Live from Brussels, this is Daybreak: Europe. One more rate cut: John Williams says he sees no need for further U.S. rate hikes next year, but oil gains after Aramco's headquarters are hit by a missile attack. Nvidia announces plans to invest $2 billion in Europe as it looks to spur demand for its products. Plus, trade and tariffs dominate discussions at the Bloomberg Economy Forum. We will bring you interviews with the Canadian foreign minister and Singapore's trade minister this hour.
Let's check in on where things are moving on markets. We do have Asian shares rising, a pause in the chip selloff after comments from John Williams, a slight shift in markets yesterday as well. European stock futures pointing higher, S&P 500 also pointing higher as we have the S&P 500 close to a record high. In terms of movement that we are tracking for you across other assets, oil prices are moving higher today on the latest headlines from the Middle East as well, Brent back up over $106 per barrel in trading. The euro back up over 1.12 as well, a touch of dollar weakness, but also the ECB policymaker talking about the need for further interest rate hikes from the ECB. And the 10-year Treasury yield just slightly rallying ahead of the CPI print later today, of course reacting to John Williams' comments yesterday, 5.2% for the 10-year Treasury yields.
Let's get into those breaking earnings from ASML, a key player when we are thinking about the AI trade. Third-quarter net sales, €11.6 billion, slightly below estimates, but not far off the €11.7 figure that markets had been expecting. ASML saying that supply is currently planned to fully meet demand. Net sales now at €44.5 billion. That is a slight upgrade over the previous update, which was a range of €43 to €45. We are looking at the higher end of that range as well, and the questions, of course, particularly around supplies of some of those machines, going to be very much in focus as we are thinking about how share prices go into reacting. ASML saying they are investigating the capacity raise for 2028 beyond 30%.
This has been a key factor for markets as well, as ASML has stopped reporting some of those quarterly sales figures, but the capacity building has been a key metric for AI demand as well. Customers have placed orders for 2029 and 2030. Those are some of the breaking lines coming for you from ASML. In terms of the other risk events, Tom Mackenzie is there, we will be speaking to him a little later on. Earnings from Bank of America and Morgan Stanley and the U.S. inflation print, that is all to come. Let's get you set up for the day ahead.
Let's see how Asian markets are faring today with Winnie Hsu in Hong Kong. Winnie, good morning.
Good morning. Seeing quite a nice rebound in Asian stocks today after yesterday's selloff, as we hear these dovish comments from the Fed officials. You are seeing the tech-heavy gauge today, and perhaps for Japan it is also getting an additional tailwind as we learn that the Bank of Japan is now leaning against a rate hike in October, and adding to that, a nice relief in the bond space as well. We did see pretty solid demand coming through for the bond auction earlier today, echoing what we saw for the 10-year and 30-year earlier.
We did have a set of fresh economic numbers coming through from China. The one that we are highlighting really is around the strong export numbers we did see, exports surging by about 36% year-over-year for September, and that is in fact the fastest pace since February. So that is due to the strong AI demand globally, and that is really showing up in the strong export for tech as well as hardware. That really helps to widen the trade surplus when it comes to China and the rest of the world. You can see that trade surplus here at about $130 billion for China in September, and that is in fact at that second-highest level when it comes to their record performance. And more interestingly, when you look beneath the numbers, you are looking at the record trade surplus, and that is coming before the two sides really signing some of these deals when it comes to addressing the imbalances as well. Back to you, Stephen.
Thank you very much, and indeed those trade figures particularly are going to be in focus when thinking about the deficit with the E.U. as well, nearly $35 billion, something that leaders will be talking about at the summit here in Brussels getting underway tomorrow, a key issue after the E.U. trade commissioner's trip to China last week as well.
Oil prices are gaining this morning as traders grapple with increased uncertainty in the Middle East. The Saudi government says Aramco's executive headquarters were hit yesterday in a missile attack by Yemen's militants. The Houthis have ramped up strikes on the kingdom in recent days, including targeting airports around the country, which left at least 18 people dead. Let's get more now from Bloomberg's executive editor for the Middle East and North Africa. What can you tell us about the latest attacks?
