Markets begin to treat the AI boom as a leverage story rather than a growth story

EU mid-market update: European markets open lower; Amazon surges on AWS growth, Apple guides strong holiday sales; Markets begin to treat the AI boom as a leverage story rather than a growth story.

Notes/observations

- European indices mostly lower as investors focus on US “Mag 7” earnings. Amazon jumped 13% afterhours on accelerating AWS growth and raised FY capex; Apple rose 2% after revenue beat and upbeat iPhone 17 holiday outlook, despite weaker China sales. Hong Kong stocks fell 1.4% as lack of clarity on Nvidia chip exports weighed on tech.

- Markets are finally beginning to treat the AI boom as a leverage story rather than a growth story, after Meta’s $30B bond sale drew $125B in orders but erased over 11% of its market cap, with some hyperscalers’ 10Q filings this quarter revealing an AI buildout sharply outpacing cash generation, again questioning AI ROI. Microsoft’s multi-billion OpenAI-linked quarterly hit, Meta’s $81B in fixed commitments and $30B bond sale, expected (or even delayed) Oracle’s $38B project debt, and gold’s rise together mark a regime where time, energy, and balance-sheet capacity - not technology - set the limits of AI’s next phase, at lease for markets.

- Macro focus on Eurozone inflation after ECB held rates, maintaining a wait-and-see stance; Dec meeting seen key for outlook; German retail sales met forecasts; UK house prices surprised higher. Yields rise in UK, US, and Eurozone as rate-cut expectations fade.

- Japan Fin Min warns on FX volatility; BOJ hike bets fade post-Ueda. China buys 4 more US soybean cargoes.

- Gold up 0.4% to $4,032/oz. Bitcoin rebounds ~2.0% to ~$110K amid risk-off mood and skepticism over US-China trade truce.

- Notable EU corporate earnings: AXA, SPIE, SCOR, Elis, Imerys, TF1, Fuchs SE, Erste Bank, Vetropack (profit warning), UMG, Fugro, Heijmans, Danske Bank, CaixaBank, Unicaja Banco.

- Asia closed mixed with Nikkei225 outperforming +2.3%. EU indices -0.4% to +0.4%. US futures +0.1-1.2%. Gold -0.5%, DXY 0.0%; Commodity: Brent -0.5%, WTI -0.5%; Crypto: BTC -0.1%, ETH -1.4%.

Asia

- China Oct Manufacturing PMI: 49.0 v 49.6e (7th month of contraction).

- Japan Sept Jobless Rate: 2.6% v 2.5%e.

- Japan Oct Tokyo CPI Y/Y: 2.8% v 2.4%e; CPI (ex-fresh Food) Y/Y: 2.8% v 2.6%e.

- Japan Sept Retail Sales M/M: 0.3% v 0.8%e; Y/Y: 0.5% v 0.7%e.

- Japan Sept Preliminary Industrial Production M/M: 2.2% v 1.5%e; Y/Y: 2.4% v 1.8%e.

- Australia Q3 PPI Q/Q: 1.0% v 0.7% prior; Y/Y: 3.5% v 3.4% prior.

- Australia Sept Private Sector Credit M/M: 0.6% v 0.6% prior; Y/Y: 7.3% v 7.3% prior.

- Japan Fin Min Katayama commented that was recently seeing one-sided and rapid [FX] moves. Closely watching FX moves with 'high sense of urgency'.

Taiwan

- US Sec of Defense Hegseth: Raised concerns around Taiwan and South China Sea to China Defense Sec Dong.

Europe

- UK Oct Lloyds Business Barometer: 50 v 42 prior.

Trade

- China said to have purchased at least 4 additional soybean cargoes from the US.

- Taiwan APEC delegation: Technical documentation exchange underway for US-Taiwan reciprocal trade negotiations.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.39% at 572.60, FTSE -0.46% at 9,715.00, DAX -0.55% at 24,006.95, CAC-40 -0.31% at 8,132.39, IBEX-35 -0.18% at 16,005.50, FTSE MIB +0.37% at 43,363.00, SMI -0.26% at 12,268.84, S&P 500 Futures +0.69%].

