Sterling, Bitcoin and tech stocks volatile

EU mid-market update: Markets slide on AI valuation fears; Sterling, bitcoin and tech stocks volatile; IEEPA hearing in focus; Election night delivers strong off-year wins for Dems.

Notes/observations

- European tech stocks fall with US and Asian peers as investors question AI spending and valuations; BE Semiconductor -3%, ASM International -2%, Suss Microtec -2%.

- Sterling still garnering attention after tax-hike signals from Treasury chief Reeves; 10-year gilt yields steady near 4.41% ahead of BoE decision tomorrow.

- Bitcoin rebounds ~$102K after falling below $100K; US dollar index holds near three-month high at 100.16 as Fed rate-cut hopes fade.

- Democrats’ strong off-year wins and California’s passage of Proposition 50 have sharply narrowed Republicans’ structural map advantage from roughly R+7 to R+1–R+3, meaning Democrats now need only about a D+1 to D+2 national margin to retake the House in 2026, not D+3. The combination of Virginia’s 51–49 Democratic legislature, Mikie Sherrill’s New Jersey victory, and record NYC turnout has given Democrats both legal and political cover to redraw maps as aggressively as Republicans have in Texas, Missouri, and North Carolina.

- Supreme Court hearing on Trump-era tariffs could affect government revenue; Treasury seen keeping auction sizes unchanged, total borrowing cut to $569B.

- Supreme Court’s ruling as soon as next month could force the refund of nearly $90B in FY25 revenue if the justices strike them down. Chief Justice John Roberts and Justice Amy Coney Barrett are seen as the pivotal votes, with lawyers expecting a possible middle-ground ruling that preserves narrow security-linked tariffs while voiding broad reciprocal ones.

- In NYC mayoral race, Democratic socialist Zohran Mamdani (34, state assemblymember) won decisively, defeating Republican Curtis Sliwa and independent Andrew Cuomo. Historic first: youngest mayor in over 100 years, first Muslim/South Asian NYC mayor. Pledged "relentless improvement" for progressive policies. City Council results ongoing, with strong Dem gains.

- Analysts note US-China trade talks provide short-term stability and room for Chinese domestic reform focus.

- Notable Corp News: BMW confirms full-year outlook despite weaker Q3 revenue of €32.3B. Pandora -4.3% after trimming 2026 margin target to 23%. AMD -3.8% premarket after cautious guidance.

- Asia closed lower with KOSPI underperforming -2.9%. EU indices -0.2% to -0.8%. US futures +0.1% to -0.2%. Gold +0.8%, DXY +0.1%; Commodity: Brent +0.5%, WTI +0.6%; Crypto: BTC -1.8%, ETH -5.3%.

Asia

- New Zealand Q3 Unemployment Rate: 5.3% v 5.3%e.

- New Zealand Q3 Employment Change Q/Q: 0.0% v 0.1%e; Y/Y: -0.6% v -0.2%e.

- Australia Oct Final PMI Services: 52.5 v 53.1 prelim (confirms 21st month of expansion).

- China Oct RatingDog PMI Services: 52.6 v 52.7e (32nd month of expansion).

- BOJ Sept Minutes (2 decisions ago) Many members expressed the recognition that while U.S. tariff policy had negatively affected the profits of Japanese firms, so far there were no signs that the effects had spread to Japan's economy as a whole.

- Japan PM Takaichi; Government's job is to ensure companies can continuously raise wages.

- China Premier Li Qiang noted that some uniltateral and protectionist measures had 'severe impact' on the economic world order. Noted that in five years the Chinese economy was expected to exceed CNY170T.

Europe

- Times shadow MPC voted 5-4 for BOE to keep Bank Rate at 4.00%.

- UK Chancellor Reeves pe-budget speech signaled that she was prepared to break Labour’s manifesto as she pledged to put “national interest” ahead of “political expediency”.

Americas

- Democrats won key races.

- Senate Majority Leader Thune (R, SD) outlined a pathway forward, pointing to the possibility of combining a new short-term bill to reopen the government.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.43% at 568.12, FTSE % at #, DAX -0.64% at 23,793.30, CAC-40 -0.25% at 8,047.62, IBEX-35 -0.76% at 15,901.00, FTSE MIB -0.42% at 43,080.00, SMI +0.14% at 12,306.18, S&P 500 Futures -0.12%].

Market focal points/key themes: European indices opened lower and remained under pressure through the early part of the session; concerns over an AI bubble seen weighing on risk appetite; better performing sectors include industrials and chemicals; among underperforming sectors are technology and financials; focus on US ASP payroll data later in the day; earnings expected in the upcoming Americas session include Leonardo, Qualcomm, McDonald’s and Enel.

Equities

- Consumer discretionary: Pandora [PNDORA.DK] -2.0% (earnings), Marks & Spencer [MKS.UK] -1.0% (earnings).

