP; for reference, Knot was a hawkish member during his tenure. Now focus will turn to ECB’s Schnabel later in the day, who is also speaking at a Knot farewell symposium.
JPY is the worst-performing G10 currency, albeit very marginally so. Focus overnight has been on BoJ Governor Ueda, who stressed the importance of maintaining an accommodative monetary environment to support the economy – these comments sparked some modest pressure in the Yen. As it stands, markets currently assign a 64% chance of a hold at the October meeting. Ueda aside, focus will be on the weekend’s LDP election. In brief, polls currently suggest Takaichi as the favourite, followed closely by Koizumi; ING suggests that the former would be seen as more bearish for the JPY.
GBP is incrementally higher today and trades in a 1.3430 to 1.3467 range, and towards the midpoint of the prior day’s range. Today’s focus has been on the region’s Final PMI metrics, where the Services component was subject to a decent downward revision to 50.8 (prev. 51.9); as such, the Composite moved lower to 50.1. The accompanying release highlighted that corporate clients are deferring spending decisions until after the Autumn budget.
Antipodeans are both slightly firmer vs the Dollar, and with some very modest outperformance in the Kiwi. Nothing really driving the upside today, but perhaps buoyed by the continued upside in base metals prices.
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FIXED INCOME
A slightly softer start for USTs to a much more limited session than initially scheduled due to the US government shutdown. much more limited session than initially scheduled due to the US government shutdown. Into the ISM Services print, the odds of a Fed move in October have just retreated beneath being fully priced with a c. 97% implied probability at the time of writing, vs the over 100% we saw following the surprising negative ADP print earlier in the week.
EGBs are contained this morning, limited reaction in OATs to the concession from French PM Lecornu that he will not be utilising Article 49.3 to pass fiscal reform.
Bunds contained in a very thin range of c. 10 ticks, updates in the space light, no reaction to remarks from Lagarde or final PMIs.
Gilts trade a little better than peers, but are essentially unchanged on the session. Awaiting any update/leak around the OBR’s first forecast round being presented to Chancellor Reeves, forecasts are expected to be very bleak from Reeves’ perspective. Furthermore, The Sun reports that the OBR wants to end the fuel duty assumption in the forecast, an update that would add further pressure to Reeves.
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COMMODITIES
Crude benchmarks rebound after WTI and Brent extended below key levels of USD 61/bbl and USD 64.20/bbl respectively in Thursday’s session. Initially, oscillating between USD 60.90-61.27/bbl and USD 64.50-64.85/bbl after picking up modestly during the APAC session. In geopolitics, a senior Hamas official said that they will need more time and are demanding substantial changes to the Trump plan. Crude benchmarks extended modestly on this to session highs of USD 61.38/bbl and USD 65.02/bbl respectively. As a reminder, Trump gave Hamas just three days to consider and accept the US-backed plan for Gaza. This upside was ultimately short-lived and has entirely pared.
Spot gold has thus far been relatively muted, after selling off from a strengthening dollar yesterday. XAU is currently oscillating within a c. USD 30/oz bound as economic newsflow remains light due to the US government shutdown.
Base metals continue to extend on gains and are on track for the biggest weekly gain since April as supply disruptions, a weaker dollar, and optimism about demand support gains. 3M LME Copper oscillated around USD 10.5k/t before extending to a high of USD 10.85k/t.
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NOTABLE DATA RECAP
EU Producer Prices YY (Aug) -0.6% vs. Exp. -0.4% (Prev. 0.2%); MM (Aug) -0.3% vs. Exp. -0.1% (Prev. 0.4%, Rev. 0.3%)
EU HCOB Composite Final PMI (Sep) 51.2 vs. Exp. 51.2 (Prev. 51.2); Services Final PMI (Sep) 51.3 vs. Exp. 51.4 (Prev. 51.4)
German HCOB Composite Final PMI (Sep) 52.0 vs. Exp. 52.4 (Prev. 52.4); Services PMI (Sep) 51.5 vs. Exp. 52.5 (Prev. 52.5)
Spanish Services PMI (Sep) 54.3 vs. Exp. 53.1 (Prev. 53.2)
Italian HCOB Composite PMI (Sep) 51.7 (Prev. 51.7); Services PMI (Sep) 52.5 vs. Exp. 51.5 (Prev. 51.5)
French HCOB Composite PMI (Sep) 48.1 (Prev. 48.4); Services PMI (Sep) 48.5 vs. Exp. 48.9 (Prev. 48.9)
UK S&P Global Services PMI (Sep) 50.8 vs. Exp. 51.9 (Prev. 51.9); Composite Output (Sep) 50.1 (Prev. 51)
NOTABLE EUROPEAN HEADLINES
ECB President Lagarde says Klass Knot would make a good ECB President, via ANP. Says Europe needs to level up regulation of non Banks involved in Bank-like activities.
