Author: Fiona Craig

The U.S. dollar firmed modestly on Thursday as investors digested renewed trade tensions between Washington and Beijing, while awaiting key U.S. inflation data that could shape the currency’s next move.

At 03:50 ET, the U.S. Dollar Index, which measures the greenback against six major currencies, was up 0.1% at 98.805, recovering after steep declines in the previous week.

Safe-haven demand lifts the greenback

The dollar found some support as investors grew cautious over the deteriorating state of U.S.-China relations, with fears mounting over a potential escalation into a trade war between the two largest global economies.

According to Reuters, Trump’s administration is weighing a plan to restrict a wide range of technology exports to China, including laptops, jet engines and other high-tech goods, in retaliation for Beijing’s recent curbs on rare earth exports.

U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet in South Korea next week. While Trump has voiced optimism, he also noted that “a meeting may not take place.”

In a separate development, Trump announced sanctions against Lukoil and Rosneft, accusing Moscow of showing a “lack of serious commitment to a peace process to end the war in Ukraine.”

The move boosted crude oil prices — which are denominated in dollars — giving the greenback an extra lift.

However, “the move has merely unwound October’s losses so far, and we’d likely need to see Brent heading to $70 [from the current $64 a barrel] to result in tangible support for USD,” said ING analyst Francesco Pesole.

CPI data could be key driver

Although the U.S. government shutdown remains unresolved, the September Consumer Price Index is scheduled to be published Friday after being delayed more than a week. The report could provide the next major catalyst for dollar volatility.

“We reiterate our view that the dollar’s rebound is getting tired and probably requires some hawkish repricing to keep going,” said Pesole. “We don’t think tomorrow’s U.S. CPI will offer that opportunity as we expect a consensus 0.3% MoM core print. But surely with 50bp of easing fully priced in by year-end, any hot print could offer good support to the dollar.”

Euro dips modestly

The euro slipped, with EUR/USD down 0.2% at 1.1592, after the White House confirmed sanctions against Russia’s biggest oil producers, again citing Moscow’s “lack of serious commitment to a peace process to end the war in Ukraine.”

“EUR/USD is hovering around 1.160, a level that, in our view, can work as an anchor again today and possibly for a few more days should U.S. CPI fail to add much to the dollar narrative,” said Pesole.

The European Central Bank is set to meet next week, but expectations for new policy moves remain low given inflation is near its 2% target and eurozone growth is holding steady.

GBP/USD edged down to 1.3351 as sterling came under mild pressure after data on Wednesday showed inflation holding steady at 3.8% in September, below expectations for an acceleration to 4.0%.

Yen weakens further

USD/JPY climbed 0.4% to 152.58, the highest level in nine days, as the yen weakened following the appointment of Sanae Takaichi as Japan’s new prime minister earlier this week. Takaichi is seen as fiscally dovish and is expected to ease both fiscal and monetary policy, which adds pressure on the yen.

That said, the Bank of Japan has indicated it will continue raising interest rates if growth and inflation stay on track, with September CPI data due Friday, just ahead of its late-October policy meeting.

USD/CNY ticked lower to 7.1229, supported by strong midpoint fixes from the People’s Bank of China. Trade tensions between the U.S. and China flared again this week after reports that Washington is considering new export controls on software-powered technologies in response to Beijing’s rare earth restrictions.

AUD/USD added 0.3% to 0.6506 and NZD/USD edged up 0.1% to 0.5746.

European equity markets opened with slight gains on Thursday, supported by strength in the energy sector amid a flood of quarterly earnings reports and escalating geopolitical tensions.

By 07:05 GMT, Germany’s DAX was up 0.1%, France’s CAC 40 gained 0.2% and the U.K.’s FTSE 100 rose 0.4%.

Trump sanctions Russian oil majors

U.S. President Donald Trump announced new sanctions against Russia’s largest oil companies, Lukoil and Rosneft, with his administration citing Moscow’s “lack of serious commitment to a peace process to end the war in Ukraine.”

Treasury Secretary Scott Bessent said the companies funded “the Kremlin’s war machine,” adding that the Treasury was prepared to impose further measures if necessary. This represents a shift in Trump’s policy toward Moscow, as no direct sanctions had been introduced during his second term until now.

The move has raised concerns over a reduction in global oil supply, pushing benchmark prices sharply higher and lifting European energy stocks. Brent futures climbed 3.1% to $64.54 a barrel, while U.S. West Texas Intermediate crude rose 3.3% to $60.43.

U.S.-China trade tensions limit gains

However, the upside was capped as investors continued to focus on the tense relationship between Washington and Beijing, amid fears of an escalating trade war between the two largest economies. According to Reuters, Trump’s administration is weighing restrictions on a broad range of technology exports to China — including laptops, jet engines, and other high-tech goods — in response to Beijing’s latest rare earth export curbs.

