Tokyo CPI Inflation Rises More Than Expected In Oct, Keeps BOJ Hike In Focus

The eurozone posted slightly stronger-than-expected growth in the third quarter of 2025, offering a glimmer of resilience after months of sluggish momentum.

But beneath the surface, the recovery reveals widening disparities among member states, with Germany's industrial malaise continuing to weigh heavily on the bloc's overall performance.

Gross domestic product (GDP) in the eurozone increased by 0.2% quarter-on-quarter, according to preliminary estimates from Eurostat released on Thursday.

The modest uptick marked an improvement from the 0.1% recorded in the second quarter and edged past analyst expectations, which had forecast growth to remain unchanged.

Year-on-year, eurozone growth slowed to 1.3% from 1.5%, though it still came in slightly above the 1.2% economists had predicted. The broader European Union fared marginally better, expanding by 0.3% on the quarter and 1.5% from a year earlier.

Portugal leads the eurozone bloc

Among countries with available data, Portugal emerged as the top performer within the eurozone, with GDP rising by 0.8% on the quarter — driven by resilient domestic demand and tourism.

In the wider EU, Sweden led the scoreboard with 1.1% growth, followed by Czechia at 0.7%. At the other end of the spectrum, Lithuania contracted by 0.2%, while Ireland and Finland both posted 0.1% declines.

Germany's economy was stagnant in the third quarter, following a 0.2% contraction in the second quarter, driven by falling exports amid higher US trade tariffs.

"The economy of the eurozone continues to edge forward rather than slip into contraction," said Joe Nellis, professor of economics at Cranfield University and economic adviser to MHA.

Nellis highlighted that consumer demand showed tentative improvement in the third quarter, helped by easing inflation and slightly higher wages, which offered some relief for households. The services sector held up, but manufacturing and exports continued to underperform, weighed down by weak global demand and lingering cost pressures.

"The eurozone is managing to grow, but very slowly," Nellis added, pointing to Germany and France's continued underperformance as a major drag on the bloc.

The eurozone's two largest economies, he said, "continue to vie for the unenviable title of 'the sick man of Europe'".

Market reactions muted ahead of ECB decision

Markets responded cautiously to the GDP release, as sentiment remained tethered to central bank moves.

European equities dipped slightly on Thursday, mirroring a broader pullback after Fed Chair Jerome Powell struck a more hawkish tone than expected following the US central bank's 25-basis-point rate cut on Wednesday.

Powell pushed back against market expectations for another interest rate cut in December, stating that it's "far from being a foregone conclusion".

The EURO STOXX 50 was down 0.39%, with Spain's IBEX 35 falling 1.14% and Italy's FTSE MIB dropping 0.80%. France's CAC 40 was 0.64% lower, while the German DAX index edged down 0.11%.

In corporate news, ING Groep jumped 4.63% after posting better-than-expected quarterly earnings, while Airbus rose 2.06% on a beat in estimates.

On the downside, Schneider Electric shares fell 4.06%, after the French industrial group slightly revised its 2025 targets despite solid quarterly revenue growth.

Attention now shifts to the European Central Bank (ECB), which is widely expected to leave interest rates unchanged at its policy meeting on Thursday.

It would be the third consecutive hold, as the ECB balances signs of resilience with ongoing disinflation and sluggish growth.

The main refinancing rate is expected to remain at 2.15%, and the deposit facility rate at 2.0%.

Source: Yahoo Finance

The European Central Bank kept interest rates unchanged at 2% for the third meeting in a row on Thursday and offered no hints about future moves as it enjoys a rare period of low inflation and steady growth, even in the face of trade turbulence.

The central bank for the 20 countries that share the euro cut rates by a combined two percentage points in the year to June but has been on the sidelines since. It has made clear it is in no hurry to change policy given inflation is at target, a sweet spot not achieved by the US Federal Reserve, the Bank of England or the Bank of Japan.

Keeping all options on the table, the ECB repeated its longstanding guidance that future decisions would be guided by incoming data and it would not pre-commit to any particular policy path.

ECB still in a 'good place'

"The Governing Council's assessment of the inflation outlook is broadly unchanged," the ECB said in a statement. "The robust labour market, solid private sector balance sheets and the Governing Council's past interest rate cuts remain important sources of resilience."

Speaking at a 1345 GMT news conference, ECB president Christine Lagarde is also expected to repeat that policy is in a "good place" and that policymakers can live with small, temporary deviations from the inflation target.

Lagarde is unlikely to shut the door to further policy easing, however, as ever-shifting US tariffs have yet to fully work their way through the economy, keeping uncertainty elevated and raising the risk that growth and inflation fall too low.

