Gold continues surge higher as investors adjust to new geopolitical environment

EU Mid-Market Update: Gold continues surge higher as investors adjust to new geopolitical environment and aggressive change in policy direction from US; LVMH rally helps CAC-40 rise over 2%.

Notes/observations

– US dollar is pressured ahead of Fed Beige Book. Risk sentiment supported by strong US bank earnings. Gold continues raging on higher to $4,200 per oz, as portfolio re-distribution, safe haven flows and lack of interest in US dollar give the metal tailwinds

– UK gilt yields slightly lower as BOE rate cut expectations rise to ~50% for Dec decision. Cable marginally higher as Reeves gives exclusive interview to Sky News about tax rises and spending cuts in Autumn Budget to address a £30B shortfall

– CAC-40 outperforming other indices after LVMH posted Q3 results, marking a return to organic growth (+1%) as every division beat forecasts, led by a rebound in Fashion & Leather Goods and strong Sephora gains. Mainland China demand turned positive, the U.S. remained firm, and management signaled sustained brand momentum and innovation despite a -5% FX drag and lingering geopolitical headwinds.

– OpenAI is pursuing an aggressive five-year financing plan to sustain more than $1T in projected AI infrastructure spending, leaning on debt partnerships, external balance sheets, and new revenue streams rather than near-term profitability. The strategy expands into government and enterprise contracts, monetization of Sora and AI agents (ChatGPT has more than 800M regular users, but just 5% of those are paying subscribers), and potential hardware ventures with Jony Ive – yet its escalating capital intensity and energy demands underscore growing concerns over the company’s long-term financial and operational sustainability. OpenAI is also anticipating computing costs will fall sharply as a result of competition among suppliers and technical advancements.

– Nomura analysts expect Chinese EV demand to soften in 1Q26 as tax exemption halves; Overseas expansion to gain importance.

– Notable EU Corp News: ASML profit beats estimates, revenue misses. Guidance is wide for Q4 and FY25 is affirmed. ASML trading ~3% higher as long-term outlook is maintained amid strong AI adoption, company notes its prepared for rare earth export controls.

– Asia closed higher with KOSPI outperforming +2.7%. EU indices -0.3% to +2.4%. US futures +0.3-0.7%. Gold +1.7%, DXY -0.2%; Commodity: Brent +0.1%, WTI +0.2%; Crypto: BTC +1.5%, ETH +4.8%.

Asia

– China Sept CPI Y/Y: -0.3% v -0.2%e; PPI Y/Y: -2.3% v -2.3%e.

– RBA Assist Gov (Econ) Hunter: Board would adjust policy as appropriate as new information comes to hand.

– Australia Sept Westpac Leading Index M/M: -0.03 v -0.08% prior.

– RBNZ Chief Economist Conway noted current OCR of 2.5% was toward the lower end of the neutral zone.

Europe

– France PM Lecornu said to have suspended reform of state pensions.

– UK Chancellor Reeves confirmed she was looking at both tax rises and spending cuts in the Autumn budget; Said “no one wants this cycle [of raising taxes] to end more than me”.

Americas

– Fed Chair Powel noted judged it appropriate to take another step toward a more neutral policy stance at our October meeting.

– Fed’s Collins (voter in 2025; non-voter in 2026) noted that it seemed prudent to cut rates further given lower inflation risks and job market concerns.

Trade

– President Trump noted that was considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution. As an example, US could easily produce Cooking Oil ourselves and did not need to purchase it from China.

Speakers/fixed income/FX/commodities/erratumEquities

Indices [Stoxx600 +0.54% at 567.58, FTSE -0.41% at 9,414.30, DAX -0.01% at 24,229.52, CAC-40 +2.22% at 8,095.37, IBEX-35 +0.42% at 15,641.36, FTSE MIB +0.28% at 42,193.00, SMI +0.27% at 12,463.75, S&P 500 Futures +0.47%].

Market Focal Points/Key Themes: European indices opened higher across the board and remained upbeat through the early part of the session; risk appetite seen supported by positive corporate results; all sectors start the day in the green; among sectors leading the way higher are consumer discretionary and technology; lagging sectors include real estate financials; tech sector supported following ASML’s earnings; luxury and apparel subsectors supported following LVMH results; French telecoms make bid for Altice’s France unit; earnings expected in the upcoming US session include Bank of America, Morgan Stanley, Abbott and Prologis.

Equities

– Consumer discretionary: LVMH [MC.FR] +12.5%, Hermes [RMS.FR] +7.0% (LVMH earnings; China sales; French political turmoil recede), Entain [ENT.UK] -1.5% (trading update), PageGroup [PAGE.UK] +4.0% (trading update).

– Energy: TotalEnergies [TTE.FR] +3.0% (trading update).

– Industrials: Stellantis [STLA.NL] +2.5% (US investment).

