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Wednesday morning brings a breath of optimism to the markets from the tech sector, alongside a solid dose of hard macroeconomic and financial data. Yesterday's Asian concerns over a slowdown in the semiconductor industry were quickly dispelled by exceptionally strong demand forecasts from European giant ASML. Meanwhile, on Wall Street, earnings season has officially kicked off, with reports from major US banks offering investors valuable insight into the true health of the economy. Today, however, all eyes will be on the key US inflation print, which will help markets price in the Federal Reserve's next moves.
Geopolitical Backdrop
The situation in the Middle East continues to exert pressure on commodity prices and disrupt global logistics. The British maritime agency UKMTO reported that a container ship and a tanker were struck by unidentified projectiles in the strategic Strait of Hormuz. These incidents maintain a geopolitical risk premium in the crude oil market—in morning trade on October 14, European Brent crude was priced around USD 106, while US WTI traded near USD 94–95 per barrel. (Sources: Reuters)
Today's Highlights
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ASML confirms massive demand for AI infrastructure. In contrast to yesterday's sell-off across the Asian chip sector, the European manufacturer of lithography systems (crucial for semiconductor production) presented an outstanding outlook. ASML reported Q3 net revenue of EUR 11.66 billion and net income of approximately EUR 5.0 billion. The company also raised the lower end of its 2026 revenue guidance from EUR 43 billion to EUR 44 billion (the range is now EUR 44–45 billion). Stoking market imagination the most, the firm explicitly admitted that its production plans will not suffice to meet all customer demand in 2027 and 2028, with some buyers already inquiring about capacity reservations for 2029–2030. (Sources: Reuters; ASML)
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A strong start to earnings season on Wall Street. On Tuesday, four heavyweight institutions posted Q3 financial reports: JPMorgan, Wells Fargo, Goldman Sachs, and Citigroup. These results are closely watched, serving as a litmus test for the broader economy. Goldman Sachs reported net revenues of USD 18.68 billion and an impressive EPS (earnings per share) of USD 17.01. Meanwhile, JPMorgan delivered net income of USD 15.3 billion (EPS of USD 5.57) on managed revenue of USD 50.9 billion. Notably, JPMorgan’s bottom line includes USD 658 million in net investment securities losses, serving as a reminder of the challenging interest rate environment. (Sources: Goldman Sachs; CNBC; Yahoo Finance)
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Chinese exports surge at an astonishing pace. While domestic demand in China continues to lag, its manufacturing sector is exporting with immense momentum. In September, Chinese exports surged by as much as 36.3% year-on-year (in US dollar terms), handily beating market consensus. Imports also surprised to the upside, growing by 31%. Consequently, China's trade surplus stood at approximately USD 133.5 billion in September, reaching a staggering total of around USD 938 billion for the January–September period. Such an immense oversupply of Chinese goods in global markets could fuel longer-term concerns over tariff disputes. (Sources: Reuters; Associated Press)
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IMF optimistic on GDP growth, but highlights a list of risks. Following up on yesterday's updates from the International Monetary Fund, we received a broader perspective on the global economy. The IMF projects global GDP growth of 3.1% in 2026 and 3.4% in 2027. However, potential catalysts for financial strain highlighted by the Fund warrant attention. In this context, the Fund points to a possible valuation correction among AI-related companies, a sharp spike in bond yields, and the risk of a major cyberattack. While the institution does not take these events as a given, it treats them as critical flashpoints for market stability. (Sources: Reuters; IMF)
In the Background
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Weak Chinese consumer weighs on LVMH. We recently drew attention to the deteriorating backdrop for luxury goods. French powerhouse LVMH’s Q3 results confirm this trend. Revenue reached EUR 18.5 billion, representing organic growth of just 1%. The flagship Fashion & Leather Goods division posted an organic decline of 5%, mirroring overall sales trends in Asia excluding Japan. A silver lining for the group remains the Selective Retailing segment (which includes the popular Sephora chain), which rose by 8%. (Sources: LVMH; Reuters; CNBC)
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Financial Stability Board (FSB) looks to the future of supervision. The FSB published a consultative report proposing eight overarching principles for modernizing financial regulation and supervision. While the document does not yet impose new, stringent capital or reporting requirements on institutions, it sets the trajectory for global regulators moving forward. Comments on the draft are open until January 8, 2027. (Sources: Financial Stability Board)
Key Events to Watch
The day's main event is the afternoon US data release. Also keep an eye on prints from China, which will shed more light on the divergence between strong export performance and domestic demand.
- 10/14 (14:30) – US: September Consumer Price Index (CPI). The week's most critical report. It will shape expectations regarding Fed rate cuts. Crucially, a Reuters survey conducted ahead of the print indicated that analysts expect a headline increase of 0.6% month-on-month, and a 0.2% m/m rise for Core CPI.
- 10/14 (03:30) – China: September CPI and PPI Inflation. The morning figures will illustrate the strength of domestic consumer demand and the extent of deflationary pressures.
- 10/14 (20:00) – US: Fed Beige Book. A qualitative assessment of current economic conditions across the 12 Federal Reserve districts.
- 10/15 (14:30) – US: Retail Sales and Producer Price Index (PPI). These releases will complement the picture of the American consumer and wholesale cost pressures.
- 10/16 (11:00) – Eurozone: Final Harmonized Index of Consumer Prices (HICP). The final verification of price pressures ahead of the European Central Bank's October meeting.
