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European bourses are firmer following constructive EU-China trade developments, US equity futures also gain. USD fractionally higher and now eyes 100.00, CHF hampered by CPI. Bonds are relatively contained into a session of central bank speak and the ISM Manufacturing series. Crude reverses initial gains after OPEC+ opted to raise output again by a modest 137k bpd in December before pausing for Q1 2026; XAU essentially flat, whilst base metals digest disappointing Chinese RatingDog Manufacturing PMI. Looking ahead, highlights include US Final Manufacturing PMI, US ISM Manufacturing PMI, Speakers including Fed’s Daly, Cook, ECB’s Lane & BoC’s Macklem, Supply from BoE Gilt Sale (long-term), US Financing Estimates. Newsquawk in 3 steps: 1. Subscribe to the free premarket movers reports 2. Listen to this report in the market open podcast (available on Apple and Spotify) 3. Trial Newsquawk’s premium real-time audio news squawk box for 7 days TARIFFS/TRADE US President Trump commented on Friday about China, in which he stated that he would love to get rid of the extra 10% tariff and that the meeting with China was incredible, while he believes the deal with China will be long-lasting. It was also reported that US President Trump told Chinese President Xi that chip sales are "between you and NVIDIA". US President Trump said the US will not let China have NVIDIA's (NVDA) most advanced chips, while he also commented that he will not attend Supreme Court tariff case arguments and doesn't want to do anything to deflect the importance of that decision. Furthermore, Trump posted that the case on tariffs is one of the most important in the history of the country, and if a President is not allowed to use tariffs, the US will be at a major disadvantage against all other countries throughout the world, while he warned if they lose the decision, the US could be reduced to almost third-world status. US Treasury Secretary Bessent said China has shown itself to be an unreliable partner in many areas, while he also commented, “we’ll see” if a 10% tariff will be enacted on Canada after the Reagan advertisement, and he is not planning on going to the Supreme Court arguments on trade policy on Wednesday, according to CNN. China’s Commerce Ministry said it will consider exemptions for the Nexperia chip export ban. It was separately reported that Nexperia’s Dutch headquarters said it welcomes announcements lifting the block on shipping chips, while the Dutch government said that China talks continue regarding a constructive way forward in Nexperia. Chinese President Xi proposed that China and South Korea properly manage differences through friendly consultations, while he called for the sides to strengthen strategic communication and consolidate the foundation of mutual trust. Xi also called for deepening China and South Korea cooperation in emerging sectors such as AI and biopharmaceuticals, as well as urged South Korea to work with China to practice true multilateralism and safeguard the multilateral trading system. South Korea’s presidential office said South Korea and China signed 7 MOUs, including a currency swap. It was also reported that a South Korean presidential adviser said they agreed with China to cooperate on stabilising supply chains and will continue working-level communication on China’s ban on Korean culture, while South Korea and China were said to have made progress on China’s effective ban on Korean culture. Japanese PM Takaichi said they agreed with Chinese President Xi to build a constructive and stable relationship, while she said they reaffirmed a strong US-Japan alliance through US President Trump’s visit. Furthermore, Takaichi said they are not planning to renegotiate the USD 550bln investment package with the US even after seeing the US-South Korea package. Canadian PM Carney met with Japanese PM Takaichi on the APEC sidelines and discussed the potential to expand a productive economic relationship between the two countries, building on USD 32bln in annual two-way merchandise trade, while the Canadian PM’s office said they stand ready to negotiate an even better trade deal for both Canada and the US. China’s MOFCOM says China and the EU held in-depth and constructive talks on mutual export control concerns; both sides agreed to maintain dialogue to support stable and smooth supply chains between the economies. China is said to be seeking to buy US wheat for the first time in a year, according to Bloomberg sources. EUROPEAN TRADE EQUITIES European bourses (STOXX 600 +0.4%) opened modestly mixed and either side of the unchanged mark, but then