– Technology: ASML [ASML.NL] +3.0% (earnings; guidance), Rexel [RXL.FR] +2.5% (earnings).

Speakers

– ECB’s De Guindos (Spain) stated that needed to assess how to further simplify supervision.

– Russia Dep PM Novak: No plans to submit a new oil production compensation plan to OPEC.

– China Foreign Ministry Spokesperson Lin stressed that US and China should engage in talks.

– India Central Bank (RBI) said to see USD/INR at 90 as key psychological level; would be unwilling to have the INR currency breech its record low against the USD. Would intervene until speculative FX positions were broken.

– Japan DPP Head Tamaki (opposition party) noted that still had some distance between DPP and CDP party; will continue talks at secretary-general level. Suggested another party leader meeting on Monday, Oct 20th.

Currencies/fixed income

– USD was softer as recent Fed speak highlighted another rate cut in Oct as markets expectations now over 95% for a further 25bps cut at the Oct 29th FOMC meeting.

– EUR/USD drifted higher to test 1.1640 in the session. Sentiment was aided by the French PM suspending the pension reform to appease the Socialist party.

– GBP/USD rebounded from 2.5 month lows to move above 1.3350 level. Cable aided after UK Chancellor Reeves confirmed she was looking at both tax rises and spending cuts in the Autumn budge.

– JPY strength was aided by Japanese opposition parties meeting to discuss potential cooperation to vote for a candidate other than LDP leader Takaichi, who has a clear dovish bias on monetary policy. The LDP proposed that Japan’s Diet plans to hold an extraordinary session from October 21 but opposition parties have pushed back on this. Pair at 151.35 by mid-EU session.

– 10-year German Bund yield at 2.59%, France 10-year Oat at 3.38% and 10-year Gilt yield at 4.55% 10-year Treasury yield: 4.01%.

Economic data

– (SE) Sweden Sept PES Unemployment Rate: 3.8% v 4.0% prior.

– (SE) Sweden Sept Final CPI M/M: 0.0%e v 0.0% prelim; Y/Y: 0.9%e v 0.9% prelim.

– (SE) Sweden Sept Final CPIF M/M: 0.1%e v 0.1% prelim; Y/Y: 3.1%e v 3.1% prelim.

– (SE) Sweden Sept Final CPIF (ex-energy) M/M: 0.1%e v 0.1% prelim; Y/Y: 2.7%et v 2.7% prelim; CPI Level: 418.26 v 418.13 prior.

– (NO) Norway Sept Trade Balance (NOK): 36.9 v 59.9B prior.

– (DK) Denmark Sept PPI M/M: -0.1% v -0.9% prior; Y/Y:0.9% v 3.0% prior.

– (FR) France Sept Final CPI M/M: -1.0% v -1.0% prelim; Y/Y: 1.2% v 1.2% prelim.

– (FR) France Sept Final CPI EU Harmonized M/M: -1.1% v -1.1% prelim; Y/Y:1.1% v 1.1% prelim; CPI (ex-tobacco) Index: 119.81 v 119.80e.

– (ES) Spain Sept Final CPI M/M: -0.3% v -0.4% prelim; Y/Y: 3.0% v 2.9% prelim.

– (ES) Spain Sept Final CPI EU Harmonized M/M: 0.2% v 0.1% prelim; Y/Y: 3.0% v 3.0% prelim.

– (ES) Spain Sept CPI Core M/M: -0.3% v +0.3% prior; Y/Y (final): 2.4% v 2.3% prelim.

– (PL) Poland Sept Final CPI M/M: 0.0% v 0.0% prelim; Y/Y: 2.9% v 2.9% prelim.

– (TR) Turkey Sept Central Gov’t Budget Balance (TRY): -309.6B v 96.7B prior.

– (IT) Italy Aug General Government Debt: €3.082B v €3.057T prior.

– (IS) Iceland Sept International Reserves (ISK): 922B v 917B prior.

– (EU) Euro Zone Aug Industrial Production M/M: -1.2% v -1.6%e; Y/Y: 1.1% v 0.0%e.

– (CN) China Sept YTD New Yuan Loans (CNY): 14.75T v 14.919Te.

– (CN) China Sept YTD Aggregate Financing (CNY): 30.09T v 29.905Te.

– (CN) China Sept M2 Money Supply Y/Y: 8.4% v 8.5%e; M1 Money Supply Y/Y: 7.2% v 6.1%e; M0 Money Supply Y/Y: 11.5% v 11.7% prior.

Fixed income issuance

– (IN) India sold total INR190B vs. INR190B indicated in 3-month, 6-month and 12-month bills.

– (UK) DMO sold £1.5B in 0.125% Aug 2031 inflation-linked Gilts (UKTi); Real Yield: % v 0.827% prior; bid-to-cover: x v 2.57x prior.

