European Midday Briefing: Shares Down Ahead of Fed, ECB Decisions

MARKET WRAPS

Stocks:

European shares were down while oil rose as the earnings season gathered pace.

AI stocks rallied across the globe as strong results for chip maker SK Hynix helped calm investor fears that the AI spending boom was running out of steam. Investors are now awaiting earnings from big AI spenders Microsoft and Alphabet after the close.

"If hyperscalers continue to report steady numbers, that will tell markets that the investment they are making can still endure in a rising rate environment," said WisdomTree WT. "That will give a lot of comfort to markets."

The Federal Reserve interest-rate decision is firmly in focus today, while French debt concerns have raised doubts over the European Central Bank's scope to raise rates further in the near-term ahead of Thursday's meeting.

"Markets are starting to doubt the near-term case for European Central Bank rate hikes, which marks a stark shift from September when tomorrow's meeting was priced as a nearly certain hike," Danske Bank said.

Markets expect the ECB to leave rates unchanged Thursday and a December rate-rise is less than 80% certain, it added.

Meanwhile, oil prices rose Wednesday as traders assessed renewed threats to Middle East energy supplies after Yemen's Houthi militants said they targeted Saudi Arabia's largest oil refinery.

U.S. Markets:

Stock futures were mixed as investors turned their attention to the Fed's interest-rate decision later today.

Markets see a 90% chance that rates will be held steady but price over 70 basis points of tightening over the next year, LSEG data show.

"Markets are fully locked into the idea of quarterly hikes with exactly 50 basis points priced in by March, in line with our call," Danske Bank said.

Forex:

The euro fell to a 17-month low against the dollar as the greenback strengthened and French fiscal concerns linger.

The dollar rose to a two-week high against a basket of currencies as sentiment towards AI stocks recovered ahead of the Fed's policy decision.

The greenback's strength should persist even if Fed Chairman Kevin Warsh refrains from sending clear signals about further tightening in December at Wednesday's meeting, Commerzbank said.

Sterling turned modestly lower versus the euro and hit a 12-day low against the dollar as investors looked ahead to the U.K. budget. Bonds:

Eurozone government bond yields edged higher, with attention shifting to events outside the eurozone--the U.K. budget and the Fed's interest-rate decision. Treasurys rose above 5% again on Wednesday in the run-up to the Fed's interest-rate decision later in the day.

The U.K. budget could have a positive impact on U.K. government bonds, ING said. Energy:

December Brent crude futures rose 1.9%, while December WTI futures gained 2%.

Metals:

Gold prices ticked lower as investors awaited the Fed's interest-rate decision.

"Markets are watching the outcome of the FOMC later today with no expectation of a hike but focus on whether commentary shifts to a more hawkish stance, and if there is any clarity on where rates head in 2027," MUFG said.

EMEA HEADLINES

Spain High-Speed Rail Crash Kills at Least 10

At least 10 people have been killed in a high-speed train crash in Spain, a local government spokeswoman said.

The collision occurred Wednesday morning on the Madrid-Seville line south of the city of Toledo, according to network manager Adif.

Intesa Sanpaolo Gets European Central Bank Approval to Take Over Monte Dei Paschi

Intesa Sanpaolo said it received authorization from the European Central Bank to take control of Banca Monte dei Paschi di Siena, removing a key regulatory obstacle for the Italian bank's 31.4 billion euros ($34.93 billion) takeover offer.

The green light from the ECB grants approval for Intesa to hold a direct controlling shareholding in Monte dei Paschi, which is widely considered to be the world's oldest bank still in operation.

UBS Profit Climbs as Asia, Americas Growth Boosts Inflows

UBS Group reported a rise in third-quarter net profit, boosted by higher inflows to its wealth-management platform from Asia and the Americas.

The Swiss banking group said net profit for the third quarter was $2.69 billion, up from $2.48 billion in the year-earlier period. The figure was lower than analysts' expectations of $2.71 billion, according to consensus estimates compiled by the bank.

Netanyahu Holds on as Election Results Show No Clear Winner

TEL AVIV-Prime Minister Benjamin Netanyahu's Likud party moved into the lead position in Israel's election Wednesday morning, denying his opponents a victory but still sitting short of a majority that would return his coalition to power.

The partial results could still fluctuate in the hours and days ahead as more votes are counted. But his showing gives the prime minister a solid position for the high-stakes showdown in the coming weeks over whether he will stay in office.

GLOBAL NEWS

Oil Prices Rise as Houthi Militants Target Saudi Energy

Oil prices rose Wednesday as traders assessed renewed threats to Middle East energy supplies after Yemen's Houthi militants said they targeted Saudi Arabia's largest oil refinery.

December Brent crude futures rose 1.9% to $116.03 a barrel, while December West Texas Intermediate futures gained 2% to $101.91 a barrel.

AI Boom Drives a Jump in Lending, but Bankers Still Sound Cautious

At the end of a previous lending boom, back in 2007, then-Citigroup CEO Charles Prince famously said: "As long as the music is playing, you've got to get up and dance."

This time around, with artificial intelligence now a driving force, banks are definitely up and dancing. But they are also eyeing possible seats and listening more keenly for a pause in the music.

Global Government Bond Yields Rise Ahead of Fed Decision, U.K. Budget

Yields on U.S. Treasurys, eurozone government bonds and U.K. gilts rose in European morning trade on Wednesday, as investors focus on the Federal Reserve's interest-rate decision as well as the U.K. budget.

The 10-year Treasury yield increased 1.8 basis points to 5.010% and the 10-year German Bund yield rose 1.9 basis points to 3.370%, while the 10-year U.K. gilt yield was up 2.5 basis points at 5.366%, according to Tradeweb.

Netanyahu Holds on as Election Results Show No Clear Winner

TEL AVIV-Prime Minister Benjamin Netanyahu's Likud party moved into the lead position in Israel's election Wednesday morning, denying his opponents a victory but still sitting short of a majority that would return his coalition to power.

The partial results could still fluctuate in the hours and days ahead as more votes are counted. But his showing gives the prime minister a solid position for the high-stakes showdown in the coming weeks over whether he will stay in office.

U.S. Warns Gulf of Possible Short, Intense Renewal of Iran War After Midterms

DUBAI-The U.S. has told several Gulf Arab countries to be prepared for a short, intense military campaign after the U.S. midterm elections, people briefed on the conversations said.

The communications through diplomatic and military channels are among a growing number of indications that the U.S. and Israel are readying to launch a new round of heavy combat operations against Iran, risking a major escalation in hopes of degrading Tehran's strength and pushing it toward negotiations.

Elizabeth Warren Demands Answers From Anthropic on 'Existential' Risks

Sen. Elizabeth Warren is "deeply troubled" by risks Anthropic raised in its initial public offering paperwork this week and is demanding answers to a long list of questions before the artificial-intelligence giant goes public, according to a copy of a letter she sent the company Tuesday that was viewed by The Wall Street Journal.

Trump and Talarico Offer Texas Split Screen With Dueling Rallies Just Miles Apart

LUBBOCK, Texas - The road to a Senate majority ran through the wide open plains of West Texas on Tuesday night, where President Trump rallied in support of Republican Senate candidate Ken Paxton, and his Democratic opponent James Talarico held an event just 3 miles away.

Both were making their final push to win voter support just one week out from the midterm elections.

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

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October 28, 2026 07:16 ET (11:16 GMT)

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