"The outlook is still uncertain, owing particularly to ongoing global trade disputes and geopolitical tensions," the ECB added. "The Governing Council is not pre-committing to a particular rate path."

While some policymakers have repeatedly warned about downside risks, some key data have surprised on the upside in recent weeks, pointing to a more balanced outlook.

Growth is holding up

Eurozone gross domestic product grew by 0.2% on the quarter, beating the ECB's prediction it would stagnate and a 0.1% growth forecast by economists, as Spain and France both outperformed.

Some early fourth-quarter figures may even point to a pick-up in growth.

Business activity, as measured by a Purchasing Managers' Index survey, is accelerating, while sentiment in Germany, the bloc's biggest economy, is improving and businesses are becoming more optimistic, partly because the fog over tariffs is starting to lift.

But these relatively upbeat reports are balanced out by more sombre data showing that industry continues to suffer and that exports to the United States are down sharply, as well as growing evidence that China is dumping goods it cannot sell in the US on European markets.

Can the tranquility last?

The real question then is whether the outlook can remain in such a fine balance given the continued tariff hit, Chinese trade diversion and weak exports.

The strong euro is also weighing on inflation, but the currency has steadied in recent weeks and a hawkish tone from Federal Reserve chair Jerome Powell after Wednesday's rate cut may limit further gains.

Undershooting risk would strengthen the case for a "slightly lower" policy rate, ECB chief economist Philip Lane argued recently, a message that is consistent with market pricing which now puts the chance of one last cut by next June at around 40% to 50%.

But the majority of economists see rates remaining where they are on the premise that uncertainty will fade, households have plenty of savings and Germany is raising spending sharply.

Inflation could still undershoot the ECB's target next year but it is then seen coming back up and policymakers have made it clear that they can tolerate temporary deviations.

The real test of this tolerance is only likely to come in December, when the bank presents fresh projections, including initial estimates for 2028.

Source: Theedgemarkets

Inflation in Tokyo rose at a faster pace, supporting the case for the Bank of Japan to keep raising interest rates gradually and giving the yen a boost.Consumer prices excluding fresh food gained 2.8% in October from a year earlier in the capital, according to the Ministry of Internal Affairs and Communications on Friday, with the main driver being water charges. The median economist estimate in a Bloomberg survey was for a 2.6% increase after the gauge rose 2.5% in September.

The pace of price gains has stayed at or above the BOJ's 2% target for three and a half years, though BOJ Governor Kazuo Ueda maintains that the underlying trend is still some ways from reaching that goal. In the latest month, inflation barring fresh food and energy gained 2.8%, picking up from 2.5% in the previous month. Overall inflation also registered 2.8% growth.The yen rose to 153.84 versus the dollar after the data were released, versus around 154.17 shortly before.

Prime Minister Sanae Takaichi aims to soften the blow of rising prices to consumers and companies with fresh economic measures. The new leader has promised to cut the gasoline tax during the current diet session, bring down electricity and gas costs during the winter, and deliver additional grants for regional governments while raising the ceiling on tax-free earnings.With city-wide subsidies for water having run their course, costs for water were flat in October versus a year earlier. In September, the subsidies led to a decline of 34.6% for those costs. Prices for energy and processed food nudged lower.

While the Tokyo CPI report is a leading indicator for national trends, isolated subsidies affecting only the capital can sometimes distort that dynamic.In other data, industrial production rose 2.2% in September from August, beating the consensus estimate of 1.5% growth, while rising 3.4% from a year earlier. Meanwhile retail sales advanced 0.3% in September versus the prior month and rose 0.5% year on year.The jobless rate held steady at 2.6% and the job-to-applicant ratio stayed at 1.20 in September, meaning there were 120 jobs offered for every 100 applicants.

Unlike in the US, where the central bank faces political pressure to change interest rates, in Japan the BOJ hasn't faced much open pressure on policy. Takaichi, who is known as an advocate of monetary easing, hasn't made any explicit demands on the BOJ since becoming premier, though she drew attention in September 2024 when she declared it would be "stupid" to lift interest rates.The BOJ held its benchmark interest rate unchanged on Thursday. Prior to the decision, BOJ watchers in a Bloomberg survey pushed back their forecast for the next interest rate hike timing. Around half see December as the most likely month when the next hike might come.

Source: Bloomberg Europe

Oil prices eased on Friday, heading for a third straight monthly decline, as a stronger dollar capped commodities gains while rising supply from major producers globally offset the impact of Western sanctions on Russian exports.

Brent crude futuresslipped 33 cents, or 0.51%, to $64.67 a barrel by 0027 GMT, while U.S. West Texas Intermediate crudewas at $60.22 a barrel, down 35 cents, or 0.58%.

