European Midday Briefing: Investor Sentiment Improves, Shares Rise

MARKET WRAPS

European shares were mixed early Wednesday after they lost ground in the prior session, but investor confidence improved as the morning progressed.

After a multiday selloff in global tech stocks, AI hardware stocks recovered in early trade though software shares slid. High oil prices also initially weighed on general sentiment.

Approaching midday, the FTSE 100 was down, the CAC 40 was gaining and the DAX was up. The pan-European Stoxx 600 index was in positive territory supported by the energy and tech sectors.

The movements come as yields on German and especially French government bonds increased.

Commerzbank said there was little reason to be optimistic about French bonds, adding it remained cautious.

"Treasury yields are pushing higher--marginally--as market anxiety over the inflation outlook builds," MUFG said.

Despite still elevated risks to Strait of Hormuz shipping, Persian Gulf oil exports have surpassed prewar levels.

Economic Insight

Inflation in the U.K. rose further above the Bank of England's target in September. The bank's policymakers are preparing for a meeting that investors expect will yield a first rate rise since the start of the war between the U.S. and Iran.

"We see inflation peaking at 4.5% in early 2027 and doubt it will be back at 2% until 2028," RSM UK said.

Figures released by the U.K.'s national statistics office suggest the country is on course for a second straight year of declining borrowing.

Stocks on the Move

Carrefour shares tumbled after the company cut its profitability targets of the year and said it expects recent violent protests to hit consumer spending.

EssilorLuxottica shares rose after third-quarter sales rose.

Randstad was the Stoxx 600's top riser after its results exceeded expectations.

U.S. Markets:

Stock futures pointed to a mostly higher open Wednesday after reports from SpaceX and Super Micro Computer overnight injected confidence into markets.

Third-quarter earnings are expected from IBM, Meta and Tesla later.

Forex:

Sterling was down slightly against the dollar while the euro fell against the pound following higher-than-expected U.K. inflation data.

The dollar recovered against a basket of currencies as Treasury yields and oil prices rose.It was also supported by safe-haven flows and a weaker euro amid ongoing concerns about French debt.

Bonds:

Eurozone government bond yields rose, tracking Treasury yields and higher oil prices. French government bonds underperformed Bunds amid uncertainties around next year's budget.

U.K. government bond yields rose only slightly and by less than their eurozone peers, even after the country's public sector borrowing data exceeded expectations.

The Investment Institute by UniCredit said it believes it remains difficult to build a strong bearish case for Bunds. It said that yields are unlikely to rise much higher from current levels because Europe's overall economic growth will remain relatively slow.

A significant repricing of European Central Bank expectations would be required to drive Bund yields lower, the investment institute added.

Energy:

Brent crude futures hovered near $110 a barrel, while West Texas Intermediate fell.

"Oil markets have held onto their recent gains, shaking off headlines on the diplomatic stance between Iran and the U.S.," MUFG said.

Metals:

Gold prices fell, with investors waiting for next week's Federal Reserve meeting for more cues on the monetary policy outlook.

EMEA HEADLINES

Jackdaw Gas Field Gets Green Light from U.K. Government

The British government has given the green light for production at the offshore gas field Jackdaw to begin, bringing an end to a protracted approvals process and allowing Shell and Equinor joint venture Adura to begin operations within weeks.

The Jackdaw project has been entangled in legal disputes and awaiting final government approval for some time. Hopes for progress were raised when new U.K. Prime Minister Andy Burnham promised a "pragmatic" approach to new drilling in the North Sea after global conflicts highlighted how vulnerable the country is to energy shocks.

Iran Is Using the Hostage Crisis Playbook. What Investors Need to Know.

Elevated oil prices, a primary driver of inflation, could last until President Donald Trump leaves the White House, according to Michael Schwartz, the dean of Wall Street's options strategists.Schwartz believes the Iranian regime is using the 1979-1981 hostage playbook to guide decisions during the current crisis with the U.S. Back then, Iran waited until Ronald Reagan defeated Jimmy Carter and was inaugurated to release hostages taken by students who stormed the U.S. embassy in Tehran.

"The Iranian terror regime will do everything it can to harm America, and interfering with the free flow of oil through the Strait of Hormuz is an effective way to increase global inflationary pressures, influence central bank policy, and even interfere with domestic U.S. politics," Schwartz, Oppenheimer's chief options strategist, told Barron's.

Adidas Lifts Profit View After U.S. Tariff Refunds, Record Quarterly Performance

Adidas lifted its profit guidance for the year after receiving a windfall of around $220 million from U.S. tariff refunds and delivering a record quarterly performance.

The German sports company said Tuesday that it received around 200 million euros, or $224.3 million, in U.S. tariff refunds, representing the majority of its total claims.

GLOBAL NEWS

U.S. Treasury Yields Edge Higher in Asian Trade

U.S. Treasury yields edged higher in Asian trading, reversing the decline in long-end yields the previous day, prompted by weak housing data.

The 10-year Treasury yield last traded 1.5 basis points higher at 5.131% on Wednesday, while the 30-year yield increased 1.6 basis points to 5.440%, according to Tradeweb.

Bank Indonesia Holds Key Rate as MSCI Downgrade Threat Weighs on Markets

Indonesia's central bank held its benchmark interest rate steady but raised its deposit facility rate Wednesday, as the threat of an MSCI market downgrade fueled capital outflows and pressured the rupiah.

Bank Indonesia kept its benchmark seven-day reverse repo rate at 5.75%, as seven of nine economists polled by The Wall Street Journal had expected. Two had forecast a quarter-percentage-point increase.

French Police Hunt for Suspected Rioters in Weekend Unrest

PARIS-France has settled into an uneasy calm after days of rioting, allowing authorities to focus on tracking down people suspected of looting shops and attacking government buildings in some of the worst unrest to rock the country in years.

Prime Minister Sébastien Lecornu has promised further arrests as police comb through footage of the riots. In the Paris region alone, some 200 investigators have been assigned to examine security camera footage and videos posted on social media.

Trump Envoy Tells Nervous Gulf Allies U.S. Can't Guarantee Security Forever

DOHA-Regional security officials received a sobering American message as they gathered in the Qatari capital and braced for a potential new round of escalation between the U.S. and Iran: They need to look out for themselves.

Tom Barrack, the U.S. ambassador to Turkey and President Trump's special envoy for Syria and Iraq, said the grand bargains that have underpinned global security for decades are undergoing major transformation, and countries in the Middle East and elsewhere should focus on securing themselves via regional partnerships.

Musk Ordered Starlink Slowdown That Blindsided Ukraine

WASHINGTON-Elon Musk ordered the slowdown of a military-grade version of Starlink relied on by Ukraine, a decision that sparked panic in Kyiv and confusion inside the Trump administration, U.S. officials and people familiar with the matter said.

Both Musk and President Trump have expressed anger at Ukraine for attacking Russian diesel refineries in recent weeks, which the president blames for high energy prices. Last week, Musk capped the speeds at which Ukrainian hardware could stay connected to the satellite-based network, the people said, rendering some offensive drones and interceptor drones virtually useless.

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October 21, 2026 05:13 ET (09:13 GMT)

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