EMEA Morning Briefing: Fed Set to Hold Despite Hot Inflation

MARKET WRAPS

Watch For:

Germany GfK consumer climate survey, U.K. budget statement; trading updates for Airbus, UBS, Unilever, Equinor, BNP Paribas, GSK, Deutsche Bank, BASF, Heineken, Deutsche Bank, Banco Santander

Opening Call:

European stock futures were lower after Asia stocks mostly rose. The yield on U.S. Treasurys were higher, the dollar strengthened. Gold fell and oil rose.

Equities:

European equity futures fell as investors looked ahead to the Federal Reserve's interest-rate decision, which is widely expected to be a hold.

Fed Chairman Kevin Warsh earlier this month said the U.S. economy had "broadly conformed" to officials' expectations at their September meeting.

The probability of a rate increase slid to around 15%. A hike now would come as a surprise less than a week before the midterm elections on Nov. 3.

"Hiking probabilities took a leg down when tech-sector credit seemed to be under pressure," said strategists at British brokerage Standard Chartered Global Research. "But tech and AI have rebounded, so downside financial-market risks are now less pronounced."

Markets are also focused on the U.K. budget announcement, with investors looking for reassurance that the government is committed to fiscal discipline, after bond yields rose globally in recent weeks on concerns over debt loads.

Forex:

The U.S. dollar strengthened, with major currencies consolidating against the greenback ahead of the Federal Reserve's rate decision.

Markets are pricing a hold, but are also closely watching Fed Chairman Kevin Warsh's tone for any hawkish signals on inflation that could reprice the rate path, said UOB's Global Economics & Markets Research team.

A dovish tilt that tempers rate-hike expectations would weigh on the greenback, it added.

Bonds:

The yield on U.K. government bonds, or gilts, were relatively stable, with markets expecting a modest set of spending plans and minimal policy changes.

The U.K. Budget will be the first under Prime Minister Andy Burnham and Treasury chief John Healey, with Healey expected to stick to the government's self-imposed fiscal rules and avoid any significant changes to government spending plans.

"If [Treasury Chief] Healey can deliver the dull budget the market expects on Wednesday, then the U.K. will be rewarded with lower gilt yields," said Matthew Amis, investment director at Aberdeen Investments.

The relative stability in gilts recently contrasts with periods earlier this year, when yields on long-dated bonds spiked due to U.K. fiscal concerns and geopolitical uncertainties.

"The prime minister and his MPs are not going to sanction spending cuts on government operations, and we also think it's highly unlikely this budget will bring in sweeping welfare cuts," May Rostom, chief U.K. economist at Citi.

Energy:

Oil prices rose as prospects of diplomatic talks eased tension in the Middle East, but failing to generate any meaningful selling interest.

Traders are increasingly focused on what is happening on the ground, said ANZ Research analysts, adding that supply risks to crude continue to rise as Saudi Arabia said it had contained a fire near its biggest export terminal at Ras Tanura following an attack on the region.

Metals:

Gold fell but hovered above the key $4,000 mark as markets await a raft of central bank decisions headlined by the Federal Reserve.

With the Fed tipped to hold, focus is on any signaling on when the next rate hike might come as oil prices stay elevated and inflation high.

The big unknown is once again the dollar, which continues to rebound, says Trade Nation's David Morrison. For now, gold seems to be consolidating, he said.

A more hawkish tone would likely weigh on the non-interest-bearing metal. Fed Chair Warsh has made it clear he's not big on forward guidance, so traders will take cues from U.S. growth and inflation data too.

Copper prices fell, as concerns over rising inflation and tighter monetary policy weigh on sentiment, said Changjiang Futures.

Expectations that the Fed will hold rates steady this week have firmed, while oil prices have pushed the implied probability of a December rate hike above 90%, adding pressure on copper.

Meanwhile, potential U.S. tariffs on refined copper may provide a floor for prices, Changjiang said, adding that copper is likely to remain rangebound under pressure.

TODAY'S TOP HEADLINES

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.

Standard Chartered Quarterly Net Profit Jumps, Raises Income Guidance

Standard Chartered reported higher third-quarter net profit, driven by strength in areas such as transaction services, markets and wealth offerings.

The London-based bank said Wednesday that net profit rose 46% from a year earlier to $1.50 billion for the three months ended September. That beat the estimate of $1.23 billion in a poll of analysts by data provider Visible Alpha.

SK Hynix Plans $75 Billion in Shareholder Returns After Blockbuster Earnings

South Korean memory-chip titan SK Hynix plans to return a total of $75 billion to shareholders this year as it reaps a windfall from surging demand for the hardware that powers artificial-intelligence computing.

The world's second-largest memory chip maker delivered another set of blockbuster earnings on Wednesday, with net profit more than tripling in the third quarter.

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Expected Major Events for Wednesday 00:01/UK: Oct CBI Growth Indicator and Service Sector Survey

07:00/NOR: Sep Credit Indicator C2

07:00/GER: Nov GfK consumer climate survey

07:00/NOR: Sep Retail Sales

07:00/EU: 3Q New Commercial Vehicle Registrations in Europe statistics (EU27 + EFTA3)

07:00/TUR: Sep Foreign Trade

07:45/FRA: Sep Housing starts

08:00/SVK: Sep PPI

09:00/AUT: Oct Austria Manufacturing PMI

09:00/ITA: Aug Industrial turnover

10:00/ITA: Sep PPI

11:00/FRA: 3Q Claimant count and job advertisements collected by France Travail

11:00/IRL: Sep Retail Sales Index

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October 28, 2026 01:17 ET (05:17 GMT)

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