European Midday Briefing: Stocks Lower as Investors Wait For Word From Powell

MARKET WRAPS

Stocks:

European indexes were lower Tuesday--part of a global trend--after the bounce in U.S. equities Monday.

The delay in official data due to the U.S. government shutdown has left investors hungry for cues, and Federal Reserve Chair Jerome Powell is due to speak at the National Association for Business Economics at 1620 GMT.

The U.S. and China will start charging new port fees on each other's ships Tuesday.

According to people familiar with the matter, Trump is trying to publicly de-escalate tensions with China to soothe markets while privately keeping up pressure on Beijing-a difficult balancing act that is being closely watched by Wall Street.

The Nikkei Stock Average closed 2.6% lower , its largest one-day decline since April 11.

U.S. Markets:

Stock futures were down as investors return from their long weekend, awaiting Powell's keynote speech.

"As there have been few significant data releases since the last Fed meeting, his message is unlikely to have changed from the September 'insurance' rate cut," Commerzbank said.

Third-quarter results are due from Citigroup, Goldman Sachs, JPMorgan and Wells Fargo.

Analysts expect the big banks to tell shareholders that their profit and revenue rose from a year earlier, even as investors voice concerns over credit quality and lending standards that two high-profile corporate bankruptcies highlighted this fall.

Forex:

The euro could fall if prospects grow that the ECB might cut interest rates again in December, Standard Chartered said.

More rate cuts in 2026 might look possible too--if inflation continues to undershoot the ECB's 2% target.

U.S. tariffs could dent euro-area exports and growth and French political uncertainty and red tape in Germany holding back fiscal disbursals could also dampen growth prospects.

Euro positives include progress on capital-market reforms and reserve managers' diversification towards the euro, though evidence of these is limited, it said, forecasting the currency will fall to $1.13 by the second quarter of 2026.

The dollar struggled as investors awaited comments from Powell later in the session.

HSBC expected the dollar to bottom out early next year.

"As the Fed resumes its easing cycle, previous episodes of cutting whilst the U.S. economy avoided a recession points us to a weaker USD."

DWS said further Fed rate cuts and the accompanying lower yield spreads are expected to result in a weak dollar versus the euro.

The euro was also being supported by investors wishing to reduce their dependence on the dollar, it added, forecasting EUR/USD at 1.20 by September 2026.

Sterling fell after data showed a surprise increase in the U.K. unemployment rate and decline in employment.

The data could damp expectations the BOE will remain cautious about cutting interest rates.

Bonds:

Treasury yields fell.

DZ Bank expected the 10-year Bund yield at 2.70% on a three-month horizon, at 2.85% on a six-month horizon and at 3.00% in 12 months' time.

Commerzbank recommended investors use relief phases, when 10-year OAT-Bund yield spreads trade close to 80 basis points, to reduce OAT exposure risks.

Columbia Threadneedle Investments said French government bond yields will likely be higher for a long period of time , and investors need to get used to the situation.

Energy:

Oil prices fell as growing trade tensions between the U.S. and China injected fresh uncertainty into markets and weighed on the global demand outlook.

Beijing on Tuesday announced sanctions against five U.S.-linked subsidiaries of a South Korean shipbuilder, while Trump said Friday that he would hit Chinese imports with a 100% additional tariff.

"The oil industry continues to navigate geopolitical issues," ANZ said.

Meanwhile, OPEC+ countries continue to boost supply, raising fears over a looming supply surplus that is expected to push prices lower.

Metals:

Gold prices held above $4,100 a troy ounce, reaching a fresh record as the U.S.-China trade spat boosted demand for safe-haven assets. Silver was also up.

DWS said a major impetus for the gold rally has come from expectations of further U.S. rate cuts, increasing the precious metal's attractiveness relative to fixed income, however, if things turn out differently--such as inflation not easing as expected--prices might come under pressure.

Gas

Natural-gas prices fell.

"Traders appear relatively confident that the region will have enough supply to meet winter demand. Imports of LNG have increased in recent weeks, with exports from the U.S. hovering close to an all-time high," ANZ.

Meanwhile, gas flows from Norway to northwest European terminals have also risen following unplanned maintenance activity over the weekend.

Neodymium-praseodymium

Macquarie raised its long-term NdPr price forecast to $110/kilogram , as it reckons the MP Materials-Defense Department deal will establish a price floor for the light rare earths.

