📰 Morning Brief: ECB holds rates steady but hints December hike; US Q3 GDP grows 3.4%

Key Snapshot

· 🏛️ The ECB kept policy rates unchanged, yet signalled a possible rate increase in December, warning that elevated and rising energy costs are amplifying inflation risks.

· 📊 US Q3 advance real GDP rose at an annualised 3.4%, the fastest pace since Q3 2025 and above consensus of 3.2%.

I. Market Outlook

Core Events:

- ECB holds rates steady with hawkish signal for December: The ECB left interest rates on hold while clearly opening the door to a December hike, cautioning that climbing energy prices are fuelling inflation pressures.

→ European equities rallied broadly; Germany’s DAX +1.31%, France’s CAC 40 +1.05%, STOXX 600 +0.77% at 649.11.

- US Q3 GDP beats forecasts at 3.4%: The reading marks the strongest expansion since Q3 2025 and tops the 3.2% estimate.

→ 10-year US Treasury yield -6.5 bps to 4.98%; 2-year yield -8.7 bps to 4.648%; US Dollar Index -0.14% at 101.98.

Exclusive Viewpoint:

The stronger-than-expected US GDP print aligns with the ECB’s hawkish tilt, signalling the global economy has not slowed meaningfully under high rates. European stocks rose despite the hike hint, as markets interpreted the hawkish message as confirmation of underlying economic resilience.

II. Overnight Market Action

US Equities: Dow Jones -0.25% at 52342.56; S&P 500 -0.30% at 7720.39; Nasdaq -1.37% at 26184.72.

European Equities: STOXX 600 +0.77% at 649.11. Germany DAX +1.31%, FTSE 100 +0.26%, France CAC 40 +1.05%.

Rates: 10-year US Treasury yield -6.5 bps to 4.98%; 30-year -4 bps to 5.321%; 2-year yield -8.7 bps to 4.648%.

Commodities: COMEX Gold -0.49% at $4031.94/oz; Spot Gold -1.13% at $4021.23, dipping near $4005 intraday; Silver -3.4% at $52.14/oz. WTI Dec crude -0.76% at $102.00/bbl; Brent -0.38% at $114.88/bbl.

FX: EURUSD +0.23% around 1.1178, after hitting its lowest level since May earlier; US Dollar Index -0.14% at 101.98.

Crypto: Bitcoin retreated near $80,000 at roughly $80133, testing $79810 intraday; Ethereum -1.5% at $2316.64.

III. Macro Headlines

1. 🏛️ ECB pauses but flags possible December rate hike: The central bank maintained rates while warning that persistent energy cost gains are lifting inflation risks.

Insight: This hawkish pause contrasts with the Fed’s data-dependent stance for December. Europe faces more immediate inflation pressure from energy shocks.

2. 📊 US Q3 GDP rises 3.4%, beating estimates: It is the fastest quarterly growth since Q3 2025. Economic resilience supports the Fed’s higher-for-longer policy bias.

Insight: The US economy continues to run above trend amid global tightening. This weighs on rate-cut expectations and explains why short-end yields remain sticky even as long-end yields ease.

3. 🇯🇵 Bank of Japan is widely expected to hold rates at 1.25% on Friday, while signalling another hike as soon as December, vowing to prevent underlying inflation from overshooting the 2% target.

IV. Corporate News

1. 💾 Intel Q3 revenue rises 21% to $16.51bn, in line with estimates, with adjusted EPS of $0.52 above consensus. However, Q4 revenue guidance fell short of analyst forecasts, sending shares down 21% after hours. Doubts linger over profitability from its AI turnaround.

2. ☁️ Amazon’s midpoint Q4 revenue outlook missed expectations, and trailing 12-month free cash flow turned negative at -$42.4bn. Shares fell nearly 7% post-market, as heavy AI infrastructure spending crimps cash generation.

3. 📉 Google Q3 revenue missed forecasts. The stock posted its largest single-day drop since listing, wiping out $479bn in market value. Search revenue of $63.35bn came in below estimates, offering the clearest sign yet that AI is disrupting the traditional search business model.

V. Key Events To Watch

· 🇩🇪 Germany Q3 advance GDP; Euro Area Q3 advance GDP. Quarterly growth is seen slowing from 0.6% to 0.2%, annual growth from 1.2% to 1.0%. Euro Area September unemployment rate released concurrently.

· 📊 Canada August GDP; Germany October flash CPI; US October Chicago PMI, expected to fall from 58.8 to 56.1.

· 🌐 US Secretary of State Rubio chairs G20 foreign ministers’ meeting, running through Oct 31.