caught a bid soon after the cash open. Upside lacked any specific drivers, but does come in the context of positive Nexperia-related developments and constructive EU-China trade talks over the weekend. European sectors opened with a negative bias, but are now mixed. Autos is by far the clear outperformer today, driven higher by the Nexperia developments over the weekend. In brief, China is to loosen its chip export ban to Europe - chips which were widely used amongst European automakers; Mercedes-Benz (+3.6%). Basic Resources is found right at the bottom of the pile, following China's decision to pause rare earth export controls to the EU; Rio Tinto (-1.2%). US equity futures (ES +0.3% NQ +0.5% RTY +0.2%) are firmer across the board, with slight outperformance in the tech-heavy NQ. Focus today will be on a couple of Fed speakers, and with ISM Manufacturing also on the docket. Alphabet (GOOGL) added to the US Analyst Focus List at JPMorgan. Click for the sessions European pre-market equity newsflow Click for the additional news Click for a detailed summary FX USD has kicked the week off on the front foot in a slight extension of last week's upside which was triggered primarily by the combination of a more hawkish-than-expected Fed announcement and a thawing in trade relations between China and the US. Whilst official data releases are still lacking, this week will present a slew of private surveys, kicking off today with the ISM manufacturing print, which is expected to remain in contractionary territory vs. expectations of an expansionary print in the services metric on Wednesday. Today's speaker docket includes Fed's Daly and Cook. DXY has risen as high as 99.92 with focus on a potential test of 100; not breached since August 1st (100.25 was the high that day). EUR is softer vs. the broadly firmer USD with incremental macro drivers for the Eurozone on the light side in the wake of last week's uneventful ECB policy announcement. Messaging since has reaffirmed the tone struck by ECB Lagarde with Nagel of Germany the latest to make the case that there is no need to adjust policy in the near-term based on the current outlook for the ECB. Note, Chief Economist Lane is due to speak @ 12:00GMT. Eurozone manufacturing PMI was unrevised at 50, as expected with the accompanying report noting that "demand across the eurozone economy remained subdued". On a more encouraging footing, China’s MOFCOM said China and the EU held in-depth and constructive talks on mutual export control concerns with both sides agreeing to maintain dialogue to support stable and smooth supply chains between the economies. EUR/USD has slipped to its lowest level since 1st August with a session trough at 1.1511. JPY is a touch lower vs. the USD with USD/JPY holding above the 154 mark. Japan was away from market overnight with newsflow surrounding Japan subsequently on the light side. The Japanese calendar is a light one this week aside from Cash Earnings data on Thursday. As it stands, markets price just a circa 28% chance of a BoJ rate hike in December. USD/JPY has ventured as high as 154.28 but is yet to test Friday's best at 154.41. GBP is soft vs. the USD but flat vs. the EUR. Newsflow continues to centre on the November 26th budget with the latest reporting suggesting that UK Chancellor Reeves will target pensions of high earners and expensive homes. The potential outcomes for the budget are vast at this stage. However, consensus is gradually coalescing around the view that Reeves will attempt to establish a greater financial buffer via a range of tax increases (e.g. freezing income thresholds, expanding NIC coverage, etc) that are expected to be non-inflationary and growth restrictive. Elsewhere, UK manufacturing PMI has been revised a touch higher but ultimately still remains below the 50 mark. Cable has slipped to a low of 1.3118 but is holding above Friday's 1.3097 base. Antipodeans are both are slightly more resilient than most peers vs. the USD with AUD managing to overlook a disappointing Chinese RatingDog Manufacturing PMI print overnight, which was hampered by a sharp decline in export orders. Instead, attention is on tomorrow's RBA policy announcement, with markets assigning a circa 94% chance of an unchanged rate in the wake of last week's hotter-than-expected Q3 inflation report. CHF is one of the laggards across the majors in the wake of softer-than-expected Swiss inflation data for October. Y/Y CPI unexpectedly slowed to 0.1% from 0.2% vs. consensus of a pick-up to 0.3%, whilst the M/M rate printed at just -0.3% (expected -0.1%, previous -0.2%); both prints were below the bottom-end of analyst forecasts. US President