European indices higher as doubt is cast on severity of Trump tariffs

EU mid-market update: European indices higher as doubt is cast on severity of Trump tariffs; Crypto remains electrified by hope.

Notes/Observations

- President-elect Trump still impacting markets as details of his administration start to be revealed; Reminder that count is still ongoing and House is yet to be decided, but Republicans are narrowing in on majority, albeit with a smaller margin than thought on Friday. Currently Rep on 214, Dems on 203 (218 needed for majority).

- Japanese Yen weakened to just shy of 154 against US dollar after Japan Parliament voted to keep Ishiba as PM, which was as expected.

- Crypto optimism over Trump win lifts Bitcoin past 80K handle; Trump and Elon Musk are both crypto endorsers; Reminder that Trump said he would fire SEC Chair Gensler on day one (Gensler is against crypto); Dogecoin is up >85% in last 7 days.

- US and parts of Europe are honoring Remembrance Day/Armistice from World War I; Most trading remains open but US bond market is closed.

- Notable EU earnings: Continental cut guidance and missed top line, but analysts like that automotive spinoff is on track and profit beat estimates.

- Asia closed mixed by -1.5% to +0.6%. EU indices are +0.8-1.2%. US futures are +0.3%. Gold -0.5%, DXY +0.3%; Commodity: Brent -1.1%, WTI -1.3%; Crypto: BTC +3.1%, ETH -0.3%.

Asia

- BOJ Summary of Opinions for Oct warned that FX and markets in general could see large fluctuations with the BOJ and Fed moving in opposite directions.

- Japan Sept Current Account Balance: ¥1.717T v ¥3.804T prior; Trade Balance (BOP Basis): -¥315.2B v -¥377.9B prior.

- Japan Oct Bank Lending Y/Y: 2.7% v 2.7% prior; Bank Lending (ex-trusts) Y/Y: 3.0% v 3.0% prior.

- China Oct CPI YoY: 0.3% v 0.4%e; PPI Y/Y: -2.9% v -2.5%e (25th month of negative readings).

Global conflict/tensions

- Russia and Ukraine launched their biggest drone attacks on each other since the start of the conflict.

- Pres-elect Trump reportedly talked to Russian Pres Putin on Nov 7th, told him not to escalate war in Ukraine and reminded him of US sizable military presence in Europe.

- Russia Foreign Ministry stated that Trump's promise to quickly resolve the crisis in Ukraine was nothing more than rhetoric. No grounds for talking about resuming dialogue with the US on strategic stability and arms.

- Qatar suspended its efforts to mediate a ceasefire and hostage deal between Israel and Hamas.

Europe

- ECB’s Holzmann (Austria, hawk): No reasons to cut rates in Dec but decision will be data-dependent.

- German Chancellor Scholz hinted that might hold vote of confidence in his govt before Dec 25th; Planned to be SPD's top candidate in German vote.

- France Industry Min Ferracci: Factory closures in country are expected to affect "thousands of jobs" in the coming weeks and months.

- Fitch revised Spain outlook to Positive from Stable; Affirmed sovereign rating at A-.

Americas

- US bond market closed for Veterans Day.

- Fed's Kashkari (non-voter for 2024 and 2025) made the media rounds noting if growth and productivity remained strong the Fed might not cut as much; need to see more evidence before deciding on another rate cut. Not concerned about the dynamic in Washington between the Fed and the incoming Trump Admin.

- Investor Scott Bessent held "very positive" meeting with Trump on Friday as he and fellow investor John Paulson emerged as leading candidates for US Treasury Sec position.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +1.05% at 511.98, FTSE +0.81% at 8,128.52, DAX +1.28% at 19,450.75, CAC-40 +1.10% at 7,419.14, IBEX-35 +0.75% at 11,641.70, FTSE MIB +1.01% at 34,157.00, SMI +1.06% at 11,930.10, S&P 500 Futures +0.28%].

Market Focal Points/Key Themes: European indices open higher across the board and stayed upbeat through the early part of the session; all sectors start the day in the green; Poland closed for holiday; markets seen playing catch-up, with ECB expected to be more dovish in the coming months; among sectors leading the way higher are financials and industrials; lagging sectors include materials and telecom; Thule acquires Quad Lock; earnings expected in the upcoming US session include Mediobanca and InterActiveCorp.

Equities

- Consumer discretionary: Burberry [BRBY.UK] +2.5% (more UK press speculation that Burberry 'set for takeover by Moncler').

- Energy: Rosneft [ROSN.RU] +2.5% (reportedly Russia govt working on a plan to merge its biggest oil companies Rosneft Oil, Gazprom Neft, and Lukoil into a single national giant firm).

- Healthcare: Almirall [ALM.ES] -3.5% (earnings) - Industrials: Continental [CON.DE] +5.5% (Q3 results, profit beat, rev miss and guidance cut; spin-off on track), Rheinmetall [RHM.DE] +2.5% (US Pres-elect Trump reportedly talked to Russian Pres Putin on Nov 7th, told him not to escalate war in Ukraine and reminded him of US sizable military presence in Europe), RHI Magnesita [RHIM.UK] +1.0% (trading update; cut outlook; call comments), LEM Holding [LEHN.CH] -16.5% (H1 results).

- Materials: Salzgitter [SZG.DE] -2.0% (final 9-month results).