Market focal points/key themes: European indices opened mixed and failed to gain direction in the early hours of trading; Sweden markets have early close for holiday; markets seen in holding pattern without catalyst to change direction in the wake of an as-expected ECB meeting; among better performing sectors are consumer discretionary and industrials; lagging sectors include materials and financials; Fresnillo to acquire Probe Gold; focus on flash Eurzone CPI later in the day; earnings expected in the upcoming US session include ExxonMobil, AbbVie, Chevron and Aon.

Equities

- Consumer discretionary: Electrolux [ELUXB.SE] -4.5% (LG Electronics results).

- Financials: Danske Bank [DANSKE.DK] +2.5% (earnings), Scor [SCR.FR] -6.5% (earnings).

- Technology: ASML [ASML.NL] -1.0% (Tokyo Electron results, Amazon raised Capex outlook; Korean firm tech), ams OSRAM [AMS.CH] +0.5% (Apple results).

Speakers

- Euro Zone ECB Survey of Professional Forecasters (SPF) raised 2025 HICP (EU Harmonized CPI) from 2.0% to 2.1% while maintaining 2026 at 1.8%, Projections raised 2025 GDP growth from 1.1% to 1.2% while maintaining 2026 GDP growth at 1.1%.

- ECB's Rehn (Finland): Keeping interest rates unchanged was justified, there was considerable uncertainty about the inflation outlook for the coming years. No major changes to outlook since Sept Staff Projections.

- ECB's Simkus (Lithuania): ECB view of economic developments essentially unchanged. Would soon see inflation slowing down.

- ECB’s Kocher (Austria): Remain in a good place on rates. Added tnat was either at the end or close to it on the current cycle.

- ECB's Muller (Estonia): Current level on interest rates is appropriate; level does not hold back growth or inflation.

- ECB's Kazaks (Latvia) reiterated Council stance that current level of interest rates were in a good place. Inflation practically at 2% target, expectations anchored.

- Turkey Fin Min Simsek commented that it would be hard to achieve CPI of 25-29% by end-2025 but a strong USD does benefit Turkey.

- PBoC Gov Pan: To narrow short term rate corridor; study policy tools for market volatility.

- China President Xi stated that was ready to maintain communication with Japanese PM and advance China-Japan ties on right track.

- China President Xi also noted that was willing to work with Canada to return ties to healthy and stable relationship.

- Japan PM Takaichi commented after meeting Xi that she sought constructive and stable ties with China.

Currencies/fixed income

- USD continued to find some slight momentum into month-end. Greenback continued to find support from recent comments from Fed Chair Powell who hinted that a Dec rate cut was not a done deal.

- EUR/USD near 2-week lows but holding above key support at 1.1500. Various ECB speakers continued to highlight that rate were at a appropriate place.

- GBP/USD below 1.3150 ahead of next week’s BOE rate decision. Analysts currently favoring a 25bps cut in Nov.

- USD/JPY probed below 153.70 during Asia after Japan Fin Min Katayama commented that was recently seeing one-sided and rapid FX moves in the yen currency. However, overall USD strength pushed the pair back above 154 area by mid-session.

- 10-year German Bund yield at 2.65%, France 10-year Oat at 3.43% and 10-year Gilt yield at 4.42% 10-year Treasury yield: 4.11%.

Economic data

- (NL) Netherlands Oct Preliminary CPI Y/Y: 3.1% v 3.1%e; CPI EU Harmonized M/M: +0.6% v -0.3% prior; Y/Y: 3.0% v 2.9%e.

- (FI) Finland Sept Retail Sales Volume Y/Y: +0.2% v -1.3% prior.

- (DE) Germany Sept Retail Sales M/M: 0.2 % v 0.2%e; Y/Y: 2.8% v 2.7%e.