Trump and Chinese President Xi Jinping are expected to meet in South Korea next week, and while the U.S. president has sounded optimistic, he acknowledged that “a meeting may not take place.”

European earnings in focus

Corporate results across the continent are also driving market sentiment. Unilever (LSE:ULVR) reported better-than-expected third-quarter underlying sales growth, helped by strong demand for beauty products in North America and emerging markets.

Lloyds Banking Group (LSE:LLOY) posted a 36% decline in third-quarter profit and cut its full-year guidance due to an £800 million charge tied to a motor-finance mis-selling scandal.

Finland’s Nokia (NYSE:NOK) delivered quarterly earnings well above expectations, supported by robust demand in optical and cloud services, as well as sales to AI data centers following its acquisition of Infinera.

French defense and aerospace company Thales (EU:HO) posted a 9% sales increase in the first nine months of 2025, reaffirming its financial targets.

Catering group Sodexo (EU:SW) issued a weaker 2026 growth forecast, citing persistent headwinds in its U.S. business.

Chipmaker STMicroelectronics (BIT:STMMI) reported a 32% drop in third-quarter net income due to weaker automotive and industrial demand, though it expects a slight sequential revenue uptick in Q4.

Dassault Systèmes (EU:DSY) saw earnings and margins expand but trimmed its 2025 revenue guidance on softer segment growth.

Tesla kicks off U.S. tech earnings season

Wall Street is also preparing for key results from Tesla, Inc. (NASDAQ:TSLA), the first of the so-called “Magnificent Seven” to report.

The electric vehicle maker’s quarterly profit fell short of expectations, pressured by tariffs, R&D costs, and lower income from regulatory credits. Revenue, however, beat forecasts, supported by record vehicle sales as U.S. customers rushed to claim a tax credit before its expiration last month.

Tesla’s performance is seen as an early indicator for the broader tech sector rally. The rest of the group — Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and Alphabet Inc. (NASDAQ:GOOGL) — are set to publish their earnings in the coming days.

Airbus (EU:AIR), Leonardo (BIT:LDO) and Thales (EU:HO) have signed a Memorandum of Understanding to merge their space operations into a single joint venture, which is expected to become operational in 2027.

As part of the agreement, Leonardo will contribute its entire Space Division, including its 67% stake in Telespazio and its 33% stake in Thales Alenia Space. Telespazio, which is fully consolidated, is currently profitable, while Thales Alenia Space, which is equity accounted, is loss-making.

On a pro forma basis, the new entity would have generated €6.5 billion in revenue in 2024. Profitability figures were not disclosed, but the companies indicated margins remain low. Leonardo will hold a 32.5% stake in the new company, which is expected to be equity consolidated.

The three partners estimate the combination will deliver approximately €500 million in annual operating income synergies within five years of closing — representing a potential 4–5% increase in Leonardo’s expected 2023 EBITA.

Ipsos (EU:IPS) saw its shares drop 3.5% after the company lowered its full-year 2025 organic growth outlook, even as it delivered stronger-than-expected third-quarter results.

Organic growth came in at 2.9% for the quarter, slightly ahead of the 2.7% forecast. On a six-year compound annual growth rate (CAGR) from 2019 to 2025, this represented an improvement from 3.3% to 3.4%, highlighting continued momentum in key markets.

The Americas led regional performance with growth of 4.3%. The U.S. market, under new leadership, rose 3% over the first nine months of the year versus 1.2% for the Americas overall. This came despite a 15% decline in Public Affairs, offset by strong demand from consumer packaged goods companies and improved results in the healthcare sector.

Most business segments improved sequentially in the third quarter. The Consumer division—which accounts for about half of group sales—accelerated from 1.6% growth in Q2 to 4.9% in Q3. Healthcare posted 4.4% growth, slightly down from 5.2% the prior quarter. Public Affairs remained in decline but showed signs of stabilization, improving from -8.7% in Q2 to -4.7% in Q3.

Despite the operational strength, Ipsos trimmed its full-year organic growth guidance from “1%+” to 0.7%, below the 1.3% recorded in 2024. The company attributed the downgrade to delays caused by the U.S. government shutdown and spending constraints in markets such as France and the UK.

The revision follows a weaker order intake in September, particularly in Public Affairs across the U.S., France, and Australia/New Zealand—contrasting with the company’s confident tone during its mid-September investor conference.

The updated guidance implies Q4 organic growth of roughly 0.5%, down from the previous 2.2% expectation. Ipsos, however, maintained its full-year 2025 margin outlook of around 12.4%, or 13% excluding the dilutive impact of consolidating lower-margin BVA Family.

Renault (EU:RNO) reported third-quarter sales ahead of expectations, driven by higher vehicle volumes across its portfolio and steady demand for its latest models.