Trump's administration reportedly discussed ways to encourage other nations to adopt the USD as their primary currency, via FT which adds that no final decision has been taken. Click for a detailed summary Click for NY OpEx Details FIXED INCOME USTs are firmer by a handful of ticks. Price action this morning was limited for USTs at first owing to the Japanese closure for Culture Day. USTs picked up a bit more into the European day alongside benchmarks generally and despite an uptick in equity performance. Action that took USTs to a 112-27 peak, nearly matching Friday’s 112-27+ high, last week’s 112-29+ best just above. Markets will get Cook (voter) and Daly (2027) later today, in addition to the refinancing estimates ahead of Wednesday’s Quarterly Refunding Announcement. Before that, ISM Manufacturing hits and given the lack of NFP on Friday owing to the shutdown the employment component may draw even-greater attention than usual. This week, we will get ADP and Challenger but no JOLTs, weekly claims or as mentioned, NFP. OATs are modestly firmer. Friday’s Zucman tax measures failed to garner support in the National Assembly on Friday, though a slight adjustment was made to a real estate tax to target “unproductive wealth”. Supported by the Socialist Party, but markedly shy of the measures they seek. Amidst this, the OAT-Bund 10yr yield spread has narrowed a touch to just above the 78bps mark, potentially trading off the c. 10 day reprieve Lecornu may very well have. Bunds drifted lower overnight and then came under pressure this morning on the announcement of six-part EUR denominated Alphabet issuance, an update that sent Bunds to a 129.24 trough with downside of 15 ticks at most. However, the move proved somewhat short-lived with Bunds bouncing thereafter to 129.41, but still shy of the overnight early doors 129.46 peak. Upside that started around the European cash equity open and despite the equity tone picking up at the time amid the MOFCOM announcing in-depth China-EU talks. While firmer the action, as is the case with USTs, leaves Bunds just shy of Friday’s 129.49 best and last week’s peak at 129.73. No substantial move to the Final Manufacturing PMIs this morning, neatly surmised by HCOB as “fragile in Germany, in recession in France, persistently weak in Italy, and showing only subdued growth in Spain.“ Gilts opened with upside of a handful of ticks at 93.65 before extending to a 93.74 peak in tandem with peers as outlined above, a high that just about eclipses Friday’s 93.71 best but stopped shy of 93.89 and 93.96 from earlier that week. No move to a slight upward revision to the Final Manufacturing PMI, but one that left it in contractionary territory. The release highlighted that manufacturing is in a holding pattern, awaiting clarity on the domestic fiscal and geopolitical backdrop. Weekend press reports focussed on the fiscal situation, as Reeves is said to be preparing a pension tax raid of as much as GBP 4bln, according to The Telegraph. Additionally, the FT reports that the Treasury is looking into higher council tax bands, a tweak that could raise several billion pounds. Alphabet (GOOGL) mandates EUR-denominated 3yr, 6yr, 9yr, 13yr, 19yr & 39yr bonds; proceeds for general corporate purposes, incl. the repayment of outstanding debt, Click for a detailed summary COMMODITIES Crude benchmarks initially gapped higher following the OPEC+ meeting on Sunday but have failed to hold onto gains, reversing back to the closing price of Friday’s session. WTI and Brent gapped and extended to a peak of USD 61.50/bbl and USD 65.32/bbl respectively before falling c. USD 0.80/bbl to a trough of USD 60.70/bbl and USD 63.98/bbl. Over the weekend, OPEC+ agreed to an oil production hike of 137k BPD for December but then to hold on oil hikes for the following three months. The three-month hold has been described by analysts as an acknowledgement by the group that the oil market is facing a sizable surplus. Spot XAU fell straight on the open of the APAC session to a trough of USD 3962/oz before gradually reversing to a peak of USD 4028/oz just as the European session got underway. Currently, XAU is trading shy of best levels at USD 4006/oz as the global equity bid weighs on the yellow metal. Base metals initially dropped as the APAC session got underway but reversed higher, with 3M LME Aluminium reaching near its highest prices since May 2022, as the market follows the wider positive sentiment in global equities. 