- (DE) Germany Sept Import Price Index M/M: +0.2% v -0.2%e; Y/Y: -1.0% v -1.4%e.

- (UK) Oct Nationwide House Price Index M/M: 0.3% v 0.0%e; Y/Y: 2.4% v 2.3%e.

- (NO) Norway Oct Unemployment Rate: 2.0% v 2.1% prior; Unemployment Rate (seasonally adj): 2.2% v 2.1%e.

- (TR) Turkey Sept Final Trade Balance: -$6.9B v -$6.9B prelim.

- (TH) Thailand Sept Current Account Balance: $1.9B v $0.5Be; Overall Balance of Payments (BOP):$B v $1.0B prior; Trade Account Balance: $3.6B v $0.8B prior; Exports Y/Y: 19.2% v 5.5% prior; Imports Y/Y: 18.0% v 14.7% prior.

- (CH) Swiss Sept Real Retail Sales Y/Y: +1.5% v -0.4% prior.

- (HU) Hungary Sept PPI M/M: -0.4% v -0.8% prior; Y/Y: 2.4% v 2.3% prior.

- (CN) Weekly Shanghai Copper Inventories (SHFE): 116.1K v 104.7K tons prior.

- (TH) Thailand May Foreign Reserves w/e Oct 24th: $273.7B v $275.2B prior.

- (FR) France Oct Preliminary CPI M/M: 0.1% v 0.1%e; Y/Y: 1.0% v 1.0%e.

- (FR) France Oct Preliminary CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 0.9% v 0.9%e.

- (FR) France Sept PPI M/M: -0.2% v -0.2% prior ;Y/Y:0.1 % v 0.1% prior.

- (TW) Taiwan Q3 Advance GDP Y/Y:7.6 % v 6.3%e.

- (RU) Russia Narrow Money Supply w/e Oct 24th (RUB): 19.01T v 19.08T prior.

- (AT) Austria Oct Preliminary CPI M/M: +0.4% v -0.2% prior; Y/Y: 4.0% v 4.0% prior.

- (HK) Hong Kong Q3 Advance GDP Q/Q: +0.7% v -0.2%e; Y/Y: 3.8% v 3.0%e.

- (HK) Hong Kong Sept Retail Sales Value Y/Y:5.9 % v 2.6%e; Retail Sales Volume Y/Y:4.8 % v 1.9%e.

- (HK) Hong Kong Sept M3 Money Supply Y/Y: 4.5% v 4.0% prior; M2 Money Supply Y/Y: 4.5% v 4.0% prior; M1 Money Supply Y/Y: 11.5% v 16.2% prior.

- (IS) Iceland Sept Final Trade Balance (ISK): -45.4B v -45.5B prelim.

- (PL) Poland Oct Preliminary CPI M/M: 0.1% v 0.1%e; Y/Y: 2.8% v 3.0%e.

- (CZ) Czech Sept M2 Money Supply Y/Y: 3.2% v 2.8% prior.

- (NO) Norway Central Bank (Norges) Nov Net FX transactions (NOK): +24M v -276M prior.

- (ES) Spain Aug Current Account Balance: €5.1Be v €6.3B prior.

- (PT) Portugal Oct Preliminary CPI M/M: 0.0% v 0.9% prior; Y/Y: 2.3% v 2.4% prior.

- (PT) Portugal Oct Preliminary CPI EU Harmonized M/M: -0.3% v +1.0% prior; Y/Y: 2.0% v 1.9% prior.

Fixed income issuance

- (IN) India sold total INR210B vs. INR320B indicated in 2028, 2032, 2054 and 2055 bonds.

- (ZA) South Africa sold total ZAR450M vs. ZAR1.0B indicated in I/L 2031, 2038 and 2058 Bonds.

Looking ahead

- (TR) Turkey Sept Foreign Tourist Arrivals Y/Y: No est v 2.1% prior.