It is sort of a continuation of what we've seen over the last several days, although now it seems at least some of the attacks are heading, to some extent, back to what we saw in March and April. This time it is coming from Yemen and the rebels. In terms of the damage itself, there was a fire that was extinguished, there were no injuries. I think it speaks to the spreading conflict and the reach that the Houthis have, and the difficult position that the Saudis are in, in that they are incredibly well-equipped, they have incredibly high defense spending, and they have this absolutely vast country to defend, and something like the 12th or 13th biggest country on the planet. Not just these very big cities they have, but also oil infrastructure and so on and so forth. It is a difficult situation, and again, I think it speaks to the escalating front. I wouldn't call it a new front, but it is definitely escalating, and that should be of concern.
We've also been looking at the latest reports of attacks on ships in the Strait of Hormuz. Talk us through what we know about what has happened and what the implications are for our energy folks.
We are basing this purely on the report that goes into the U.K. and puts it out into the public domain. This is ship captains or shipowners reporting attacks on their vessels, and based on those numbers, there has been an escalation in hostilities on the waters of the Persian Gulf. We don't know exactly why, but we can take an educated guess. We would presume this is Iran's attempt to try to stifle that rebounding trade going through Hormuz, that was definitely increasing supply to the market. Nonetheless, those have got pretty close to pre-war levels, and again, you can extend from that the idea that perhaps what Iran is trying to do is bump up energy prices before the midterm elections and pile pressure on the U.S. administration to make concessions in terms of those somewhat stalled negotiations. I think if you look at the crude oil price today, we would be firmly over $100 per barrel, and so far that strategy seems to be working. What will be interesting to see is what is the shipowner's reaction. Clearly, they had a risk tolerance anyway, but this takes it to a whole new level.
Thank you. U.S. President Donald Trump is facing growing opposition within his own party to his deal with Vladimir Putin on Moscow's exports of diesel. That agreement with the Russian leader reached just weeks after he signed a law authorizing stiff sanctions on countries that buy Russian oil. 12 senators, including six Republicans, have written to Trump urging him to rescind the deal and instead enforce the new sanctions law. Still ahead, Nvidia announces billions of dollars of investment in Europe. We are live at the International AI Summit in Dublin later.
Welcome back to Bloomberg Daybreak: Europe. The European Central Bank president says the euro area inflation elevated by high energy prices is yet to feed into the broader economy. Christine Lagarde also indicated officials are watching for any signs of second-round effects. He believes the ECB will likely need to hike again.
Inflation is too high, so we have hiked. I'm not making any bets anymore because with so much uncertainty on the energy front, maybe also AI with the stories about a possible bubble or not, a year from now we could have lower energy prices. Don't know what is going to happen in terms of AI, but over the short term, the economy is more resilient than we thought it would be.
Equity traders at Wall Street's biggest banks are on track to achieve the rare feat of beating their rivals at fixed income. The equity division blew past expectations in the third quarter while their fixed income counterparts missed estimates. JPMorgan posted a surprise drop in fixed income trading revenue, the first such decline in more than two years.
The bond volatility, the market, the fear is not going to change what we do. It is the weather. The pipeline is fine. It can open and close pretty quick. You've seen in the United States the delays probably. We don't really know.
Bank of America has been fined more than $1.2 billion for money laundering and sanctions violations. U.S. regulators say the bank effectively outsourced a key part of its KYC efforts to try to protect revenue. Bank of America says it has worked with regulators on compliance, with the fines expected to cut net income by about $0.17 a share. Bank of America CEO Brian Moynihan will be live on Bloomberg Television at 7:00 p.m. London time, 8:00 p.m. here in Brussels.
Swiss lawmakers have backed a new special tax for systemically important banks in the latest blow to UBS. Members of the committee voted in principle for a lump-sum fee for major banks with substantial foreign operations, granting access to public liquidity guarantees after too-big-to-fail regulations. UBS would be the only bank affected.
Workers at the world's biggest copper mine are set to go on strike after wage talks broke down. Roughly a quarter of employees at BHP's Escondida mine in Chile plan to walk out from Wednesday morning local time, seeking a greater share of profits with copper prices near record highs.
New York Fed President John Williams told Bloomberg he sees one more rate hike this year as appropriate, but doesn't have any reason to believe that more will be needed. He also said he sees inflation approaching the Fed's 2% target next year. Let's bring in Mark Cranfield for more on this. Very interesting to see what John Williams has to say about the right path ahead. We've also got CPI to look forward to later today.