UK OBR reportedly wants to end the ongoing status of assuming that the 5p cut to fuel duty will be reversed in the spring and then increase with inflation thereafter, via The Sun citing sources.
French Prime Minister Lecornu announces he will renounce the use of 49.3 to pass the French Budget.
NOTABLE US HEADLINES
US President Trump said there could be firings and project cuts if the shutdown continues, according to an interview.
Google (GOOGL) will locate a new data centre in West Memphis, Arkansas, with a multi-billion USD investment, according to Reuters.
Government report flags security risks from China’s DeepSeek models, though they remain behind American counterparts, via Axios.
US administration to enlist powerful businesses and labor groups to push Democrats to end shutdown, reports via Axios.
Fed’s Williams (voter) does not comment on the outlook for monetary policy. Says, robust policy works to anchor inflation expectations
GEOPOLITICS
MIDDLE EAST
“A senior Hamas official told the Saudi media: “We have informed the mediators that we need more time for consultations regarding the Trump plan. Hamas Demands Some “Fundamental Changes” in Some of the Plan’s Clauses”, via Kan News.
NATO
Germany’s Munich Airport has been closed after drones were spotted over the airport, a federal police spokesperson told BILD.
Munich Airport later reopened after being closed overnight amid drone sightings, according to witnesses
RUSSIA-UKRAINE
Russian President Putin also said the possible seizure of vessels would increase the risks of confrontations at sea, and warned that any US supply of Tomahawk missiles to Ukraine would not change the battlefield but would be dangerous, damage relations, and escalate the conflict, according to Reuters.
CRYPTO
Bitcoin is a on a firmer footing and trades back above USD 120k, whilst Ethereum also rises back towards the USD 4.5k mark.
APAC TRADE
APAC stocks were mostly firmer, taking their cue from Wall Street’s gains amid light newsflow, whilst the looming delay of the US jobs report due to the government shutdown keeps focus on Fed speak and upcoming ISM data. Mainland Chinese and South Korean markets remained closed for holidays.
ASX 200 was supported by strength in technology and healthcare names, though gold miners lagged as the yellow metal pulled back.
Nikkei 225 outperformed, driven by weakness in the yen and strength in technology, while remarks from BoJ Governor Ueda following this week’s Tankan Survey underlined the need to maintain an accommodative monetary environment, with focus also on the upcoming LDP elections.
Hang Seng declined, bucking the regional trend as it failed to benefit from gains in technology, with Stock Connect closed and Mainland participants absent during Golden Week.
NOTABLE ASIA-PAC HEADLINES
BoJ Governor Ueda said the Bank will continue raising interest rates if the economy and prices move in line with its forecast, while stressing the need to maintain an accommodative monetary environment to support the economy. He said the likelihood of the baseline forecast materialising will be scrutinised alongside upside and downside risks, with close monitoring of the global outlook, including the US economy, the impact of tariffs on corporate profits, wage and price-setting behaviour, and overall price developments. Ueda noted signs that consumers are cutting back on spending amid rising food prices, which the BoJ is watching carefully. He said corporate profits are likely to stay elevated, though some manufacturers are being hit by tariffs, as seen in exports and output data. He reiterated the BoJ wants to support business activities by keeping policy loose, but warned that tariff policy creates global uncertainty and a 15% tariff rate would weigh on the economy. He added that economic growth is likely to moderate before rising again as overseas economies return to a moderate growth path, and emphasised that judgements will be made without preconceptions on whether the economy and prices are moving in line with the forecast. He repeated that interest rates will continue to be raised if conditions follow the outlook, while noting that the impact of US tariffs has not spread to Japan’s entire economy so far, according to Reuters.
Japan Finance Minister Kato said tariffs cannot be boosted on countries importing Russian oil from the perspective of compliance with international laws. He added that Japan is watching with high interest the impact of the US government shutdown on markets and the economy.
DATA RECAP
Japanese S&P Global Services PMI Final SA (Sep) 53.3 (Prev. 53)
Japanese S&P Global Composite Op Final SA (Sep) 51.3 (Prev. 51.1)
Japanese Unemployment Rate (Aug) 2.6% vs. Exp. 2.4% (Prev. 2.3%)
Japanese Jobs/Applicants Ratio (Aug) 1.2 vs. Exp. 1.22 (Prev. 1.22)
Australian S&P Global Composite PMI Final (Sep) 52.4 (Prev. 52.1)
Australian S&P Global Services PMI Final (Sep) 52.4 (Prev. 52.0)
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