Market Wrap 2025-10-24

• The US is expected to investigate China's compliance with the 2020 trade agreement, while President Trump has reportedly "terminated" all trade discussions with Canada.
• European stock exchanges began trading with a firmer tone but have since moved off their highest levels, while US equity futures are showing gains; INTC is up 8.3%.
• The USD is slightly stronger ahead of the CPI release, while the EUR saw a boost from German PMIs but has since pared those gains.
• Bunds and Gilts are being impacted by PMIs, OATs are awaiting Moody's assessment, and USTs are focused on the CPI data.
• Crude oil is giving back recent gains, and XAU is also declining, trading around USD 4.06k/oz.
• Looking ahead, key events include US Flash PMIs (Oct), US CPI (Sep), the CBR Policy Announcement, the European Council meeting (23rd-24th), Moody’s Credit Review on France, and speeches from ECB’s Cipollone & Nagel, as well as earnings from Procter & Gamble.

TARIFFS/TRADE

• US Trade Representative Greer is scheduled to visit Malaysia, Japan, and South Korea.
• South Korea's Industry Minister stated that South Korea prefers the US investment package to be less than USD 350 billion as part of the tariff agreement. Separately, it was reported that South Korea and the US still have significant differences on key points in trade negotiations, although some progress has been made, according to a senior presidential aide.
• China's Commerce Minister commented on relations with the US, stating that dialogue and cooperation are the only viable options for finding solutions and ensuring coexistence. The minister also noted that China will not engage in zero-sum games in opening up and attracting investment and will further reduce market access barriers for foreign investors.
• US President Trump posted, "Canada has fraudulently used an advertisement, which is FAKE, featuring Ronald Reagan speaking negatively about Tariffs...They only did this to interfere with the decision of the U.S. Supreme Court, and other courts. TARIFFS ARE VERY IMPORTANT TO THE NATIONAL SECURITY, AND ECONOMY, OF THE U.S.A. Based on their egregious behaviour, ALL TRADE NEGOTIATIONS WITH CANADA ARE HEREBY TERMINATED."
• Canada is reportedly limiting the number of American vehicles that Stellantis (STLAM IM) and GM (GM) can import tariff-free, following production cuts in Canada, according to CBC. The Canadian government later confirmed significant reductions to import quotas for General Motors (GM) and Stellantis (STLA IM), reducing the annual remissions quotas for General Motors by 24.2% and for Stellantis by 50%.
• Japan and the US have agreed to collaborate on AI and next-generation telecom standards, according to Nikkei.

EUROPEAN TRADE

EQUITIES

• European equities (STOXX 600 -0.2%) are trading lower after an initial positive opening. European market sentiment has not followed the positive tone in APAC and Wall Street, which was supported by the confirmation of the upcoming Xi and Trump meeting. There has been no clear macroeconomic driver for the recent losses.
• European sectors have opened slightly negative this morning. Technology (+0.9%) is the top performer, boosted by post-earnings strength in Intel (+8.3%). Financial Services is in second place, driven by gains in LSEG (+4.3%) after a broker upgrade from JP Morgan. Real Estate is at the bottom of the pack.
• US equity futures are firmer (ES +0.3% NQ +0.4% RTY +0.5%), as markets await the US CPI data later today. Pre-market movers include Intel (+8.3%, Q3 beat) and Google (+1.4%, Anthropic said it will expand its deal with Google to use up to 1mln AI chips).
• The EU Commission has found TikTok and Meta (META) in breach of their transparency obligations under the Digital Services Act; firms can now take measures to remedy the breaches.
• China smartphone shipments (Aug): 22.6 million, -6% Y/Y (previous +16.1%), via CAICT; foreign branded 1.306 million, -30.2% Y/Y (previous +15.6%).

