Morning Brew October 19 2026

Good morning.

 China’s growth recovery, renewed unrest in France, a more hawkish Bank of Japan and a sharp rotation away from U.S. technology stocks are the key drivers this morning. Oil remains elevated, Treasury yields have fallen on safe-haven demand, and markets are now looking ahead to a heavy earnings week.

China — Economic growth rebounded from a three-year low in the third quarter as strong exports offset continued weakness in consumer spending. However, analysts warn that the growing reliance on external demand is deepening structural imbalances.

France — President Emmanuel Macron appealed for calm on Sunday after one of the country’s worst days of unrest in years. Thousands were arrested, while shops were looted or damaged during protests over high prices and declining public services.

Bank of Japan — Governor Kazuo Ueda said underlying inflation is “quite close” to the central bank’s 2% target. Strong global AI demand is adding to inflationary pressure from a tight labour market, signalling scope for further rate increases.

• U.S. equities — On Friday, the S&P 500 fell 1.1% to 7,659, the Nasdaq Composite dropped 2.1% to 26,140 and the Dow slipped 0.3% to 52,002. For the week, the S&P 500 lost 2%, the Nasdaq declined 4.5% and the Dow gained 0.7%, marking the S&P 500’s worst week since June and the Nasdaq’s worst since April 2025. The selloff was driven by AI and semiconductor stocks, with chipmakers posting their longest losing streak since 2008. One data-centre operator fell 12%, taking its five-day loss to around 25%, while its bond yields rose above 15%. Tesla lost 2.5% after unveiling a redesigned Roadster with rocket-style thrusters developed with SpaceX. This morning, S&P 500 futures are up 0.5% and Nasdaq 100 futures are up 0.9% ahead of a heavy earnings week. Anthropic, the developer of Claude, said it will commit 5% of its shares to a new public-benefit fund to expand donations for the public good.
• European equities — European stocks outperformed sharply last week as investors rotated out of AI names and into defensive and value sectors. The Stoxx 600 rose 2.1%, its biggest weekly outperformance versus the S&P 500 since April 2025. On Friday, the index gained 0.7% to 645, led by banks and food and beverage stocks. The FTSE 100 rose 0.4% to 10,881, its highest close since 25 August, while the SMI added 0.3% to 14,391. Goldman Sachs expects Stoxx 600 companies to deliver 20% earnings growth in the second half of 2026.
• Yields — Despite weakness at the long end on Friday, 10-year yields fell around 17 basis points over the week as the AI trade wobbled and the Nasdaq tumbled 5.5%. Treasuries are showing tentative signs of reclaiming their traditional safe-haven role, creating risks for investors who remain heavily short duration. The U.S. 10-year yield is at 5.07%, Germany at 3.41%, Japan at 2.90% and France at 4.78%.

Commodities — Brent crude reached USD 110 a barrel for the first time since May, driven by fears of supply disruptions in the Strait of Hormuz and the Black Sea, as well as Houthi strikes on Saudi Aramco’s headquarters. Oil eased from a five-month high on Monday as investors took profits after President Donald Trump waived sanctions and tariffs on Russia, potentially allowing more Russian fuel exports. Brent is now around USD 108 in London. Gold is trading near USD 4,180 and silver near USD 67.70.

This week — The economic calendar is relatively light, but earnings are heavy. Wednesday stands out, with Tesla, Meta and SAP all reporting on the same day.

Positioning — COT update: Euro short jumps to ten-year high while commodity funds extend selling

• Commitment of Traders — The latest update covers futures positions and weekly changes made by hedge funds and other speculators across commodities and foreign exchange through Tuesday, 13 October 2026.
• Foreign exchange — Speculators increased their gross U.S. dollar long position by 27% to an 11-week high of USD 45 billion. The position has grown by USD 37 billion in just four weeks, increasing the risk of a crowded-trade reversal.
• Energy — Brent crude attracted strong buying as Middle East supply risks remained elevated and refined-product markets stayed tight, helping the broad commodity index rise 1.5%.
• Metals — Managed money reduced exposure across all metals, led by gold, as U.S. dollar strength and elevated real yields weighed on sentiment ahead of Wednesday’s inflation report.
• Outlook — Grain longs fell for a fourth consecutive week, led by corn after a bearish USDA WASDE report, while sugar’s net long reached a five-year high. Markets now face a relatively light macro calendar but a heavy earnings schedule, with Wednesday’s reports from Tesla, Meta and SAP likely to be the main planned focus alongside oil, yields and the stability of the AI trade.

Monday, 19 October 2026

Macro: China Q3 GDP, industrial production and retail sales; Canada CPI and Bank of Canada Business Outlook Survey.
Corporate earnings: Fifth Third Bancorp, Steel Dynamics and W. R. Berkley.

Tuesday, 20 October 2026
Macro: People’s Bank of China interest-rate decision; UK labour-market report.
Corporate earnings: GE Aerospace, Philip Morris, RTX, General Motors, Northrop Grumman, 3M, Halliburton, Netflix, Chubb, Intuitive Surgical and United Airlines.

Wednesday, 21 October 2026
Macro: UK CPI; New Zealand CPI.
Corporate earnings: Meta Platforms, Tesla, SAP, IBM, Texas Instruments, Lam Research, Thermo Fisher Scientific, Abbott Laboratories, Danaher, AT&T and NextEra Energy.

Thursday, 22 October 2026
Macro: U.S. housing starts and initial jobless claims.
Corporate earnings: Procter & Gamble, Union Pacific and Western Digital.

Friday, 23 October 2026
Macro: UK retail sales; flash manufacturing and services PMIs for Germany, the euro area, the UK and the United States.
Corporate earnings: American Express, General Dynamics, Eni and SLB.