MARKET WRAPS
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ECB interest rate announcement; EU business and consumer confidence; U.K. money and credit; trading updates from Shell, TotalEnergies, Repsol, Naturgy, STMicroelectronics, AB InBev, Societe Generale, ING, Danske Bank, BBVA, Glencore, Haleon, Boliden, Volkswagen, Renault, Adidas, OMV, Carlsberg, MTU Aero Engines, Universal Music, IMI, St. James's Place
Opening Call:
European stock futures traded mostly higher early Thursday. Asian stock benchmarks were mixed; the dollar was flat; Treasury yields were down; while oil futures and gold fell.
Equities:
Stock futures point to a stronger open in Europe, after the Federal Reserve brought cheer to stock investors ahead of the European Central Bank's rate decision due later Thursday.
The Fed held interest rates steady as expected, and Chairman Kevin Warsh made comments that investors interpreted as slightly dovish.
"All in all, I would say the market is taking this as less likelihood of aggressive hiking," said Anders Persson, chief investment officer and head of global fixed income at Nuveen.
Forex:
The dollar was unmoved by the Fed's decision to stand pat.
"We think the smaller-than-expected number of dissents and cautionary language inserted at the end of the statement should be read dovishly on the margins," Corpay's Karl Schamotta said. The "cross-currency rate differentials that helped support the dollar's gains earlier this autumn are likely to hold firm for now," he said.
Bonds:
Warsh's remarks on artificial intelligence bear on the question of how high rates ultimately need to go, and the answer may depend on how much the technology sector responds to borrowing costs.
"The idea that there's no interest-rate sensitivity from anything related to AI, to me, is very extreme," said Marc Giannoni, chief U.S. economist at Barclays.
The Fed's challenge is that the boom as a whole can look unfazed while strains build at the edges. "There's a point at which it breaks. And at that point, the Fed may find that spending weakens more significantly" than their models predict, said Vincent Reinhart, a former senior Fed adviser who is now chief economist at BNY Investments.
Energy:
Oil fell in Asian trading hours, after settling higher overnight. Vice President JD Vance is engaging one of Iran's most powerful hard-liners to revive peace negotiations even as President Trump threatens to restart the war after next week's midterm elections, The Wall Street Journal reported, citing U.S. officials and people familiar with the matter.
Risks remain elevated for oil prices with Saudi Arabian energy infrastructure coming under repeated attacks from the Yemen-based Houthis, ANZ Research analysts said.
Metals:
Gold declined after the Fed's latest rate decision. Investors are likely mulling the tone of Warsh's comments and what these could signal for further increases this year and in 2027, said Tony Sage of Critical Metals.
The personal consumption expenditures and U.S. economic growth data this week could also offer further monetary policy clues, he said. "Any dovish figures could soften yields and support gold, while firm data could lift the dollar and weigh on the metal," he added. Copper weakened after rising overnight, as easing concerns over U.S. copper outflows and signs of softening seasonal demand weighed on the outlook for the metal, Everbright Futures analysts said.
Copper prices might face some near-term pressure, though sustained enthusiasm for artificial intelligence could help keep prices elevated, they added. Iron ore strengthened in a likely technical rebound after recent declines. China's iron ore inventories saw a slight decline last week, and the pace of stock accumulation has been slow, Nanhua Futures analysts said.
However, despite weak steel production, China's reduced use of scrap in steel has kept the country heavily reliant on iron ore for steelmaking, Citi analysts said.
TODAY'S TOP HEADLINES
The Fed's AI Puzzle: Will High Rates Slow the Boom?
For months, a common view of the artificial-intelligence boom has been that it is propping up the U.S. economy and it is too big and too flush with cash to care about interest rates. Federal Reserve Chairman Kevin Warsh said Wednesday he wasn't so sure about either assumption.
The positions complicate the question of how much higher interest rates may have to go because they could point in opposite directions. The Fed held rates steady Wednesday, as anticipated, with investors widely expecting an increase at the next meeting in December.