FX

• The USD is marginally firmer today, as traders digest trade-related updates and await the delayed US CPI report for September. The DXY is currently in a 98.89-99.10 range. Consensus expects headline CPI to rise +0.4% M/M (previous 0.4%), with the annual rate seen rising to 3.1% Y/Y (previous 2.9%). On the trade front, the White House confirmed that President Trump will meet with several Asian leaders next week, including Chinese President Xi on Thursday. It was also reported that Trump believes the meeting with Xi will be positive.
• Regarding the northern border, Trump cancelled all trade negotiations with Canada due to anti-tariff ads. In response, USD/CAD moved higher by 25 pips to 1.4030 from 1.4005 over two minutes and is currently trading around 1.4028. ING suggests that the BoC is more likely to deliver a 25bps cut at next week’s meeting, given the trade uncertainty and existing tariffs impacting Canadian businesses.
• The EUR is essentially flat/modestly lower against the Dollar. Focus today has been on a series of PMIs. Starting with France, the figures were subdued, while Germany's were upbeat, and EZ-wide metrics were also resilient. The Single-Currency saw a slight dip on the French metrics but then jumped higher on the German figures, rising from 1.1607 to 1.1628. The pair has since cooled from those highs.
• The JPY is the marginal G10 underperformer today, continuing the pressure seen in the APAC session. USD/JPY is currently trading at the upper end of a 152.47-153.06 range; the peak marks a fresh WTD high and is approaching last week’s best at 153.27. Focus for the region has been on inflation, with Japan’s National CPI Y/Y rising from the prior (in line with expectations); the core figure also rose (as expected), while the super-core metric fell more than expected. From a policy perspective, the elevated inflation figures favor a hike for the BoJ; ING opines that the ongoing US-China trade spat will keep the BoJ wary of hiking rates in October and instead favor December.
• The GBP is modestly lower against the Dollar. Focus for the UK today was on Retail Sales, which topped analyst expectations; headline M/M +0.5% (expected -0.2%), the Ex-Fuel figure cooled from the prior but not as much as expected. Cable slipped from those levels heading into the PMI metrics, which were overall resilient; Services ticked a little higher, while Manufacturing topped the most optimistic of analyst expectations. The accompanying report suggested that “Companies are clearly treading cautiously in terms of spending, investment and hiring ahead of the upcoming Budget”. Overall, Cable lifted from 1.3302 to 1.3321; the midpoint of the day’s range. On the Budget, it was reported that Chancellor Reeves is considering raising income tax at next month's budget, according to The Guardian.
• Antipodeans are modestly lower against the USD, after trading with modest gains overnight, facilitated by the generally positive risk tone. However, this has subsided a touch in recent trade. AUD/USD trades in a 0.6641-0.6707 range, and within the confines of this week’s range; NZD/USD trades in a 0.5743-0.5759 range, the high for the day just shy of the WTD best at 0.5761 and then the 21 DMA at 0.5763 thereafter.
• PBoC set USD/CNY mid-point at 7.0928 vs expected 7.1192 (previous 7.0918).

FIXED INCOME

• USTs are contained overnight despite a handful of trade updates, with USTs very much waiting for the upcoming US September CPI report. The series is being released, despite the shutdown, to facilitate social security adjustments. Consensus expects headline CPI to rise +0.4% M/M (previous 0.4%), with the annual rate seen rising to 3.1% Y/Y (previous 2.9%). The core rate is expected to rise by +0.3% M/M (previous 0.3%), with the annual rate of core inflation seen unchanged at 3.1%. Elsewhere, updates are awaited on the trade front. Firstly, a potential investigation into China’s adherence with Section 301 terms from Trump’s first term. Secondly, further details on Thursday’s upcoming Trump-Xi meeting. Finally, relations between the US and Canada have deteriorated significantly, with Trump stopping discussions following the release of a Canadian tariff video.
• Bunds were contained early on, holding just under the 130.00 mark. Thereafter, the softer-than-expected French PMIs pushed the benchmark to a 130.07 peak and also lifted OATs to a 123.06 high. However, this peak proved short-lived as the subsequent German measures came in firmer than expected across the board and eclipsed the forecast range. The German metrics sent Bunds down by c. 30 ticks at the time, a move that has since extended to a 129.50 base following the EZ figure.
• OATs are underperforming compared to peers. After-hours, Moody’s will be reviewing France. Currently, Moody’s has France at Aa3 and is the last of the big-three to have a double-A rating on France; after S&P cut in an unscheduled move last Friday and Fitch earlier on. In politics, PS leader Faure spoke to BFM this morning and outlined that they are yet to see any signs of compromise from the government over an ultra-rich tax measure, and if there is no change by Monday then “it’s all over”; implying that they would submit a no-confidence motion unless progress is made on taxing the wealthiest in society.
• Gilts had a firmer start to the day, but only by a few ticks. Thereafter, Gilts followed EGBs lower following the German and EZ figures before coming under more pressure and slipping to a 93.41 low in the wake of better-than-expected Flash UK PMIs. The series confirms the relatively ok performance of the economy and corroborates the recent cooler-than-expected CPI report; furthermore, it chimes with the view of uncertainty ahead of the November Budget. On the point of data, this morning’s surprisingly strong retail sales figures spurred a slight hawkish reaction in November pricing, trimming the odds of a cut to c. 21% (pre-release c. 35%) but had no impact on December pricing; in sum, chiming with the above view on the BoE’s near-term trajectory. Elsewhere, attention remains on reports in UK press that Chancellor Reeves is said to be considering breaching a manifesto pledge and raising income taxes. However, a UK minister has since pushed back on this.
• China will issue up to USD 3 billion of USD-denominated sovereign bonds in Hong Kong during the first week of November.