"A stronger USD weighed on investor appetite across the commodities complex," ANZ analysts said in a note.

The greenback was boosted after Federal Reserve Chair Jerome Powell said on Wednesday a rate cut in December was not guaranteed.

Both Brent and WTI are set to fall about 3% in October as rising supply is expected to exceed demand growth this year, with the Organization of the Petroleum Exporting Countries and major non-OPEC producers ramping up output to gain market share.

More supply will also cushion the impact of Western sanctions disrupting Russian oil exports to its top buyers China and India.

OPEC+ is leaning towards a modest output boost in December, sources familiar with the talks said ahead of the group's meeting on Sunday.

The eight OPEC+ members have boosted output targets by a total of over 2.7 million barrels per day - or about 2.5% of global supply - in a series of monthly increases.

Meanwhile, crude exports from top exporter Saudi Arabia hit a six-month high of 6.407 million barrels per day in August, data from the Joint Organizations Data Initiative (JODI) showed on Wednesday, and are set to climb further.

A U.S. Energy Information Administration (EIA) report also showed record production of 13.6 million bpd last week.

U.S. PresidentDonald Trumpsaid on Thursday that China has agreed to begin the process of purchasing U.S. energy, adding that a very large-scale transaction may take place involving the purchase of oil and gas from Alaska.

However, analysts remained sceptical as to whether the U.S.-China trade deal will boost Chinese demand for U.S. energy.

"Alaska produces only 3% of total US crude oil output (not significant), and we think Chinese purchases of Alaskan LNG likely would be market driven," Barclays analyst Michael McLean said in a note.

Source: TradingView

The much-awaited meeting between President Donald Trump and Chinese President Xi Jinping on Thursday concluded with significant decisions on trade, soybeans, and resources.The two leaders met at the sidelines of the APEC summit in Busan, South Korea. The first in-person meeting between the two since Trump's second term began in January, for about an hour and 40 minutes.

Reduced Fentanyl Tariffs, Soybean And Rare Earth Deal

Trump told reporters aboard Air Force One about the reduction in fentanyl tariffs from 20% to 10%. The reduced fentanyl tariffs will take effect immediately, lowering the levy on Chinese exports to 47% from 57%. Trump still called the subject of fentanyl very "complex" and expressed confidence that Xi would "work hard" to stop the related deaths.

In exchange, Beijing has pledged to step up measures against fentanyl trafficking and restart imports of "tremendous amounts" of U.S. soybeans and other agricultural goods, as per Trump. He also appreciated China's gesture to resume "large quantities" of soybean imports.The President also said that the U.S. and China have reached an agreement on rare earths and critical minerals. Rare earth issue "has been settled," Trump stated, adding that the agreement will be renegotiated annually.

Nvidia Talks Does Not Include Blackwell

Trump said he had discussed the sale of Nvidia (NASDAQ:NVDA) chips to China with President Xi, adding that it was now up to Beijing to continue talks with the company. "That's really between you and Nvidia," Trump is said to have told the Chinese president.However, he clarified that the discussion did not cover the sale of Nvidia's latest Blackwell chips to China.

Trade Deal 'Pretty Soon'

When asked about signing the trade deal with China, Trump replied, "pretty soon." He added, "We have not too many major stumbling blocks."Trump also announced plans to visit China in April, adding that Xi is expected to make a return visit to the U.S., though no specific dates were provided. Overall, he called the meeting "amazing" and rated it a "12 out of 10," emphasizing the positive outcomes and agreements reached.

Geopolitical Issues Discussed

Trump also noted that Taiwan was not part of the talks, but the topic of Ukraine was discussed extensively. He emphasized that the U.S. is willing to work with China toward resolving the conflict.

Xi Willing To Work With Trump

Xi said China's growth aligns with Trump's vision to "Make America Great Again," emphasizing that "China and the U.S. should be partners and friends," as reported by China Daily.He added that both nations are "fully able to help each other succeed and prosper together" and expressed readiness to work with Trump to "build a solid foundation for China-U.S. relations and create a sound atmosphere for the development of both countries."

Source: Yahoo Finance

Tucked into President Donald Trump's trade deals formalizing higher tariffs on goods from Asia this week are provisions for a global economic frontier the US wants to stay free of protectionism: digital commerce.In deals with Malaysia and Cambodia, and a more preliminary agreement with Thailand, the White House received assurances none will impose digital services taxes or discriminate against American providers of e-commerce, social media, streaming, cloud storage or other types of online services. Those activities count as digital trade when the transactions cross national borders.