U.S. Economy Set to Deliver Remarkably Resilient Third Quarter Growth
A new batch of economic data Thursday is expected to show the U.S. economy strengthened substantially over the last three months, driven by resilient consumer spending and a surge in the artificial intelligence buildout.
The Bureau of Economic Analysis' first estimate of third quarter gross domestic product growth will be published at 8:30 a.m. Forecasts from leading economists and Federal Reserve models vary some-but all agree that third-quarter growth dramatically beat the second quarter's 2.2% growth rate. A rosy GDP report will be welcomed by the president and his Republican party as voters concerned about the economy head to the polls in the midterm elections next week.
Vance Reaches Out to Iranian Hard-Liner in Bid to Restart Peace Talks
Vice President JD Vance is engaging one of Iran's most powerful hard-liners to revive peace negotiations even as President Trump threatens to restart the war after next week's midterm elections, U.S. officials and people familiar with the matter said.
Vance sent a letter to Mohsen Rezaei, the secretary of Iran's top security body, the Supreme National Security Council, and previously Iran's longest-serving commander of the Islamic Revolutionary Guard Corps, according to the people.
Airbus Posts Lower Earnings as It Seeks to Ramp Up Plane Deliveries
Airbus logged lower earnings in the third quarter as it works to significantly boost plane deliveries to customers in the last few months of the year.
The European plane maker said adjusted earnings before interest and taxes-its most closely watched measure of profitability-declined 9% from a year earlier to 1.77 billion euros, equivalent to $1.97 billion. Statutory net profit increased 20% to 1.34 billion euros.
The Beleaguered Chip Sellers Getting Their Revenge on Apple
During a ride in a Southern California desert, sales executive Scott Nelson stopped his dirt bike, pulled out a rifle and shot his old iPod.
Nelson sold flash storage to Apple and hated feeling like he always got the worst end of the deal. His Japan-based manufacturer, Kioxia, had little leverage. Apple was the world's biggest buyer of flash-the chips in iPhones that store photos, music and apps-and used its position to squeeze every cent from suppliers. Apple bullied flash makers into opening their books so it could monitor sales, making sure no one else got a better deal.
Microsoft Quarterly Profit Soars as Cloud Growth Accelerates
Microsoft's cloud business continued to post accelerating growth in the company's most recent quarter, contributing to a higher profit and easing jitters over potential returns from the artificial-intelligence infrastructure build-out.
The 48% growth in the Azure cloud business propelled Microsoft's total revenue to $92.28 billion, up 19%, for its fiscal first quarter. The result beat Wall Street's expectations for $90.62 billion in revenue, according to analysts polled by FactSet.
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Expected Major Events for Thursday 00:01/UK: Sep UK monthly automotive manufacturing figures
05:30/NED: Oct Producer confidence survey
07:00/SWE: 3Q Flash GDP
07:00/SWE: Sep Retail sales
07:00/SWE: Oct Quarterly Business Tendency Survey
07:00/SWE: Oct Consumer Tendency Survey
07:30/HUN: Sep Trade Balance
07:30/HUN: Sep PPI
08:00/SPN: Sep Retail Sales
08:00/SVK: Oct Business tendency survey
08:00/SVK: Oct Economic sentiment indicator
09:00/ICE: Oct CPI
09:00/ITA: Sep Unemployment
09:30/UK: Sep Bank of England effective interest rates
09:30/UK: Sep Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit
09:30/UK: Sep Monetary & Financial Statistics
10:00/ITA: Sep Foreign Trade non-EU
10:00/BEL: 3Q Preliminary GDP
10:00/CYP: Aug Industrial Production Index
10:00/EU: Oct Business & Consumer Surveys - Business Climate Indicator & Economic Sentiment Indicator
10:00/MLT: Sep PPI
10:00/CRO: Sep Industrial Production Volume Index
10:30/BEL: Oct CPI
11:00/ITA: Oct Consumer Confidence Survey
11:00/ITA: Oct Business Confidence Survey
11:00/IRL: 3Q Preliminary GDP Estimate
13:15/EU: ECB interest rate announcement
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