Group revenue rose 6.8% year-on-year to €11.43 billion ($13.27 billion) for the three months to September, topping the company’s consensus estimate of 6.2% growth. Total deliveries increased 9.8% to 529,486 units, with gains seen across the Renault brand and its other marques.

“In a challenging environment, we continue to capitalise on our compelling and competitive line-up, spanning electric, ICE (internal combustion engine) and hybrid vehicles,” said Chief Financial Officer Duncan Minto.

The company reiterated its full-year operating margin forecast of around 6.5%, a target that was lowered earlier in the year from at least 7% amid intensifying competition in the European automotive market. Renault continues to face pricing pressure from lower-cost Chinese EV manufacturers, while U.S. tariffs on imported vehicles have added to headwinds.

“We remain fully committed to our value-over-volume strategy, while maintaining strong focus on executing our cost-reduction roadmap,” Minto said.

He noted that new models made up 30% of Q3 sales, compared with 28% earlier in 2025 and 25% at the end of 2024. The new compact crossover SUV Dacia Bigster has been a key contributor to improved profitability.

Jefferies analyst Philippe Houchois commented that Renault’s third-quarter revenue was “marginally ahead of consensus with a bit more volume and country mix and a bit less product mix than expected.” He added, “Revenue disclosure consistent with FY guidance, reiterated, for the Nth time.”

Thales (EU:HO) reported a solid 9% year-on-year increase in sales for the first nine months of 2025, supported by strong performance in its aerospace and defence divisions. The company also reaffirmed its full-year financial guidance, reflecting continued confidence in its outlook.

Total sales reached €15.26 billion ($17.70 billion), compared with €14.07 billion a year earlier—representing 9.1% organic growth. Orders climbed 8% to €16.76 billion, pushing the book-to-bill ratio above one as rising demand in Europe and Asia bolstered both defence and space activities.

The defence segment was the main growth engine, with sales increasing 14% to €8.24 billion, supported by accelerated production and several major contract wins in the U.K., India, and Germany. Aerospace revenue advanced 7%, while the Cyber & Digital business saw a 3.8% decline, reflecting softer cybersecurity demand and the integration impact of the Imperva merger.

Thales reiterated its 2025 guidance, targeting organic sales growth of 6–7%, an adjusted EBIT margin between 12.2% and 12.4%, and a book-to-bill ratio remaining above one.

Orange (EU:ORA) saw its Paris-listed shares edge higher on Thursday after reporting third-quarter earnings that slightly exceeded analyst expectations, supported by steady customer growth and cost control measures.

Earnings before interest, taxes, depreciation, and amortization after leases (EBITDAaL) rose 3.7% year-on-year to €3.44 billion, just above the €3.43 billion anticipated by analysts. The company attributed the increase to expanding customer numbers and disciplined expense management.

Fiber-to-the-home customers grew to 16 million globally, up from 15.5 million in the previous quarter, while mobile customers increased to 100.4 million from 98.1 million. Growth was particularly strong in the Middle East and Africa, where revenue rose at a double-digit pace for the tenth consecutive quarter.

A “gradual deterioration” of the company’s French market over the last few quarters “is not worsening” either, according to analysts at Kepler Cheuvreux, who described the overall results as “reassuring.”

Orange also upgraded its full-year guidance, now expecting core income growth of at least 3.5%, compared with its previous forecast of “over 3%.” Analysts including Javier Borrachero at Kepler Cheuvreux said the revised outlook was even “more encouraging” than the Q3 performance, especially given the “challenging context” and “a tough macroeconomic backdrop that is also having a larger negative impact than expected in Orange business.”

CFO Laurent Martinez highlighted that the company’s balance sheet provides sufficient flexibility to pursue M&A opportunities in France and Spain. Orange has already submitted a bid for the remaining 50% stake in MasOrange and is part of a €17 billion joint offer with Bouygues Telecom and Free-Groupe Iliad to acquire a large portion of Altice’s French operations. However, the company cautioned that “there is no certainty” the latter deal will be finalized.

Renishaw PLC (LSE:RSW) saw its shares decline 4.3% on Thursday after reporting first-quarter revenue below market expectations, as sharp weakness in the EMEA region overshadowed gains in other markets.

Revenue rose 2.8% at constant currency for the quarter ended September 30, falling short of the 4.6% growth forecast for fiscal 2026. At actual exchange rates, revenue slipped 1.8% to £170.8 million, down from £173.9 million a year earlier. The company noted that 1.2 percentage points of constant currency growth came from surcharges in the Americas to offset tariff duties—indicating that underlying organic growth remained limited.

The EMEA region was the main drag, with revenue plunging 20.5% at constant currency. The company cited weak demand for Industrial Metrology sensors from machine tool builders and lower laser encoder sales. It also noted that the planned implementation of a new ERP system impacted September revenue, though it expects to recover this shortfall in Q2.

