EMEA Morning Briefing : Anthropic's IPO Filing Eases AI Jitters

MARKET WRAPS

Watch For:

Updates on EU monetary policy and trading updates from Novartis, ASM International, Reckitt Benckiser, Assa Abloy, Saint-Gobain, Ferrovial, Finnair, Orange and Beiersdorf.

Opening Call:

European stock futures were lower early Tuesday. Asian stock markets were mixed, the dollar strengthened, and U.S. Treasury yields fell. Oil futures and gold prices also declined.

Equities:

Stock futures suggest that European markets will open lower, even though Anthropic's IPO paperwork has eased worries about a possible bubble in artificial intelligence (AI) stocks.

The figures showed that Anthropic's growth is beginning to slow from its earlier high levels. Josh Gilbert, eToro's lead analyst for the Asia-Pacific region, said investors are now focused on how quickly that growth will slow further.

"Given the expectations and valuation for Anthropic, there is not much room for its growth to fall short of expectations," he said. The major AI company plans to go public during the week of Nov. 16. Its IPO could raise $100 billion or more and value the company at between $1.5 trillion and $2 trillion.

Forex:

Higher interest rates alone will not solve the problem of weak confidence in the euro, said Philip Wee of DBS. The Federal Reserve and the European Central Bank are expected to leave interest rates unchanged this week while signaling that they may tighten policy further in December.

The euro also faces political challenges, said the bank's senior foreign-exchange strategist. He pointed to social unrest in France and the possibility that Democrats could win control of both chambers of Congress in the U.S. midterm elections.

Bonds:

A rise in bond prices in mid-October pushed 10-year Treasury yields back below 5%. Yields remain below that level as October enters its final weeks.

Jay Woods, chief market strategist at Freedom Capital Markets, said this week's Federal Reserve rate decision will likely determine the market's immediate reaction. The Fed is expected to keep its main lending rate unchanged at 3.75% to 4.00%.

"Don't expect a clear plan for what comes next, but keeping rates unchanged while giving a strong warning about December could push yields higher and put pressure on stocks," he said. "Investors could feel some relief if they become more confident that inflation will cool. But they will be listening closely to how difficult the Fed says it will be to justify the next rate increase, which is expected in December."

Energy:

Oil prices fell as traders considered diplomatic efforts to reduce tensions between the U.S. and Iran. Mediators in the Middle East have been trying to restart talks between Washington and Tehran as the U.S. prepares additional military options against Iran, The Wall Street Journal reported.

"Given the low chance that the U.S. will strike Iran before the Nov. 3 midterm elections, compared with a much greater chance after the elections, I find it unusual that the gap between near-term and later oil prices keeps widening. This is happening even though the December Brent contract expires on Friday, before the election," said Robert Yawger of Mizuho.

Metals:

Gold prices edged lower in Asian trading. Markets broadly expect the Fed to leave interest rates unchanged at its October meeting, but another rate increase later this year remains a real possibility, said Christopher Wong of OCBC Group Research.

Higher interest rates usually put pressure on gold because gold does not pay interest. For gold prices to rise more steadily, there will probably need to be some combination of lower oil prices, slower inflation, a weaker dollar and lower bond yields, the strategist added. Copper prices rose. Tight supplies from mines and falling inventories in China are supporting prices. However, expectations of higher interest rates and rising stocks of copper held by the London Metal Exchange are weighing on the market, analysts at Changjiang Futures said.

Disruptions at mines in Chile have increased concerns about copper supplies, the analysts said. Falling inventories in China are also supporting prices as demand from businesses further down the supply chain improves and companies restock. Iron ore prices fell early in Asian trading because supply was higher. However, market conditions could improve in the fourth quarter as demand for steel recovers, analysts at Galaxy Futures said.

Analysts at ANZ Research noted that Brazil's iron ore exports grew strongly during the first two weeks of October. This increased the amount of iron ore arriving at China's 47 major ports.

TODAY'S TOP HEADLINES

A $300 Billion 'Debt Wall' Is Looming Over Private-Equity Backed Companies

Private-equity firms are rushing to avoid large losses if many of the companies they own fail to repay their debts.

Fund managers are working quickly to extend loans that make up much of a $300 billion wave of debt that will come due starting in 2028. This has become more urgent because higher interest rates have made it more expensive to refinance debt this year. Much of this debt belongs to software companies that could lose ground to AI companies such as Anthropic, which launched a major IPO on Monday.

The Bond Market's Big October Rally Has Stalled. Where It Heads Next Will Be Crucial.

Stocks are heading into an important week filled with company earnings, central bank rate decisions and the final stages of the U.S. midterm election season. Meanwhile, the bond market faces its own major turning point before the end of the year. Neither possible direction is likely to be good for investors.

The bond market made a strong comeback this year. Yields on benchmark 10-year U.S. Treasury notes have risen by more than 100 basis points since the U.S. launched its first attacks on Iran in late February. Earlier this month, yields reached their highest levels in more than 20 years.

HSBC Quarterly Profit Climbs, Plans $1 Billion Buyback

HSBC Holdings reported higher net profit for the third quarter and announced plans to buy back up to $1 billion of its own shares.

The London-based bank said Tuesday that net profit rose 45% from a year earlier to $7.09 billion in the three months ended Sept. 30. However, this was below the $7.24 billion expected in a survey of analysts by data provider Visible Alpha.

France Offers Concessions to Quell Student Protests

PARIS—The French government announced new teaching jobs, more university places and billions of euros in loans to renovate schools. These are its first major concessions in response to student protests that have caused unrest across the country.

The government said first-year classes at public high schools will be limited to 28 students, down from the current average of more than 30. It plans to create 15,000 new university places and offer regional authorities EUR4 billion, or $4.4 billion, in loans to renovate schools.

Broadcom CEO Intervened to Seal $63 Billion Anthropic Debt Deal

Hock Tan was losing patience.

The CEO of chipmaker Broadcom had spent nearly two months trying to persuade banks to commit more than $40 billion to what would be the largest AI debt deal ever. The deal was intended to let Anthropic lease specialized chips that Broadcom is developing with Google.

The Biggest Takeaways From Anthropic's IPO Prospectus

Anthropic has officially begun the process that could lead to the biggest initial public offering ever. The maker of Claude released its IPO paperwork on Monday morning, putting it on track to go public as soon as the week before Thanksgiving.

The 400-page prospectus described both the promise and the risks of AI. It said AI could begin a new era of progress by changing how people write code, conduct research, build financial models and automate everyday tasks. It could even help cure major diseases such as cancer. At the same time, AI could help create new biological weapons, "destabilize the geopolitical order" and develop beyond "humans' ability to understand and control" it.

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Expected Major Events for Tuesday

00:01/UK: September Zoopla House Price Index

00:01/UK: Adzuna UK Job Market Report

00:01/UK: October Shop Price Monitor

07:00/DEN: September Central Government Finance & Debt

07:00/TUR: September Employment / Unemployment

07:00/SWE: September Foreign Trade

07:45/FRA: October Consumer Confidence Survey

08:00/SPN: Third-quarter Economically Active Population Survey

09:00/EU: September Monetary Developments in the Euro Area (M3)

09:30/UK: September Capital Issuance Statistics

11:00/IRL: September Wholesale Price Index (WPI)

All times are in GMT. Information provided by Onclusive and Dow Jones.

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This article is the text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

10-27-26 0127ET