European Midday Briefing: Shares Fall as Bond Selloff Extends, Oil Prices Rise

MARKET WRAPS

Stocks:

European shares fell Wednesday as higher yields and oil prices dragged the market mood.

French bonds remained in focus amid budget talks in which the government insists it will cap the deficit at 5% of GDP.

Opposition far-right leader Marine Le Pen's fiscal plan "may briefly support OATs, but a lack of credibility and the election uncertainty ahead still point to spread widening risks," ING said.

Meanwhile, oil prices rose, with Brent crude above $100 a barrel as attacks by Yemen's Houthi rebels on Saudi Arabia keep regional tensions elevated and threaten a recovery in exports.

"There is a clear tug-of-war at the moment between improving supply from the region and lingering threats to supply," ING said.

Economic Insight

Industrial production in Germany recovered unexpectedly sharply in August , as manufacturing firms continued to respond to the changeable environment caused by volatile energy prices.

U.S. Markets:

Stock futures were mixed Wednesday after the S&P 500 and Nasdaq hit new record highs on Tuesday.

For the day ahead, investors will be looking out for the Federal Open Market Committee's minutes from its September meeting to help gauge what the central bank might do next.

Forex:

The euro fell, albeit staying above recent lows.

The dollar gained as the Middle East conflict pushed up oil prices and as Treasury yields rose.

Bonds:

Yields on French government bonds rose in European opening trade and by more than their eurozone peers.

Treasury yields rose, reversing Tuesday's falls, as investors awaited the release of the Fed's September meeting minutes.

The energy shock and higher expectations for policy rates are an important part of the explanation for the sharp rise in long-term rates but the rise also reflects more structural changes, SEB said.

Danske Bank analysts see the risk of 10-year and 30-year Treasury yields hitting 6% as investors demand a higher premium for the long end.

Energy:

Brent was up 0.6%, while WTI futures were 0.5% higher.

Metals:

Gold prices fell as investors awaited the release of the Fed's meeting minutes for more cues on this year's inflation and monetary policy outlook.

EMEA HEADLINES

Shell's Refining Margin Soars to Record High After Middle East Conflict Upends Fuel Markets

Shell expects to report that its refining margin hit a record high in the third quarter, driven by volatility stemming from the conflict in the Middle East and a global supply squeeze across fuel markets.

The London-based energy major said Wednesday that its refining margin marker is forecast at $42 a barrel for the third quarter compared with $24 a barrel in the second quarter. The previous record margin was $28.04 a barrel, shortly after Russia's full-scale invasion of Ukraine in 2022.

German Industrial Output Rebounds at Strongest Pace Since Early 2025

Industrial production in Germany recovered unexpectedly sharply in August, as manufacturing firms continued to respond to the changeable environment caused by volatile energy prices.

Output rose 2.0% on month, from a 1.2% fall in July, Germany's statistics body said Wednesday. That marked the strongest rise since March 2025. Economists polled by The Wall Street Journal had predicted a smaller 0.5% rise.

Porsche Plans 20% Price Rise for Top-End Models in Exclusivity Push

Porsche plans to make its cars even more exclusive while continuing to cut costs and streamline its operations as it targets higher profitability in coming years.

The German sports-car maker said ahead of an investor event Wednesday that it will offer more higher-end vehicles and aim to increase the average selling price of these models by about 20% to 330,000 euros ($371,596).

France's Economy Is Trapped in a Negative Feedback Loop

The French government desperately needs a return to strong growth if it is to contain its rapidly rising debts. But uncertainty about whether the country can fix its finances has itself started to weigh on economic activity.

France only narrowly avoided a recession in the second quarter, as activity stagnated after extreme heat hit agricultural output and the energy price shock from the war in Iran continued to squeeze households and businesses.

GLOBAL NEWS

Oil Prices Rise as Houthi Attacks, U.S. Gulf Storm Raise Supply Risks

Oil prices rose Wednesday as traders weighed fresh Houthi attacks in Saudi Arabia and storm-related U.S. Gulf production shut-ins against recovering Middle East crude supplies.

December Brent crude futures rose 1% to $101.54 a barrel, while December West Texas Intermediate futures gained 1% to $89.31 a barrel.

German Industrial Output Rebounds at Strongest Pace Since Early 2025

Industrial production in Germany recovered unexpectedly sharply in August, as manufacturing firms continued to respond to the changeable environment caused by volatile energy prices.

Output rose 2.0% on month, from a 1.2% fall in July, Germany's statistics body said Wednesday. That marked the strongest rise since March 2025. Economists polled by The Wall Street Journal had predicted a smaller 0.5% rise.

IMF Chief Tells Economic Leaders: The Time to Act Is Now

The global economy is caught in a tug of war between an energy shock and an artificial-intelligence boom.

Those forces are testing the resilience economies have shown through a series of crises, International Monetary Fund Managing Director Kristalina Georgieva said Wednesday.

IMF Chief Tells Economic Leaders: The Time to Act Is Now

The global economy is caught in a tug of war between an energy shock and an artificial-intelligence boom.

Those forces are testing the resilience economies have shown through a series of crises, International Monetary Fund Managing Director Kristalina Georgieva said Wednesday.

French Government Is Willing to Bypass Parliament to Pass Billions in Cuts

PARIS-France's finance minister said the government is prepared to exercise special constitutional powers and circumvent Parliament to pass billions in spending cuts if negotiations stall over next year's budget.

In an interview, French Finance Minister Roland Lescure said he was willing to negotiate on all aspects of the budget, but he has two red lines-sticking to a maximum budget deficit of 5% of gross domestic product and avoiding any changes that hurt growth.

FlyDubai Attacker Was Part of Pilot Hiring Spree at Fast-Growing Airline

FlyDubai has been one of the world's fastest expanding airlines, nearly doubling its staff since the pandemic to become the go-to low-cost carrier for a travel-hungry region.

That growth is now running headlong into the biggest challenge in the carrier's history: restoring trust after a novice pilot attempted to intentionally crash a plane on one of its most sensitive routes, to Israel's Ben Gurion Airport.

Mexico's Sheinbaum Is Getting Fed Up With Playing Nice With the U.S.

MEXICO CITY-President Claudia Sheinbaum began her workday at dawn last week by grilling Mexico's top security and intelligence officials. She wasn't happy.

Inside the ornate National Palace, Sheinbaum confronted some of her most trusted aides over their plans to freeze the local bank accounts of former Mexican officials linked to a state governor from Sheinbaum's ruling party. The U.S. Treasury was about to target those former officials with sanctions for allegedly accepting bribes to protect the Sinaloa cartel's drug-smuggling operations, said people familiar with the discussion.

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(END) Dow Jones Newswires

October 07, 2026 05:17 ET (09:17 GMT)