EU OPEN - DAX remains strong; Nikkei breaks record high & CAC 40 dips

US Markets

• Performance:
  • US equities ended mixed on Friday — Nasdaq 100 (–0.4%) lagged, while small caps (Russell 2000 +0.7%) outperformed.
  • Large-cap weakness was led by NVDA, AMZN, META, TSLA, and PLTR, pulling Consumer Discretionary, Communication Services, and Technology into the red.
  • Utilities and Healthcare were the top gainers.
• Macro data:
  • The US ISM Services index fell sharply to 50.0 (exp. 51.7; prev. 52.0), signaling stalling expansion. Business activity and new orders weakened, while employment and prices paid ticked up.
  • The US payrolls report remains postponed amid the government shutdown.
• Fed commentary:
  • Vice Chair Jefferson: higher tariffs feeding into inflation; data delays complicate policy.
  • Governor Miran: expects sufficient data by the October FOMC meeting.
  • Logan (2026 voter): non-housing services inflation remains stubborn; tariff effects could prove longer-lasting, risking higher long-term inflation expectations.
• Policy tone:
  • Fed officials emphasize caution — rate-cut expectations for 2025 remain elevated, but rhetoric signals concern over tariff-driven inflation persistence.

Commodities & Currencies

• Oil:
  • Crude futures gained after OPEC+ agreed to a 137 kbpd output hike for November, citing stable demand. Next meeting – Nov 2.
  • Qatar set November OSPs at Oman/Dubai + $2.00–2.05/bbl.
• Gold:
  • Spot gold extended gains above $3,900/oz, supported by the shutdown and rising expectations for two more Fed cuts this year.
• Copper:
  • Consolidated near $10,500/t, with Chinese markets shut and trading muted.
• Crypto:
  • Bitcoin rose overnight but retreated from weekend highs above $124k.
  • UK FCA may delay the launch of retail crypto ETFs by nearly a week beyond its planned schedule.

Asia-Pacific

• Japan:
  • Markets rallied to record highs (Nikkei > 48,000) after Sanae Takaichi won the LDP leadership race, positioning her to become Japan’s first female PM.
  • Fiscal-spending, stimulus measures expectations and a BoJ policy delay drove the rally.
  • USD/JPY > 150.00 as markets priced a 78% chance BoJ stays on hold Oct 30; only 41% probability of a hike by December.
  • Takaichi pledged support for SMEs, agriculture, and healthcare; hinted at possible tax cuts and fuel-price relief, and close BoJ coordination.
  • Credit Agricole’s Aida: expects BoJ could allow one more 25 bps hike by Jan 2026, but no further moves until 2027.

• China:
  • FM Wang Yi to visit Italy and Switzerland for bilateral and strategic dialogues.
  • Indonesia lifted its TikTok suspension after the firm provided requested data.
• Corporate:
  • Hon Hai (2317 TT) sales +11% YoY to TWD 2.06 tln, reflecting robust AI server demand (NVDA partner).
• Regional markets:
  • Broader APAC trading mixed, with multiple holiday closures and uncertainty from the US shutdown.

Europe

• AI & industrial policy:
  • The EU is developing a new AI strategy to reduce dependence on US and Chinese technology (FT).
• Trade:
  • Japan to expand anti-dumping duties to cover indirect exports via third countries amid Chinese overcapacity.
• Political developments:
  • France: Roland Lescure set to become Finance Minister, Bruno Le Maire to move to Defence. Opposition parties criticized the reshuffle as continuity.
  • Czech Republic: Populist ANO party (Babis) won the election with ~35%, seeking coalition partners to govern.
  • UK: Revised ONS data raises doubts over household savings and growth resilience (The Times).

DAX Technical Analysis

• The Germany 40 (4H) is undergoing a mild pullback after a strong breakout leg. The index failed to sustain above 24,510 resistance and has retraced modestly toward the 24,300 area, coinciding with the 20 EMA and mid-Bollinger band — a typical reversion level following a sharp rally. RSI has cooled to ~62 from prior overbought readings, showing that momentum is normalizing without signaling weakness yet. The MACD remains in positive territory, though the histogram has started to contract, suggesting a short-term pause rather than a reversal.
• Structurally, the breakout above the 200 EMA and prior range ceiling around 23,900 remains valid, implying that the current dip may act as a retest before trend continuation. Key support sits at 24,100 and then 23,900 — both crucial for maintaining the bullish bias. Resistance levels are still marked at 24,510 and 24,650 (all-time high). If buyers defend 23,900, a renewed push toward the highs looks probable. However, a sustained break below 23,900 would undermine the breakout and reintroduce range-bound conditions. Overall tone: bullish consolidation within a breakout structure.

World Policy & Trade

• Tariffs:
  • Sen. Moreno: Trump may grant tariff relief for US auto production.
  • Shell PLC warned Trump’s hostility to wind projects is damaging investment and threatens clean-energy financing.
• Middle East diplomacy:
  • Israel–Hamas talks begin Monday in Egypt under US mediation.
  • Trump said Israel agreed to an initial withdrawal line and hostages-for-prisoners deal contingent on Hamas confirmation.
  • Hamas accepted the US Gaza proposal in principle, pledging to release all Israeli hostages and hand Gaza administration to a technocratic Palestinian body, though some officials called the 72-hour timeline “unrealistic.”
  • Secretary Rubio: significant progress toward ending the war, but cautioned phase-two (disarmament) talks will be difficult.
  • No full ceasefire yet, though selective halts in bombing reported.
• Russia–Ukraine:
  • Trump called Putin’s nuclear-limits proposal “a good idea.”
  • Putin warned US Tomahawk supplies to Ukraine would “ruin” relations.
  • Russia launched a large-scale missile and drone attack, killing ≥5 and damaging Ukrainian energy infrastructure; Ukraine reported >50 missiles and 500 drones launched overnight.
• Latin America:
  • US directed diplomats to lobby against a UN resolution to lift the Cuba embargo, linking Havana’s support to Russia’s war in Ukraine.
  • Trump authorised Caribbean anti-narcotics strikes off Venezuela after a naval engagement.
• Korea:
  • Kim Jong Un said North Korea will develop new military measures to counter increased US presence.