EMEA HEADLINES

China's Rare-Earth Export Controls Are Critical Concern for EU, Trade Chief Says

China's fresh export controls on rare-earth materials are a critical issue for the European Union, EU trade chief Maros Sefcovic said, as tensions continue to rise between Brussels and Beijing.

"These measures are seen as unjustified and of course causing a lot of problems and complications for the European companies and European industry," Sefcovic said on the sidelines of a meeting of EU trade ministers Tuesday.

BP Expects Boost From Higher Upstream Production But Warns of Weak Oil Trading Result

BP expects a rise in upstream production and higher refining margins in its products segment to boost earnings, but warned of a weak contribution from its oil trading division.

The company is in the midst of a strategic reset and review of its portfolio as it seeks to shore up its balance sheet amid declining profitability and pressure from an activist investor.

Thyssenkrupp's Warship Arm to List Next Week as Group Eyes European Defense Cash

Thyssenkrupp's naval-defense business will start trading on the German stock exchange next week as the industrial company looks to cash in on a European drive to expand its submarine fleet in the face of geopolitical tensions.

The listing on the Frankfurt exchange on Monday will conclude the spinoff of a minority stake of Thyssenkrupp Marine Systems, Thyssenkrupp said Tuesday. Under the spinoff, set out last year and approved by shareholders in August, Thyssenkrupp will retain a 51% stake in the business.

Ericsson Hints at Higher Shareholder Returns After Cost-Savings, Unit Sale Boost Earnings

STOCKHOLM-Ericsson suggested it could lift its shareholder payout this year after third-quarter earnings beat expectations, driven by cost-cutting measures and the sale of its U.S.-based Iconectiv business.

"Solid recurring cash flow and the Iconectiv sale contributed to a strong third-quarter cash position, offering scope for increased shareholder distributions," Chief Executive Borje Ekholm said.

Publicis Lifts Outlook, Says AI Is Boosting Growth

Publicis Groupe boosted its annual outlook for the second time this year after third-quarter organic revenue growth beat analysts' expectations, and said artificial intelligence powered its top line.

The French advertising group on Tuesday projected its full-year net revenue would grow by between 5% and 5.5% organically, ahead of its previous guidance of close to 5%. For the third quarter, the owner of agencies such as Leo and Saatchi & Saatchi reported organic growth of 5.7%, exceeding analysts' forecasts of 5.1%, according to a company-compiled consensus.

GLOBAL NEWS

IEA Forecasts Bigger Oil Surplus, With Global Inventories Soon Set to Rise

The oil market is facing an even larger surplus than previously anticipated, with global inventories soon poised to rise as large crude shipments make their way to major hubs, the International Energy Agency said in its closely watched monthly report.

The Paris-based organization now forecasts oil-supply growth of 3 million barrels a day this year and 2.4 million the next, from earlier estimates of 2.7 million and 2.1 million barrels a day, respectively. Global demand, however, is expected to grow by 710,000 barrels a day and 699,000 barrels a day over the periods.

These Chinese Consumers Are Splurging. Little Luxuries Are Big Business.

In a softly lit boutique in the southern Chinese city of Meizhou, Guangdong province, 32-year-old Li Na scrolls through a display of artisanal leather goods. She pauses over a locally made calfskin crossbody bag priced at about 1,800 yuan ($250). "It's a treat," she says. "I still wait for promotions, but when I see something beautiful and well made, I'll splurge a little."

Li is part of a growing wave reshaping China's consumption landscape: middle-income shoppers outside Beijing and Shanghai who are gravitating toward what marketers call "little luxury"-artisan cosmetics, premium apparel, and imported skin care. These purchases are neither cheap nor extravagant, but sit in the sweet spot of being aspirational yet attainable.

Trump's Big Gamble on Tackling the Middle East's Intractable Problems

President Trump wants to quickly pivot from a Gaza cease-fire to the thornier problem of a broader peace in the Middle East, betting that two years of war transformed the region so much that decades-old animosities can be set aside.

It is a gamble that-much like the unorthodox diplomacy Trump used to secure the release of the hostages held by Hamas-flouts traditional thinking about the intractable problems at the heart of the region's problems, and it risks inflaming tensions between Israel, Palestinians and the broader Muslim world.

Can Shotguns, Spy Planes and Lasers Protect Europe From the Next Drone Incursion?

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October 14, 2025 05:16 ET (09:16 GMT)