- Consumer staples: Ahold Delhaize [AD.NL] +1.5% (earnings).

- Energy: Orsted [ORSTED.DK] +3.0% (earnings), Vestas Wind Systems [VWS.DK] +13.0% (earnings).

- Healthcare: Novo Nordisk [NOVOB.DK] +1.0% (earnings).

- Industrials: BMW [BMW.DE] +1.5% (earnings).

- Technology: ASML [ASML.NL] -2.5% (continued tech weakness in Asia; AMD results; Foxconn monthly sales decelerate).

Speakers

- ECB Wage Tracker for 2026: Sees Q3 wage growth at 2.2% v 1.8% in Q2.

- ECB's Nagel (Germany) stated that should be vigilant on inflation but not complacent.

- ECB’s Villeroy (France): Not in a fixed position on policy; reiterates need for full 'optionality'.

- Sweden Central Bank policy statement reiterated stance that rate to remain at this level for some time to come. New information also supported forecast that economy was on its way to recovery. Overall, outlook for inflation and economic activity remained largely unchanged.

- Sweden Central bank (Riksbank) Gov Thedeen post rate decision press conference stated that could see economic recovery beginning.

- Japan Vice Fin Min and Top FX Diplomat Mimura: Recent Yen moves deviate from fundamentals. Notes of some speculation in the market about Japan's macroeconomic policies, especially fiscal policy.

- Chinese regulatory authorities had ordered such data centers that were less than 30% complete to remove all installed foreign chips.

Currencies/fixed income

- EUR/USD holding below the 1.15 level despite both German factory orders and French production data rebounding and upward revisions to various PMI data.

- GBP/USD maintaining a soft tone into Thursday’s BOE rate decision. Pair at 1.3030 by mid-session. Cable had sold off following Chancellor Reeves pre-budget speech on Tues.

- USD/JPY at 153.50 araea and little phased despite comments from Japan’s top currency official. MOF’s Mimura noted that recent Yen moves deviated from fundamentals and reiterated govt stance that watching FX markets closely.

- 10-year German Bund yield at 2.64%, France 10-year Oat at 3.43% and 10-year Gilt yield at 4.41% 10-year Treasury yield: 4.07%.

Economic data

- (DE) Germany Sept Factory Orders M/M: 1.1% v 0.9%e; Y/Y: -4.3% v -4.1%e.

- (FI) Finland Sept Preliminary Trade Balance: -€0.4B v -€0.7B prior.

- (ZA) South Africa Oct PMI (whole economy): 48.8 v 50.2 prior.

- (SE) Sweden Oct PMI Services: 55.4 v 57.1e; PMI Composite: # v 57.2 prior.

- (FR) France Sept Industrial Production M/M: 0.8% v 0.1%e; Y/Y: 1.3% v 0.6%e.

- (FR) France Sept Manufacturing Production M/M: 0.9% v 0.3%e; Y/Y: 1.5% v 0.5% prior.

- (CZ) Czech Oct Preliminary CPI M/M: 0.5% v 0.3%e; Y/Y: 2.5% v 2.3%e.

- (ES) Spain Oct Services PMI: 56.6 v 54.5e (26th month of expansion); Composite PMI:56.0# v 54.3e.

- (TW) Taiwan Oct Foreign Reserves: $600.2B v $602.9B prior.

- (SE) Sweden Central Bank (Riksbank) left Repo Rate unchanged at 1.75% (as expected).

- (IT) Italy Oct Services PMI: 54.0 v 53.0e (11th month of expansion); Composite PMI: 53.1 v 52.1e.

- (FR) France Oct Final Services PMI: 48.0 v 47.1 prelim (confirmed 15th month of contraction); Composite PMI: 47.7 v 46.8 prelim.

- (DE) Germany Oct Final Services PMI: 54.6 v 54.5 prelim (confirmed 2nd month of expansion); Composite PMI: 53.9 v 53.8 prelim.

- (EU) Euro Zone Oct Final Services PMI: 53.0 v 52.6 prelim (confirms 5th month of expansion); Composite PMI: 52.5 v 52.2 prelim.

- (UK) Oct New Car Registrations Y/Y: 0.5% v 13.7% prior.

- (IT) Italy Sept Retail Sales M/M: -0.5% v -0.2% prior; Y/Y: 0.5% v 0.6% prior.

- (UK) Oct Final Services PMI: 52.3 v 51.1 prelim (confirms 6th month of expansion); Composite PMI: 52.2 v 51.1 prelim.

- (UK) Oct Official Reserves Changes: $1.3B v $4.6B prior.

- (EU) Euro Zone Sept PPI M/M: -0.1% v 0.0%e; Y/Y: -0.2% v -0.2%e.