3M LME Copper dipped to a trough of USD 10.84k/t early in the trading day before reversing to a peak of USD 10.93k/t and currently oscillating within this tight c. USD 100/t band. Overnight the red-metal lacked direction after disappointing Chinese PMI data. Eight OPEC+ countries agreed to raise oil output in December by 137k bpd and then pause for Q1. Turkish oil refiners are to cut Russian crude imports for December arrival with Azeri Socar buying four non-Russian cargoes, while Turkish state refiner Tupras increases purchases of non-Russian crude, according to sources cited by Reuters. Morgan Stanley raises H1'26 Brent estimate to USD 60/bbl (prev. saw USD 57.50/bbl) BP (BP /LN) CEO says oil demand remains robust, adds that 1% oil demand growth was helped by aviation and petchems. UBS sees upside risks for gold towards USD 4,700/oz if political or financial market volatility increases again. OPEC Secretary-General says the group has been consistently and regularly returning barrels to the market, have the flexibility to alter, pause and reverse past decisions. Making sure to maintain supply-demand balance. Group sees oil demand growth at 1.3mln BPD this year. Still sees good signs for demand. Not expecting any surprises in the market. Click for a detailed summary NOTABLE DATA RECAP Swiss CPI YY (Oct) 0.1% vs. Exp. 0.3% (Prev. 0.2%); CPI MM (Oct) -0.3% vs. Exp. -0.1% (Prev. -0.2%) Turkish CPI MM (Oct) 2.55% vs. Exp. 2.83% (Prev. 3.23%) EU HCOB Manufacturing Final PMI (Oct) 50.0 vs. Exp. 50.0 (Prev. 50.0) Spanish HCOB Manufacturing PMI (Oct) 52.1 vs. Exp. 51.7 (Prev. 51.5) Italian HCOB Manufacturing PMI (Oct) 49.9 vs. Exp. 49.3 (Prev. 49.0) French HCOB Manufacturing PMI (Oct) 48.8 vs. Exp. 48.3 (Prev. 48.3) German HCOB Manufacturing PMI (Oct) 49.6 vs. Exp. 49.6 (Prev. 49.6) UK S&P Global Manufacturing PMI (Oct) 49.7 vs. Exp. 49.6 (Prev. 49.6) NOTABLE EUROPEAN HEADLINES UK Chancellor Reeves is reportedly considering higher bands of council tax to target expensive homes, via FT citing sources who said the idea is well established, the discussion is on the implementation; would reportedly raise several billion pounds. (FT) EU is devising plans to expand supervision of key financial markets infrastructure, including stock exchanges, crypto exchanges and clearing houses, as it seeks to eliminate fragmentation in the single market, according to FT. German VDMA says German engineering order fell 19% Y/Y in September; domestic orders -5%, Foreign Orders -24%; July-Sept -6% Y/Y. ECB's Kazimir says there's no time or need to fine-tune or overengineer monetary policy. Would not read too much into small deviations from a desired inflation path. There's a risk as broadly balanced for both the economy and inflation. The next move could be in either direction depending on the signals the ECB receives. NOTABLE US HEADLINES Fed’s Miran (voter) warned that the Fed risks a recession if it doesn’t cut rates rapidly, according to The New York Times. US President Trump urged Senate Republicans to terminate the filibuster rule. US President Trump separately commented that they will ask the courts how they can legally fund SNAP benefits as soon as possible. US Treasury Secretary Bessent said the Trump administration will not appeal the judge’s ruling on SNAP benefits, while he also commented that the Fed should be cutting rates if inflation is dropping, according to an interview with CNN. US Democratic and Republican Senators are talking and focussed on finding agreement on FY26 spending bills, via Punchbowl; the hope being that a spending agreement could help to resolve the shutdown. On spending, talks continued over the weekend and there is some optimism around a resolution. However, there are no signs from Trump/Republicans around giving ground on extending the expiring premium Obamacare subsidies. GEOPOLITICS MIDDLE EAST Israeli PM Netanyahu warned that Israel was prepared to take further action against Iran-allied groups, Hezbollah in Lebanon and Houthis in Yemen, according to FT. Israel’s Defence Minister said the Lebanese government must fulfil its commitment to disarm Hezbollah and remove it from south Lebanon, while Israel vowed maximum enforcement will continue and intensify to protect northern residents. Israel reportedly conducted artillery strikes and destroyed residential blocks in Khan Younis, southern Gaza Strip. Israel announced on Sunday that it received the bodies of three hostages from the Red Cross in Gaza. Iran’s President said Tehran will rebuild its nuclear facilities with greater power, according to state media. Iranian Foreign Minister Araghchi reiterates Iran is not interested in direct negotiations with the US, via Iran International. Iranian Foreign Ministry spokesperson Baghaei says Tehran remains committed to the Non-Proliferation Treaty (NPT) and its safeguards agreement, via