“Despite the continued global uncertainty, the structural drivers that underpin our markets are presenting growth opportunities across our businesses,” said Renishaw in its trading update, maintaining expectations for “steady revenue growth” for the year.

The company completed its £20 million operating cost reduction program during the quarter, trimming its workforce by 350 employees, or 6.5% compared to the end of fiscal 2025.

Outside EMEA, performance was more encouraging: order books strengthened in the Americas and APAC regions, with revenue up 11.2% and 14.7% respectively at constant currency. New product launches—including the Equator-X dual method shopfloor gauge and MODUS IM Equator metrology software—were also well received.

Renishaw said it continues to advance productivity initiatives to improve efficiency and returns, with medium-term targets including operating margins above 20%.

Schroders Plc (LSE:SDR) saw its shares decline more than 2% on Thursday after reporting third-quarter net new money of £2.2 billion—missing analyst forecasts as weaker wealth management inflows offset market and currency gains. Total assets under management (AUM) rose 5% quarter-on-quarter to £817 billion, buoyed by £39 billion in market and FX movements, including £8.4 billion from a stronger U.S. dollar.

“30-Sep AUM (£817bn) is up +5% q/q and +2% above VA cons. driven by market & FX movements of +£39bn (FX +£8.4bn driven by USD) and NNM of +£2.2bn,” Jefferies noted in a client report.

Asset management inflows were a bright spot, with net inflows of £4.4 billion, ahead of consensus expectations of £1.9 billion. “Strong inflows in Core Solutions (+£6.7bn), lighter NNM in Private Markets (£0.9bn vs VA cons £1.1bn) and positive NNM in FI (+£0.1bn) more than offsetting outflows in Equities (-£3.0bn, driven by Asia equities) and Multi-asset (-£0.3bn),” Jefferies said. The brokerage also noted that “the negative mix effect in public markets is likely to be offset by the strong market performance during the quarter.”

Wealth management was softer, with net inflows of £0.5 billion, missing expectations of £1.7 billion. Jefferies attributed the shortfall to “drawdowns in charity reserves in Cazenove despite continued flow momentum in HNW.” It added that “the outflow in Benchmark (-£0.2bn) was driven by the decision of an adviser firm to change its MPS provider.” Joint ventures saw £2.7 billion of outflows versus expectations of £0.1 billion in inflows.

By segment, asset management AUM stood at £574 billion (vs. consensus £561 billion), including £72 billion in private assets and alternatives and £502 billion in public markets. Wealth management AUM totaled £136 billion (vs. £134 billion consensus), split between £99 billion in advised and other wealth and £37 billion in Benchmark. Joint ventures accounted for £107 billion, slightly below the £109 billion expected.

Jefferies said Schroders faces “heavy lifting required in 4Q to meet WM target,” with stronger wealth management flows needed in the final quarter to hit full-year goals. The brokerage maintained a Hold rating on the stock with a 390 pence price target, around 3% above the prior close of 379 pence.

Schroders’ shares have traded between 429 pence and 283 pence over the past 12 months, with a market capitalization of approximately £6.1 billion ($8.2 billion) as of October 22. Jefferies’ valuation is based on “a target P/E of 10.0x 25E EPS before adding back surplus capital and deducting £250m of Tier 2 notes.” Key risks highlighted include weaker market returns, lower net new money, and an unfavorable business mix that could pressure fee margins.

St. James’s Place PLC (LSE:STJ) reported stronger-than-expected third quarter results, with funds under management exceeding £200 billion for the first time. However, shares fell 3.03% after the company signaled that inflows could slow in the fourth quarter.

Gross inflows reached £5.7 billion for Q3, surpassing analyst expectations of £5 billion and marking a 30% increase from the same period a year earlier. Net inflows came in at £1.76 billion, ahead of the £1.6 billion consensus estimate and nearly double the £0.89 billion recorded in Q3 2024. Total funds under management stood at a record £212.36 billion as of September 30—up 12% year-to-date and around £2 billion above forecasts.

The company reported an improved retention rate of 95.2%, compared to 94.6% a year ago, while net flows as a percentage of opening funds under management rose to 3.9% from 2.2%.

“I am pleased to report another strong quarter for new business, which underlines the power of our advice-led business model and the value clients place in the long-term, trusted relationships they have with our advisers,” said Mark FitzPatrick, Chief Executive Officer.

Despite the strong performance, St. James’s Place warned that fourth-quarter flows may soften. The company noted that Q3 benefited from “unseasonally high levels of client engagement and activity” ahead of the introduction of its new charging structure in late August, while macroeconomic uncertainty continues to weigh on consumer sentiment.

The firm also pointed to strong investment returns, with year-to-date gains representing 12% of opening funds under management on an annualized basis. It recently launched the Polaris Multi-Index fund range, applying its active asset allocation expertise within index-tracking strategies.