EMEA Morning Briefing: Earnings Defy Tariff Risks

MARKET WRAPS

Watch For:

U.K. CPI, PPI; trading updates for Heineken, Hermes, SAP, Barclays, Kering, UniCredit, among others.

Opening Call:

European stock futures were lower, after Asia stocks broadly fell. The U.S. Treasury yields were flat, the dollar was mostly unchanged. Gold and oil were higher.

Equities:

European futures were lower as Wall Street earnings topped expectations in the third-quarter, setting up the stock market for an end-of-year rally that could defy the risks from tariffs, inflation, and the trade war with China that still overshadow the world's biggest economy.

Jean Boivin, who heads the BlackRock Investment Institute, sees resilient economic growth, Fed Reserve rate cuts and continued spending on artificial intelligence as likely to bring broader earnings growth.

"LSEG data show expected year-over-year Q3 earnings growth for the 'magnificent seven' tech titans is 14%," he said in a recent note. "But performance is broadening out, with estimated growth of 7.8% for the other S&P 500 companies, a much narrower gap than in recent quarters."

Forex:

The U.S. dollar held steady as the U.S. government shutdown continues, with the data vacuum expected to remain in place until Friday, when CPI is set to be released.

"This is a market being driven by strong fundamentals," said Scott Helfstein, head of investment strategy at asset manager Global X."Earnings growth is largely driving equity values."

Some analysts tied the selloff in safe-haven assets like gold to optimism that the U.S. will reach a new trade deal with China, after the U.S. and Australia signed a rare-earths trade agreement.

Bonds:

The recent decline in bond yields has come despite lingering fears of inflation-one factor that can keep bond yields elevated no matter what the economic outlook.

Markets researcher DataTrek noted while nominal 10-year yields have fallen about 0.59 percentage points since the start of the year, almost all of the decline was tied to souring economic assumptions.

Changing inflation expectations accounted for just 0.07 percentage points of the 0.59-point decline. Meanwhile, the so-called "real yield"-which calculate a bond's yield minus the expected rate of inflation-declined 0.52 percentage points.

"We expect this will continue through the rest of the year as markets reassess U.S. economic growth and, therefore, future Fed monetary policy, " wrote DataTrek co-founder Nicholas Colas.

Energy:

Oil futures rose, buoyed by the U.S. Energy Department's plan announced Tuesday to buy 1 million barrels for the Strategic Petroleum Reserve. Oil prices have also likely seen support by President Trump's latest remarks that could lead to tighter supply, analysts said.

"Trump stressed that India would wind down its purchases of oil from Russia, claiming for the second straight week that he spoke directly about the matter with Prime Minister Modi," Commerzbank Research analysts said.

Metals:

With gold behaving more like a growth stock than a safe-haven asset, a bit of volatility was bound to hit at some point. It's finally here-and the yellow metal posted its worst drop in more than a decade. The pullback is a jolt to investors after a historic bull run this year. While some strategists said the metal had plenty of room to climb, others have argued the rally was overdone.

"Gold has entered a zone of unsustainable advance," wrote analysts at Renaissance Macro Research in a weekend note, adding that the bull run has made it more difficult to gauge when to take profits.

"Whenever the reversal strikes, traditional trend following techniques are likely to be too slow to react to preserve capital," Renaissance wrote.

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Base metals traded mixed, mostly holding within recent ranges, which indicates continued consolidation, said Sucden Financial analysts.

However, they could benefit from increased funding after a pulling back in precious metals. Markets appear to be unwinding speculative positions in precious metals and establishing fundamental support levels, which could free up capital for other commodities, the team said.

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Iron ore rose amid improved sentiment. ANZ Research in a note attributed the higher prices to the industry painting a relatively positive picture of demand, with BHP saying it expects strong global demand for iron ore even as it flagged slowing growth in China.

Despite production remaining high, however, Nanhua Futures added there is little room for upside.

The market's risk appetite is expected to remain subdued due to U.S.-China trade tensions, rising port inventories and shrinking steel-mill profits, it said.

TODAY'S TOP HEADLINES

Fed Model Shows Strong Growth. Is Government Shutdown Distorting Data?

The Atlanta Fed's closely watched GDPNow model shows the U.S. economy surging ahead at a 3.9% annualized growth rate for the third quarter of the year, a strong reading that conflicts with some expectations of an economic slowdown.

But the government shutdown has created a significant data blackout that may be distorting the picture. A weakening labor market may also drag gross domestic product down further than estimates show.

This Blackstone-TPG deal joins over $700 billion worth of private-equity buyouts this year. That's good news for shareholders.

The $18.3 billion acquisition of Hologic Inc. announced Tuesday is the latest in a run of larger deals by private-equity firms that have fueled stock gains and provided billions of dollars in fees to investment banks.

U.S. private-equity firms have announced $737.94 billion in deals in 2025 as of Tuesday - up 26.4% from the year-ago level of $584 million and the largest figure since 2021, when $957 billion in deals were announced as of the same date, according to LSEG data.

Bonds Are Rallying on Economic Fears. They Have More Gains Ahead.

The party for bonds could continue through the rest of 2025, unless the economic data suddenly start looking a lot better.

On Tuesday, yields on 10-year Treasury notes slid 0.029 percentage points to 3.959%. Last week, the 10-year yield dipped below 4% for the first time since April, when President Donald Trump rocked the markets by kicking off his trade war. (Bond prices move in the opposite direction to yields.)

Trump Says Ukraine Summit With Putin Would Be a 'Waste of Time'

WASHINGTON-President Trump said Tuesday that meeting with Russian President Vladimir Putin would be a waste and that he would reveal his new thinking on the Ukraine war within two days.

"I don't want to have a wasted meeting. I don't want to have a waste of time til I'll see what happens," he said Tuesday at the White House.

Saudi Crown Prince Plans First White House Visit Since 2018

Saudi Arabia's de facto leader will visit Washington next month and meet President Trump in the Oval Office, people familiar with the matter said, capping a multiyear effort to restore his international standing with a trip that could lay the groundwork for an eventual deal to establish ties with Israel.

The trip by Crown Prince Mohammed bin Salman, who last visited the U.S. in early 2018, is scheduled for Nov. 18 and 19, one of the people said. It would come a month after Trump negotiated a cease-fire to end Israel's two-year war with Hamas in Gaza.

Pop Mart Sales Top Market Expectation, Signals Sustained Momentum

Pop Mart reported stronger-than-expected third-quarter results, signaling sustained sales momentum which belied its shares' recent weakness.

Pop Mart said late Tuesday that its third-quarter revenue more than tripled compared with the same period a year earlier, as sales from the Americas rocketed 1,265%-1,270%. The surge in revenue was a further acceleration from the first-half of the year and topped market expectations.

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Expected Major Events for Wednesday

04:30/NED: Sep House Price Index

06:00/UK: Sep UK producer prices

06:00/UK: Sep CPI

06:30/HUN: Sep Employment & unemployment

08:00/POL: Sep Agricultural prices

08:00/POL: Sep Retail Sales

08:00/ICE: Sep Labour Force Survey

08:30/UK: Aug UK House Price Index

09:00/BEL: Oct Consumer Confidence Survey

10:00/IRL: Sep WPI

12:00/POL: Sep Broad money M3

23:01/UK: BRC Consumer Sentiment Monitor

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

October 22, 2025 00:16 ET (04:16 GMT)