While Trump wields tariffs to rebalance US deficits in merchandise trade, his push for a global internet free of import duties and other surcharges is aimed at ensuring the world's largest economy remains the leading net exporter of e-services. That stands in contrast with the prior administration under Joe Biden, which was more sympathetic to European officials' concerns about unfettered access to markets for US tech giants including Alphabet Inc.'s Google, Meta Platforms Inc. and Amazon.com Inc."The Trump administration believes that our deficit in trade in goods has been unfairly imposed, but that our surplus in trade in services has been fairly earned" and wants to "maintain our services surplus, while reducing our goods deficit," said Anupam Chander, a professor of law and technology at Georgetown Law in Washington. "I could understand why other countries would feel that this is itself unfair."

Last year, global exports of digitally delivered services increased to more than $4.77 trillion, a nearly 10% jump from 2023 and more than double the growth in total goods and services trade, according to World Trade Organization and United Nations figures. It's the fastest-growing segment of global goods and services trade that reached about $33 trillion last year.

Supercharging digital trade is artificial intelligence, raising questions for officials concerned about national security, data sovereignty, intellectual property abuse and consumer privacy protections as online services flow unchecked across borders.For some nations, it means a loss of government revenue as items formerly shipped as goods – a book or a movie, for example – are now sent digitally and out of reach of traditional customs duties.As Trump tries to rewire the global trading system, digital commerce has become another battleground for geopolitical fragmentation where Washington and Beijing are jockeying for influence across Africa, Latin America and South Asia.

China's DeepSeek Is Beating Out OpenAI and Google in Africa

The new US provisions for Malaysia, Cambodia and Thailand stand out because they call for long-term acceptance of an agreement forged at the WTO calling on all countries to refrain from putting tariffs on digital services.All three Southeast Asian economies agreed to support a permanent extension of the WTO accord known as the "moratorium on customs duties on electronic transmissions."Aside from that initiative and another aimed at protecting fisheries, Washington has abandoned the WTO – the referee of the rules-based trading system for the past 30 years - in favor of Trump's unilateral approach with so-called reciprocal tariffs.

The WTO moratorium has been extended by consensus every two years since 1998, most recently in 2024 when it only was approved in a last-minute deal held up by objections from India. It comes up for renewal again heading into the Geneva-based organization's ministerial meeting in March 2026 in Cameroon."The commitments in the US deals to facilitate the free flow of data are absolutely welcome – especially when set against the trend for localization requirements that we've seen in recent years," said Andrew Wilson, deputy secretary-general for policy at the International Chamber of Commerce. "While country-by-country progress is valuable, the ultimate goal should be to anchor these norms in a new international deal."

Malaysia's accord with Trump included the additional concession that it will refrain from "requiring US social media platforms and cloud service providers to pay into Malaysia's domestic fund."

AI Data Center Boom Threatens Trump's Manufacturing Revival

The latest digital pacts by the US – plus a preliminary one with Vietnam that contains a vague pledge to finalize digital services commitments — follow a framework the US announced in July with Indonesia, whose customs agency had preemptively added a line for digital services in its harmonized tariff schedule, or HTS.That deal specified that "Indonesia has committed to eliminate existing HTS tariff lines on 'intangible products' and suspend related requirements on import declarations," according to the White House document.

Under Trump, the US push for a permanent extension will have to address concerns from Brazil and India, both of which have faced some of the steepest US tariffs. In the past, both have wanted to preserve the option of raising revenue from foreign tech companies and protecting domestic e-commerce companies. Keeping the moratorium renewable also gave them leverage in other areas of trade."That extension looked very shaky after the last ministerial conference," said Simon Evenett, a professor of geopolitics and strategy at IMD Business School in St. Gallen, Switzerland.

Still, he said, while the US uses its leverage to push for a permanent extension of the moratorium, "it's too soon to say this represents broad-based WTO re-engagement — more likely, it's selective engagement on a topic critical to US big tech."Digital services provisions are part of most modern trade agreements, though the US and European Union have different views on the need for openness.Officials in Brussels want safeguards against anti-competitive behavior and stricter data privacy protections — oversight that US officials consider over-regulation. Some European countries have annoyed Washington by imposing taxes on digital services, viewing such moves as domestic fiscal policy that's outside the scope of trade talks. French lawmakers earlier this week voted to double a tax on large technology companies, risking a backlash from Trump.

The US-EU trade framework dated Aug. 21 noted both sides "commit to address unjustified digital trade barriers" and will together pursue a permanent WTO's e-commerce moratorium.Martina Ferracane, an associate professor of international digital trade at Teesside University in the UK, said another temporary extension is likelier than a permanent one because the US administration has "weakened its credibility" to lead a global consensus on the issue.She cited Trump's pledge to put 100% tariffs on films made outside the US as an example of a "threat of non-compliance" with the international ban on tariffs on digital commerce.

Source: Bloomberg Europe