COMMODITIES

• Crude benchmarks are pausing following Thursday’s drive higher as the US placed sanctions on Russian oil companies. APAC trade was muted, with WTI and Brent trading in a tight USD 0.60/bbl range before slightly extending to a peak of USD 62.13/bbl and USD 66.30/bbl respectively as German and UK PMIs came in better-than-expected, but then pulling back modestly. Currently, benchmarks are off best and somewhat rangebound. Late in Thursday’s session, a White House official said a Trump-Putin meeting is not completely off the table and states that the US President has not seen enough action from Russia towards peace.
• Spot XAU is currently being weighed on as bond yields rise globally, reversing Thursday’s gains. XAU rose to USD 4144/oz early in the APAC session before gradually falling to a low of USD 4047/oz as the European session got underway.
• Base metals followed on Thursday’s rally as copper supply concerns come at a time of broad optimism over demand and a Trump-Xi meeting on the horizon. 3M LME Copper oscillated in a tight c. USD 65/t range during the APAC session, forming a low at USD 10.8k/t, before extending the prior week’s high and peaking at USD 10.97k/t as the red metal nears the key USD 11k/t price point. Prices are currently off best levels, with 3M LME Copper pulling back to USD 10.89k/t.

NOTABLE DATA RECAP

• UK Retail Sales MM (Sep) 0.5% vs. Expected -0.2% (Previous 0.5%, Revised 0.6%); Ex-Fuel MM (Sep) 0.6% vs. Expected -0.6% (Previous 0.8%, Revised 1.0%)
• UK Retail Sales YY (Sep) 1.5% vs. Expected 0.4% (Previous 0.7%); Ex-Fuel YY (Sep) 2.3% vs. Expected 0.7% (Previous 1.2%, Revised 1.3%)
• UK GfK Consumer Confidence (Oct) -17.0 vs. Expected -20.0 (Previous -19.0)
• EU HCOB Composite Flash PMI (Oct) 52.2 vs. Expected 51 (Previous 51.2); Services Flash PMI (Oct) 52.6 vs. Expected 51.1 (Previous 51.3); Manufacturing Flash PMI (Oct) 50 vs. Expected 49.8 (Previous 49.8)
• French HCOB Composite Flash PMI (Oct) 46.8 vs. Expected 48.4 (Previous 48.1); Manufacturing Flash PMI (Oct) 48.3 vs. Expected 48.2 (Previous 48.2); Services Flash PMI (Oct) 47.1 vs. Expected 48.7 (Previous 48.5)
• German HCOB Composite Flash PMI (Oct) 53.8 vs. Expected 51.5 (Previous 52); Manufacturing Flash PMI (Oct) 49.6 vs. Expected 49.5 (Previous 49.5); Services Flash PMI (Oct) 54.5 vs. Expected 51 (Previous 51.5)
• UK Flash Manufacturing PMI (Oct) 49.6 vs. Expected 46.6 (Previous 46.2); Services PMI (Oct) 51.1 vs. Expected 51 (Previous 50.8); Composite PMI (Oct) 51.1 vs. Expected 50.6 (Previous 50.1)

NOTABLE EUROPEAN HEADLINES

• A Turkish court ruling allows the opposition leader to remain in place.

NOTABLE US HEADLINES

• The Fed has reportedly requested a formal consultation into a banking ruling around the treatment of cross-border loans for EZ banks, via Bloomberg citing sources.
• White House Deputy Chief of Staff Blair told Politico that, regarding the shutdown, US President Trump wants to spend time and political capital putting together a broader overhaul of healthcare.
• White House Deputy Chief of Staff Blair says there will be a "number" of publicly traded pharmaceutical companies who’ll be “coming to the table ” to “get the cost of prescription drugs down in the United States.”, via Politico.

GEOPOLITICS

MIDDLE EAST

• US President Trump said, regarding Israel, that it will not be doing anything with the West Bank.