It needs to be a really shocking number from the inflation data later today to really change their minds about the October meeting. It sounds as though most of them have made their decision already that they are going to be on hold for that meeting. So only if we get a number much higher than expectations would they want to reconsider that. The bigger question for the markets really is how many people are leaning toward that December interest rate hike, which is pretty much priced into the markets at the moment. That won't be a big surprise, other speakers have been that way, but it is by no means a foregone conclusion. But you will have quite a bit more inflation data before we get to that, a couple more reports under the table by then. We've also got the midterm elections and more jobs data, which has been a bit more mixed than the inflation. So there is a lot to be put up before we get there.
As far as 2027 is concerned, you can imagine most of the Fed people would want to keep their options open as much as possible. It's a very fluid situation in terms of global energy. Prices are relatively high at the moment. That's because directly of the situation between the U.S. and Iran. But if we were to get a surprise deal, a backing off of hostilities in the Middle East, oil prices could fall quite quickly. We saw that earlier a couple of months ago. We saw that as things cooled down, prices go down very fast, and that affects the inflation outlook as well. It would be surprising if other Fed members like Mr. Williams probably want to keep their options open as much as possible. See a lot more data, and later in the year they will give you a clearer picture of where they see 2027 going.
Mark Cranfield, thank you very much. Coming up next, we are going to be going back live to New Delhi to Bloomberg's New Economy Forum. Francine Lacqua currently speaking to a panel about resilience amid turbulence, including Qatar's commerce and industry minister. We'll bring you a key interview next. This is Bloomberg.
Welcome back to Bloomberg Daybreak: Europe. India and Canada leaders are embarking on efforts to deepen bilateral ties as Canada tries to reduce its reliance on the U.S. The prime ministers spoke over the phone yesterday, pledging to build on positive momentum. Let's take it to New Delhi next.
We have the Canadian foreign minister joining us here. We just spoke, of course, with the trade minister from Canada. Certainly there is so much conversation about the India and Canada relationship right now. How are conversations with your counterparts?
It is such an exciting time. I was here almost exactly to the day one year ago to revive the relationship between Canada and India, and to ensure that we have a roadmap to base the growth of the relationship on, beginning with a dialogue on national security, making sure that there is a respect for the rule of law, and then moving to other strategic areas: energy, critical minerals, information technology and AI, trade and investment. And of course, we are looking to conclude the Economic Partnership Agreement with India before the end of the year.
Polling suggests maybe a majority of Canadians have expressed unfavorable views when it comes to India over the past years. What have you done in terms of changing misperceptions?
Ties between our countries are strong. This is true in and outside of the educational fields. We have a number of universities that are partnering with Indian universities. And so growing those relationships is very important in culture, music, the arts as well. There are strong relationships. This is a complex relationship with many layers. And then the strategic areas: critical minerals and energy. We signed an agreement, $6.2 billion between Amoco and India back in February. This is the type of work we are doing at various levels to ensure an integrated and growing relationship.
Customs and immigration has hit India quite hard, especially when it comes to immigrants. I think one of the largest immigrant communities in Canada is from India. Should we expect that to change anytime soon?
Decisions about immigration were very much in response to social supports that were available for populations across the country, Canadians and immigrant populations, and housing and social services. And so it is very much a recalibration to ensure that when people are coming to Canada there are supports available, and so that is the work that the immigration minister is undertaking. But of course, if you step back and you look at Canada as a whole, immigration has been fundamentally important to our economic growth, our diversity, and our ability to thrive as a country.
So what can we expect in terms of changes in labor or education mobility between the two?
So this is the work that the trade teams between Canada and India are doing right now. The Indian delegation, trade negotiating team, was in Canada just last week. Of course, our minister of international trade is here this week with a 150-person-strong delegation. This work between the trade negotiating teams is continuing, and let's just say Prime Minister Modi and Prime Minister Carney spoke yesterday about the promise of the trade and investment relationship, but also the need to keep working on these other strategic areas because the complementarities between India and Canada are so great, and we are looking forward to that before the end of the year.
Things have been pretty rocky since Prime Minister Carney took the role. Have we eased tensions in any way since he took office?
Most definitely. I was here last year setting out the roadmap for the relationship. Prime Minister Carney actually invited Prime Minister Modi to the G7, and the work that we are doing ensures a long-term relationship going forward.
You just got off the stage here talking about the middle powers. Obviously we still remember that speech talking about how the U.S. is stepping back from this global world order. How realistic is it to really step up right now?