- 06:00 (EU) Euro Zone Oct Advance CPI Estimate Y/Y: 2.1%e v 2.2% prior; CPI Core Y/Y: 2.3%e v 2.4% prior; CPI M/M: 0.2%e v 0.1% prior- 06:00 .

(IT) Italy Oct Preliminary CPI M/M: 0.0%e v -0.2% prior; Y/Y: 1.5%e v 1.6% prior.

- 06:00 (IT) Italy Oct Preliminary CPI EU Harmonized M/M: 0.1%e v 1.3% prior; Y/Y: 1.6%e v 1.8% prior.

- 06:00 (GR) Greece Sept Retail Sales Value Y/Y: No est v 2.1% prior; Retail Sales Volume Y/Y: No est v 4.0% prior.

- 06:00 (EU) Daily Euribor Fixing.

- 06:00 (FR) France Debt Agency (AFT) announcements on upcoming issuance.

- 06:25 (EU) Daily ECB Liquidity Stats.

- 06:30 (IN) India Sept Fiscal Deficit YTD (INR): No est v 5.982T prior.

- 07:00 (PT) Portugal Sept Industrial Production M/M: No est v 1.6% prior; Y/Y: No est v 3.1% prior.

- 07:00 (UK) DMO to sell £6.0B in 1-month, 3-month and 6-month bills (£1.0B, £2.0B and £3.0B respectively).

- 07:01 (NZ) New Zealand Oct Cotality Home Value M/M: No est v 0.1% prior.

- 07:30 (BR) Brazil Sept Nominal (overall) Budget Balance (BRL): -89.3Be v -91.5B prior; Primary Budget Balance: -17.6Be v -17.3B prior; Net Debt % GDP: 64.5%e v 64.2% prior.

- 07:30 (IN) India Forex Reserve w/e Oct 24th: No est v $702.3B prior.

- 08:00 (ZA) South Africa Sept Trade Balance (ZAR): 6.9Be v 4.0B prior.

- 08:00 (BR) Brazil Sept National Unemployment Rate: 5.5%e v 5.6% prior.

- 08:30 (US) Sept Personal Income: 0.4%e v 0.4% prior; Personal Spending: 0.4%e v 0.6% prior; Real Personal Spending (PCE): 0.2%e v 0.4% prior.

- 08:30 (US) Sept PCE Price Index M/M: 0.3%e v 0.3% prior; Y/Y: 2.8%e v 2.7% prior.

- 08:30 (US) Sept Core PCE Price Index M/M: 0.2%e v 0.2% prior; Y/Y: 2.9%e v 2.9% prior.

- 08:30 (US) Q3 Employment Cost Index (ECI): 0.9%e v 0.9% prior.

- 08:30 (CA) Canada Aug GDP M/M: 0.0%e v 0.2% prior; Y/Y: 0.9%e v 0.9% prior.

- 09:00 (UK) Daily Baltic Dry Bulk Index.

- 09:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance.

- 09:00 (IN) India announces upcoming bill issuance (held on Wed).

- 09:30 (US) Fed's Logan at Bank Funding Conference, Day 2.

- 09:45 (US) Oct Chicago Purchase Managers Index (PMI): 42.0e v 40.6 prior.

- 11:00 (CO) Colombia Sept National Unemployment Rate: No est v 8.6% prior; Urban Unemployment Rate: 7.7%e v 7.8% prior.

- 11:00 (MX) Mexico Sept Net Outstanding Loans (MXN): No est v 7.098T prior.

- 12:00 (US) Fed's Hammack and Bostic at Bank Funding Conference.

- 13:00 (US) Weekly Baker Hughes Rig Count data.

- 14:00 (CO) Colombia Central Bank Interest Rate Decision: expected to leave Overnight Rate unchanged at 9.25%.

- 20:00 (KR) South Korea Oct Trade Balance: $2.4Be v $9.5B prior (revised from $9.6B); Exports Y/Y: -0.6%e v +12.6% prior (revised from 12.7%; Imports Y/Y: -0.8%e v 8.2% prior.