RUSSIA-UKRAINE

• EU leaders failed to support a EUR 140 billion loan to Kyiv using frozen Russian state assets following opposition from Belgium, according to the FT.
• EU's Costa said discussions at the EU summit showed a reparation loan for Ukraine is feasible, while he added that discussions with the ECB and Eurogroup presidents showed the reparation loan proposal is in line with European and international law. It was also reported that Belgium's Prime Minister said Belgium does not want one euro of money returned to Russia, and on the legality of the reparation loan idea, it is not clear and it is a matter that needs to be solved. Furthermore, German Chancellor Merz said regarding Russian frozen assets that he assumes all EU countries will take part and it is complicated because there is no blueprint for such a step, as well as stated regarding Russian jets violating Lithuania's airspace, that it is a further provocation and they will react with a sense of proportion.

OTHER

• US President Trump said reports that B-1 bombers flew near Venezuela are not accurate, while he added that China is using Venezuela for Fentanyl smuggling. Furthermore, he said they will be seeing land action in Venezuela soon and may go to Congress about targeting land drugs.

CRYPTO

• Bitcoin is a little firmer and trades around USD 111k, while Ethereum also gains but still resides just shy of USD 4k.

APAC TRADE

• APAC stocks were mostly higher as the region took impetus from the rebound on Wall St, where energy names were underpinned amid surging oil prices and with the improved risk sentiment also facilitated by confirmation of a Trump-Xi meeting for next Thursday.
• The ASX 200 lagged as gains in tech were offset by weakness in defensives and the top-weighted financials sector.
• The Nikkei 225 rallied at the open and reclaimed the 49,000 status alongside a weaker currency, while the latest CPI data from Japan printed mostly in line with forecasts but showed an acceleration in the headline and core figures.
• The Hang Seng and Shanghai Comp conformed to the upbeat mood following confirmation of a Trump-Xi meeting next week, although gains were capped as it was also reported that the US is to probe China's 2020 trade deal compliance, while an investigation could be announced on Friday.

NOTABLE ASIA-PAC HEADLINES

• Chinese President Xi said China’s development is facing both strategic opportunities and challenges, while he added that China should comprehensively promote the integrated development of education, science, and technology talent, as well as strive to break through key core technologies, according to Xinhua.
• China's NDRC head said the economy relies on the real economy to move towards the future and noted that strong domestic demand is a strategic underpinning for China's modernisation. The NDRC head also stated that there is room and potential for China to expand domestic demand and they will implement some major investment projects, improve the structure of government investment, and increase the proportion sent to people's livelihoods. Furthermore, they will expand economic policy space during the next five years, will prevent improper government intervention in the economy, and will increase coordination of macroeconomic policies.
• China's Deputy Head of Office of Financial and Economic Affairs Commission said the external environment is uncertain and unstable, but noted the economy is on a solid foundation and fundamentals supporting long-term growth remain unchanged, while it was stated that they must move faster to implement a new development paradigm.
• China's Science and Technology Minister said regarding AI, that they will accelerate development and seek breakthroughs, as well as step up efforts on the top-level design of artificial intelligence. China will also develop chips with high-level resources and will strengthen artificial intelligence governance, while it will step up efforts in quantum technology and biotechnology.
• Japan’s Finance Minister Katayama said they need to take into account various factors when asked regarding the possibility of raising financial income tax, while she added that monetary policy measures should be up to the BoJ and hopes the BoJ continues appropriate dialogue with markets. Furthermore, Katayama said she spoke with US Treasury Secretary Bessent for about 15 minutes via phone, while she told Bessent she wants to tackle various issues and will meet with Bessent next week.
• Japan's Prime Minister Takaichi says 'Economy first then fiscal policy' will be the foundation of the government's approach. Will not implement cash handout which was pledged during the upper House election due to lack of public understanding. Aims to pass legislation in the current diet session to abolish provisional gasoline tax rate. To provide assistance for electricity, gas bills during winter. Launching a Japanese growth strategy council to expand the economy.

DATA RECAP

• Japanese National CPI YY (Sep) 2.9% vs Expected 2.9% (Previous 2.7%)
• Japanese National CPI Ex. Fresh Food YY (Sep) 2.9% vs Expected 2.9% (Previous 2.7%)
• Japanese National CPI Ex. Fresh Food & Energy YY (Sep) 3.0% vs Expected 3.1% (Previous 3.3%)