Fixed income issuance

- (NG) Nigeria opened kits book to sell USD-denominated 10-year and 20-year bonds via syndicate.

- (DK) Denmark sold total DKK5.10B in 2027 and 2035 DGB Bonds.

- (SE) Sweden sold total SEK6.0B vs. SEK6.0B indicated in 2031 and 2036 Bonds.

Looking ahead

- (CO) Colombia Quarterly Monetary Policy Report.

- (MX) Mexico Citi Survey of Economists.

- (PL) Poland Central Bank (NBP) Interest Rate Decision: Expected to cut Base Rate by 25bps to 4.25%.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (DE) Germany to sell combined €2.0B in 2041 and 2044 Bunds.

- 05:30 (IT) Italy Debt Agency (Tesoro) Buyback operation:

- 06:00 (PT) Portugal Q3 Unemployment Rate: No est v 5.9% prior.

- 06:00 (IE) Ireland Oct Unemployment Rate: No est v 4,7% prior.

- 06:00 (EU) European Union to sell combined €3.5B in 3-month, 6-month and 12-month bills.

- 06:00 (RU) Russia to sell OFZ Bonds.

- 07:00 (US) MBA Mortgage Applications w/e Oct 31st No est v 7.1% prior- 07:00 (MX) Mexico Aug Gross Fixed Investment M/M: -1.8%e v +1.6%

prior; Y/Y: -7.0%e v -6.6% prior; Private Consumption Y/Y: -0.8%e v +0.1% prior.

- 07:00 (CZ) Czech Republic to sell up to combined CZK9.0B in 2029, 2032 and 2035 bonds.

- 07:00 (CZ) Czech Republic to sell €500M in 6-month bills.

- 08:00 (HU) Hungary Central Bank (NMB) Oct Minutes.

- 08:00 (BR) Brazil Oct Services PMI: No est v 46.3 prior; Composite PMI: No est v 46.0 prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:15 (US) Oct ADP Employment Change: +30Ke v -32K prior.

- 08:30 (US) Treasury quarterly refunding announcement.

- (PL) Poland Central Bank (NBP) Interest Rate Decision.

- 09:30 (CA) Canada Oct Services PMI: No est v 46.3 prior; Composite PMI: No est v 46.3 prior.

- 09:45 (US) Oct Final S&P Services PMI: 55.2e v 55.2 prelim; Composite PMI: 54.8e v 54.8 prelim.

- 10:00 (US) Oct ISM Services Index: 50.7e v 50.0 prior.

- 10:00 (AT) ECB's Kocher (Austria).

- 10:30 (US) Weekly DOE Oil Inventories.

- 11:15 (UK) BOE’s Bredden.

- 11:30 (CH) SNB’s Tschudlin.

- 11:30 (US) Treasury to sell 1017-Week Bills.

- 12:00 (CA) Canada to sell 5 Year Bonds.

- 16:30 (BR) Brazil Central Bank (BCB) Interest Rate Decision: Expected to leave Selic Target Rate unchanged at 15.00%.

- 18:00 (KR) South Korea Sept Current Account Balance: No est v $9.1B prior; Balance of Goods (BOP): No est v $9.4B prior.

- 18:30 (JP) Japan Sept Labor Cash Earnings Y/Y: -1.5%e v 1.7% prior;(revised from -1.5%) Real Cash Earnings Y/Y: 1.9%e v -1.3% prior (revised from 1.5%); Cash Earnings - Same Sample Base Y/Y: 2.3%e v 1.9% prior; Sept Scheduled Full-Time Pay - Same Base Y/Y: 2.3%e v 2.4% prior.

- 19:30 (JP) Japan Oct Final PMI Services: No est v 52.4 prelim; PMI Composite: No est v 50.9 prelim.

- 19:30 (AU) Australia Sept Trade Balance (A$): 4.0Be v 1.8B prior; Exports M/M: No est v -7.8% prior; Imports M/M: No est v 3.2% prior.

- 20:00 (PH) Philippines Sept Unemployment Rate: No est v 3.9% prior.

- 21:00 (JP) Japan Oct Tokyo Avg Office Vacancies: No est v 2.7% prior.

- 21:05 (VN) Vietnam Oct CPI Y/Y: 3.5%e v 3.4% prior.

- 21:05 (VN) Vietnam Oct Trade Balance: $2.3Be v $2.9B prior; Exports Y/Y: 19.5%e v 24.7% prior; Imports Y/Y: 19.3%e v 24.9% prior.

- 21:05 (VN) Vietnam Oct Industrial Production Y/Y: No est v 13.6% prior.

- 21:05 (VN) Vietnam Oct Retail Sales Y/Y: No est v 11.3% prior.

- 21:30 (HK) Hong Kong to sell CNY-denominated 3-year Bonds.

- 22:30 (JP) Japan to sell 6-month Bills.