Key Takeaways
- The European Central Bank (ECB) raised key interest rates by 25 basis points to 2.50%, citing persistent inflation pressures from energy prices and Middle East conflicts.
- Spot gold prices surged 1% to a record $4,357.59 per ounce, driven by safe-haven demand amid escalating geopolitical tensions and currency volatility.
- France faces mounting fiscal pressure as Bank of France officials warn that the 2027 budget must address a deficit currently standing at approximately 5% of GDP.
- India and Russia have transitioned 96% of bilateral trade to national currencies, with Sberbank (SBER) reporting that the "excess rupee" accumulation issue has been largely resolved.
- SoftBank Group (SFTBY) received an inaugural 'BB+' rating from Fitch with a stable outlook, reflecting its improved loan-to-value ratios following the surge in Arm Holdings (ARM) shares.
ECB Tightens Policy Amid Energy Price Volatility
The European Central Bank raised its deposit facility rate to 2.50% on Thursday, marking its second hike of 2026. ECB President Joachim Nagel signaled that a "mildly restrictive" policy stance may remain necessary as headline inflation is projected to average 3.0% in 2026. Nagel emphasized that energy prices will remain the primary determinant of future policy moves, warning that the central bank must prevent second-round effects on wages.
The updated ECB staff projections revised inflation forecasts upward for 2027 and 2028, citing the ongoing conflict in the Middle East as a persistent inflationary driver. Despite the tightening, the Eurozone economy has shown greater than expected resilience, with growth projections for 2026 adjusted upward to 0.9%.
France Grapples with Budget Deficit and Growth Slowdown
Bank of France official Moulin issued a series of warnings regarding the French economy, stating that while the situation remains "manageable," action to cut the deficit cannot be delayed. France’s public debt has exceeded 116% of GDP, and the budget deficit remains well above the EU's 3% target. Moulin noted that recent heatwaves have already shaved 0.1 percentage points off economic growth, which is now expected to recover only at a moderate pace.
Concerns are mounting in the bond markets, where the spread between French and German 10-year yields has widened to nearly 90 basis points. Political uncertainty ahead of next year's presidential election has further complicated the fiscal outlook, with some candidates proposing controversial debt-cancellation plans that economists warn could backfire by triggering higher borrowing costs.
India-Russia Trade Shifts to Digital and Local Currencies
Sberbank (SBER) CEO Herman Gref announced that the infrastructure for Russia-India settlements in national currencies is now fully operational, with 96% of trade conducted in rupees and rubles. The bank no longer sees an "excess accumulation" of rupees by Russian firms, a problem that had previously hampered trade.
Looking forward, Sberbank sees significant scope for Central Bank Digital Currencies (CBDCs) to further increase efficiency. Transactions that once took days now see 90% of payments processed in under 10 minutes. Simultaneously, India is expanding its mineral security by holding talks with Argentina and Chile for additional lithium blocks to support its electric vehicle supply chain.
UK Trade Deficit Widens Despite Export Growth
The UK Office for National Statistics (ONS) reported that the total trade deficit (excluding precious metals) stood at £3.9 billion in July 2026. While goods exports rose by 2.8% during the month, the increase was offset by a 2.4% rise in imports, particularly from non-EU countries. The UK Debt Management Office (DMO) also announced the addition of Natixis as an associate Gilt-Edged Market Maker (GEMM) to support liquidity in the sovereign debt market.
SoftBank Secures Stable Credit Rating
SoftBank Group (SFTBY) has achieved a 'BB+' rating from Fitch Ratings, supported by a stable outlook. The rating agency highlighted the recovery of SoftBank's listed assets, particularly the sharp rise in the valuation of Arm Holdings (ARM), which now accounts for over 40% of the group's invested assets. S&P Global also recently revised SoftBank's outlook to stable, estimating the company's loan-to-value (LTV) ratio has improved to the 20%-25% range.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.