Speakers

- SNB Vice Chairman Martin stated that it had commitment to future interest rate cuts and next decision to be determined by data : Expected CHF currency (Franc) to appreciate; notes it is a safe haven currency.

- EU said to see little chance of quick China deal to avoid EV tariffs.

- Russia Kremlin Spokesperson stated that reports on recent Trump/Putin call was untrue. Currently Putin had no specific plans to speak to Trump.

- Japan Parliament voted to keep Shigeru Ishiba as PM and lead minority govt.

Currencies/fixed income

- FX price action was subdued on as the data calendar was light and the closure of US Treasury cash trading for Veterans Day.

- USD continued to hold onto its post Trump election gains. Greenback aided by Trump's expected pro-growth and protectionist agenda.

- EUR/USD at 1.0685 as dealers suggested that interest rate differentials were moving against the Euro and in favor of the greenback.

- GBP/USD below the 1.19 level. Dealers were focus on Tuesday release of UK wage data which was expected to show that wage pressures remained stubborn in the country.

- USD/JPY at 153.70 area. Yen has outperform its other G10 peers against the USD. BOJ published its Summary of Opinions for October, which showed that members exhibited a mix of hawkish and dovish sentiments during their discussion last month.

- The election of pro-crypto Trump administration has helped to lift Bitcoin past $81,000.

Economic data

- (SE) Sweden Nov SEB Swedish Housing-Price Indicator: 50 v 49 prior.

- (FI) Finland Sept Current Account: €1.1 v €0.6B prior.

- (NO) Norway Oct CPI M/M: 0.6% v 0.5%e; Y/Y: 2.6% v 2.4%e.

- (NO) Norway Oct CPI Underlying M/M: 0.2% v 0.3%e; Y/Y: 2.7% v 2.7%e.

- (NO) Norway Oct PPI (including oil) M/M: +4.6% v -1.9% prior; Y/Y: -3.5% v -2.9% prior.

- (DK) Denmark Oct CPI M/M: +0.6% v -0.3% prior; Y/Y: 1.6% v 1.3% prior.

- (DK) Denmark Oct CPI EU Harmonized M/M: +0.7% v -0.4% prior; Y/Y: 1.6% v 1.2% prior.

- (DK) Denmark Sept Current Account (DKK): 35.1B v 38.7B prior.

- (TR) Turkey Sept Unemployment Rate: 8.6% v 8.6% prior.

- (TR) Turkey Sept Industrial Production M/M: +1.6% v -1.6% prior; Y/Y: -2.4% v -5.2% prior.

- (CZ) Czech Oct CPI M/M: 0.3% v 0.3%e; Y/Y: 2.8% v 2.8%e.

- (CZ) Czech Sept Import Price Index Y/Y: 0.4% v 3.1% prior; Export Price Index Y/Y: 2.3% v 4.0% prior.

- (CH) Swiss Weekly Total Sight Deposits (CHF): B463.5 v 456.6B prior; Domestic Sight Deposits: 455.4B v 447.8B prior.

- (CN) China Oct YTD New Yuan Loans (CNY): 16.520T v 16.72Te- (CN) China Oct YTD Aggregate Financing (CNY): 27.060T v 27.20Te.

- (CN) China Oct M2 Money Supply Y/Y: 7.5% v 7.0%e; M1 Money Supply Y/Y: -6.1% v -7.0%e; M0 Money Supply Y/Y: 12.8% v 11.5% prior.

- (HU) Hungary Oct YTD Budget Balance (HUF): T v -2.624T prior.

Fixed income issuance

- None seen.

Looking ahead

- (UR) Ukraine Central Bank (NBU) Oct Minutes.

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

- 05:30 (DE) Germany to sell combined €3.0B in 6-month and 12-month BuBills.

- 06:00 (IL) Israel to sell bonds.

- 06:00 (RO) Romania to sell RON600M in 7.1 % July 2034 bonds.

- 06:00 (TR) Turkey to sell Bonds (2 tranches).

- 06:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 06:30 (BR) Brazil Sept Nominal Budget (Overall) Balance (BRL): -66.2Be v -90.4B prior; Primary Budget Balance: -7.3Be v -21.4B prior; Net Debt to GDP: 62.3%e v 62.0% prior.

- 07:00 (MX) Mexico Sept Industrial Production M/M: +0.6%e v -0.5% prior; Y/Y: +0.3%e v -0.9% prior; Manufacturing Production Y/Y: -0.9%e v +0.1% prior.

- 07:00 (MX) Mexico Oct Consumer Confidence: 46.9e v 47.1 prior.

- 07:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 10:30 (UK) DMO quarterly consultations.

- 16:00 (US) Weekly Crop Progress Report.

- 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 86.5 prior.

- 18:30 (AU) Australia Nov Westpac Consumer Confidence: No est v 89.8 prior.

- 18:50 (JP) Japan Oct M3 Money Supply Y/Y: No est v 0.8% prior; M2 Money Supply Y/Y: No est v 1.3% prior.

- 19:30 (AU) Australia Oct NAB Business Confidence: No est v -2 prior; Business Conditions: No est v 7 prior.

- 22:00 (TH) Thailand Central Bank to sell THB55B in 3-month Bills.

- 23:30 (TW) Taiwan to sell NT$20B in 30-year Bonds.