Iran International. RUSSIA-UKRAINE US Pentagon was reported on Friday to have approved the White House to transfer US Tomahawk missiles to Ukraine, although left the final decision to the US President Trump, according to CNN, while the Russian Foreign Ministry said regarding reports about the US approval of Tomahawk supplies to Ukraine, that sending weapons to Kyiv will not help any settlement, according to RIA. However, US President Trump commented on Sunday that he is not really considering giving Ukraine Tomahawk missiles. Ukraine drone attack causes fire at Russian Black Sea port of Tuapse, while authorities announced that an oil tanker and two foreign civilian vessels were damaged as a result of the drone attack on Russia’s Tuapse. Ukraine’s military said it is raising the number of its assault groups to counteract Russian troops and that it has improved positions in several districts in Pokrovsk. However, it also stated that the situation in Pokrovsk remains complicated and dynamic, while Russia’s Defence Ministry said Ukrainian soldiers surrounded in Pokrovsk began to surrender. Russia says it struck Ukrainian gas facilities, a military airfield, and a Ukrainian military equipment repair base in large overnight strikes. OTHER US President Trump's administration is reportedly planning a new mission in Mexico to target cartels, via NBC citing current & former officials; would include US troops on the ground, though deployment is not imminent. US President Trump threatened to cut off all US aid to Nigeria over the killing of Christians and said the US might go into Nigeria with “guns-a-blazing”, while he instructed the Department of War to prepare for possible action and separately commented that there could be US troops on the ground in Nigeria or airstrikes. US Secretary of War Hegseth posted "The killing of innocent Christians in Nigeria — and anywhere — must end immediately. The Department of War is preparing for action. Either the Nigerian Government protects Christians, or we will kill the Islamic Terrorists who are committing these horrible atrocities." US and China agreed to set up direct communication between their militaries to help avoid conflict, according to US Secretary of War Hegseth, who also said the administration supports a strong and independent Vietnam, while the US wants a deeper military relationship with Vietnam and wants to expand the partnership with Vietnam and work to advance shared interests. Furthermore, Hegseth announced that the US military carried out another ‘lethal kinetic strike’ on a vessel in the Caribbean. South Korean President Lee said they will aid US President Trump to play a peacemaker role on North Korea. China criticised Japanese PM Takaichi for meeting with Taiwanese officials on the sidelines of APEC. Philippines signed a military pact with Canada as the former seeks to build a coalition of allies to deter China's aggression in the South China Sea. CRYPTO Bitcoin is on the backfoot and is now down to USD 107k, with Ethereum also slipping to around USD 3.7k. APAC TRADE APAC stocks trade mostly higher despite a lack of fresh major macro developments over the weekend and with thinned conditions as Japanese markets were shut for a holiday. ASX 200 lacked conviction as gains in tech, energy and financials were offset by weakness in healthcare, real estate and miners, while the RBA also began its two-day policy meeting, where the central bank is unanimously forecast to maintain its Cash Rate at 2.60%. KOSPI rallied to a fresh all-time high amid tech strength with notable gains in SK Hynix and Samsung Electronics, while South Korea and China reportedly signed 7 MOUs and agreed to cooperate on stabilising supply chains. Hang Seng and Shanghai Comp were ultimately higher although price action in the mainland was choppy with risk sentiment flimsy as participants digested disappointing Chinese RatingDog Manufacturing PMI data. NOTABLE ASIA-PAC HEADLINES Hong Kong’s Financial Secretary Chan said the city is set to achieve its annual target of 2%-3% for 2025 and noted that the economy grew 3.8% in Q3, which was the fastest pace of growth since Q4 2023. South Korea and Singapore agreed to cooperate on defence technology and signed an MOU on AI and green shipping, according to Korea’s presidential office. RBNZ 2025 stress test results noted that large banks are well placed to withstand the solvency and liquidity impact of a severe scenario caused by worsening geopolitical risks. DATA RECAP Chinese RatingDog Manufacturing PMI Final (Oct) 50.6 vs. Exp. 50.9 (Prev. 51.2) Australian Building Approvals (Sep) 12.0% vs. Exp. 5.0% (Prev. -6.0%, Rev. -3.6%) Loading...