– (SE) Sweden sold total SEK17.5B vs. SEK17.5B indicated in 3-month and 9-month bills.

-(NO) Norway sold total NOK2.0B vs. NOK2.0B indicated in 2029 and 2035 bonds.

Looking ahead

– G20 Finance Ministers and central bank meeting.

– (NG) Nigeria Sept CPI Y/Y: 19.0%e v 20.1% prior.

– (CO) Colombia Sept Consumer Confidence: No est v -2.4 prior.

– 05:25 (EU) Daily ECB Liquidity Stats.

– 05:30 (GR) Greece Debt Agency (PDMA) to sell€250M in GGB Bonds.

– 05:30 (DE) Germany to sell combined €2.5B in 2050 and 2056 Bunds.

– 05:30 (PL) Poland to sell Fixed-rate Bonds.

– 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays).

– 06:00 (IE) Ireland Aug Property Prices M/M: No est v 0.8% prior; Y/Y: No est v 7.5% prior.

– 06:00 (RU) Russia to sell OFZ Bonds.

– 07:00 (US) MBA Mortgage Applications w/e Oct 10th: No est v -4.7% prior.

– 07:00 (ZA) South Africa Aug Retail Sales M/M: No est v 2.1% prior; Y/Y: 3.7%e v 5.6% prior.

– 07:00 (UK) Weekly PM Question time in House.

– 07:30 (IN) India Central Bank (RBI) Oct Minutes.

– 08:00 (BR) Brazil Aug Retail Sales M/M: +0.2%e v -0.3% prior; Y/Y: 0.2%e v 1.0% prior.

– 08:00 (BR) Brazil Aug Broad Retail Sales M/M: 0.6%e v 1.3% prior; Y/Y: -2.3%e v -2.5% prior.

– 08:00 (UK) Daily Baltic Dry Bulk Index.

– 08:30 (US) Oct Empire Manufacturing: -1.8e v -8.7 prior.

– 08:30 (US) Sept Real Avg Hourly Earning Y/Y: No est v 0.7% prior; Real Avg Weekly Earnings Y/Y: No est v 0.4% prior.

– 08:30 (CA) Canada Aug Manufacturing Sales M/M: -1.5%e v 2.5% prior; Wholesale Sales (ex petroleum) M/M: -1.3%e v +1.2% prior.

– 09:45 (FI) ECB’s Rehn (Finland).

– 11:00 (PE) Peru Sept Unemployment Rate: 6.1%e v 6.0% prior.

– 11:00 (PE) Peru Aug Economic Activity Index (Monthly GDP) Y/Y: 3.1%e v 3.4% prior.

– 11:00 (CO) Colombia Aug Retail Sales Y/Y: 13.4%e v 17.9% prior.

– 11:00 (CO) Colombia Aug Manufacturing Production Y/Y: 3.8%e v 5.8% prior; Industrial Production Y/Y: 1.1%e v 2.9% prior.

– 11:30 (IL) Israel Sept CPI M/M: -0.3%e v 0.7% prior; Y/Y: 1.9%e v 2.9% prior.

-11:30 (US) Treasury to sell 17-Week Bills.

– 11:45 (UK) BOE’s Breeden.

– 11:50 (FR) ECB’s Villeroy (France).

– 12:00 (US) Canada to sell 3.5% Dec 2057 bonds.

– 12:30 (US) Fed’s Miran.

– 13:00 (US) Fed’s Waller.

– 14:00 (US) Fed Beige Book.

– 14:00 (UK) BOE’s Breeden.

– 14:00 (ES) ECB’s De Guindos (Spain).

– 15:30 (SE) Sweden Central bank (Riksbank) Gov Thedeen.

– 15:45 (AU) RBA Gov Bullock.

– 16:30 (US) Weekly API Crude Oil Inventories:

– 17:45 (NZ) New Zealand Sept Food Prices M/M: No est v 0.3% prior.

– 17:50 (AU) RBA’s Kent.

– 19:50 (JP) Japan Aug Core Machine Orders M/M: +0.5%e v -4.6% prior; Y/Y: 4.9%e v 4.9% prior.

– 20:30 (AU) Australia Sept Employment Change: +20.0Ke v -5.4K prior; Unemployment Rate: 4.3%e v 4.2% prior; Full Time Employment Change: No est v -40.9K prior; Part Time Employment Change: No est v 35.5K prior; Participation Rate: 66.8%e v 66.8% prior.

– 21:30 (JP) BOJ’s Tamura.

– 22:00 (NZ) New Zealand Sept Non Resident Bond Holdings: No est v 61.5% prior.

– 23:00 (KR) South Korea Sept Total Bank Lending To Household (KRW): No est v 1,168T prior.

-23:30 (JP) Japan to sell 12-Month Bills.