It is happening as we speak. We as middle powers can watch a world unfold where global hegemons are becoming more protectionist, or we can step up and lead together. And whether it is on defense and security, Arctic security, or in economic relationships, you are continuing to see middle powers work together. Canada has signed 50 trade agreements over the past year, and that is servicing millions of people all over the world.
This is also coming at a time when Canada is maybe forging more deep relationships with China. We have the APEC summit, is Prime Minister Carney going to be there?
We are planning a full delegation. That is the work we do as multilateral, but also the work that we want to continue to do in the Pacific as a Pacific country ourselves. We see the growth potential in these relationships in the Indo-Pacific. We are seeking FTAs, hoping to be concluded before the end of 2026. We are hosting in 2028. So attending in Cambodia is extremely important, and of course, APEC is always a must-go.
Great to have you. Joining us here on day two of the Bloomberg Economy Forum. Back to you.
Thank you very much. We will be returning to New Delhi later in the program where we will be speaking with Singapore's deputy prime minister. Coming up, ASML raises its sales outlook as the AI boom drives demand. We will have the details next. This is Bloomberg.
Live from Brussels, this is Bloomberg Daybreak: Europe. I'm Stephen Carroll with your top stories. One more, and done. The Fed's John Williams says he sees no need for further U.S. rate hikes next year. While oil gains after Aramco's headquarters are hit by a Houthi missile attack. ASML says supply won't meet demand for its chipmaking machines out to 2028 as Europe's most valuable company raises its outlook. Plus, trade and tariffs dominate discussions at the Bloomberg New Economy Forum. We'll bring you our interview with Singapore's trade minister.
Let's check in on where things are moving on markets for you this morning. A pause in the chip selloff helping Asian shares higher. The MSCI up by 0.4%. S&P near a record high as we watch closely to see how the trading session pans out today, with plenty more earnings in focus for markets. In terms of the other assets we're watching for you, oil prices are a little higher on the day as well. Brent crude back up over $106 a barrel, those latest headlines out of the Middle East. Comments that we have in terms of John Williams and the rate hikes helping to weaken the dollar a little bit. The euro trading over $1.12 again today, but not that far off the 17-month low that it had reached. The 10-year Treasury yield ahead of the CPI print, a slight rally, hovering around 5.2%.
ASML has upgraded the low end of its 2026 sales forecast as soaring AI spending fuels demand for the Dutch company's chipmaking machines. For more, let's go to Dublin and speak to Bloomberg anchor Tom Mackenzie, who's there for the International AI Summit. Tom, ASML has indicated it won't fully meet demand in the next two years. How significant is this?
Well, it is significant. And it reminds us that demand from its customers — TSMC, Samsung, Intel, the factories that actually produce and churn out the chips that are used in this AI revolution, also chips that go into everything from fridges to cars — that demand from the end customer, from those foundries, remains very, very strong indeed. This is a third consecutive quarter, Stephen, where they have raised, ASML, that forecast. This time on the low end range. So at the low end from €44 billion, top end €45 billion of annual sales is now what is being projected by this company. This is the company that has a lead time of about one year. So it's a really good indicator of that forward demand at a time, of course, when overnight you had concerns reflected in the movements around Applied Materials in the U.S., which didn't give details, picture and details of the numbers in terms of the forecast for that company, at a time when we had the CEO of Broadcom talking about some investors in the AI space acting like they were in a casino.
ASML coming out validating that the demand is still there, and if there are any question marks, if there are any flies in the ointment, it's this: that this is a company that is unable to fulfill that demand. That's what the CEO is saying. 2027-28, they will struggle to fill in that demand. This is a company that in the Netherlands is building out additional capacity, looking to increase capacity again by about 30%. So the demand is incredibly strong. The challenge for ASML is actually meeting that demand at this point.
Well, elsewhere in the sector, Tom, Nvidia's CEO has announced plans to invest $2 billion in European deals. Let's hear from Jensen Huang speaking in Paris.
This is the beginning, the beginning of AI in Europe. In the last year alone, we have invested $8 billion in European startups. And in the next week, I'm going to announce another $2 billion. And so we've invested tremendously in just about every single layer of the AI infrastructure here in Europe. And so the next layer above that is investments. These are going to be the superstar companies of the next generation.
Tom, Jensen Huang, a big event of money at the headline level, but what sort of impact will it have on Europe's AI buildout?
