Key Takeaways
- UK inflation data came in mixed but generally softer than anticipated, significantly increasing market expectations for Bank of England rate cuts, with a full cut priced for February 2026 and 17 basis points by December 2025.
- Major European companies reported Q3 earnings, with luxury giant Hermes and consumer goods firm Reckitt Benckiser exceeding sales expectations, while Barclays delivered stronger-than-estimated pretax profit and net interest income.
- Geopolitical developments include the EU's strategic outreach to former President Trump and Japan's pledges of U.S. purchases, alongside Walmart's halt in H-1B visa hiring due to new U.S. policy.
- A cyber attack on Jaguar Land Rover is estimated to have cost the UK economy a substantial £1.9 billion.
The financial markets are actively repricing expectations for the Bank of England's monetary policy following the release of the latest UK inflation data. September's Consumer Price Index (CPI) showed a year-over-year actual rate of 3.8%, matching the previous month but coming in below the 4.0% estimate. Core CPI also softened to 3.5% year-over-year, against an estimated 3.7%. Retail Price Index (RPI) annual growth was 4.5%, lower than both the previous 4.6% and the 4.7% estimate.
This softer inflation picture has led traders to significantly increase their bets on BoE easing. A full rate cut is now fully priced for February 2026, with expectations for 64 basis points of cuts by the end of 2026, up from 57 basis points before the data release. Furthermore, traders are now pricing in 17 basis points of cuts by December. UK Chancellor Reeves acknowledged the figures, stating dissatisfaction with the inflation numbers and emphasizing the government's responsibility to support the Bank of England in bringing inflation down. Producer Price Index (PPI) data also showed a year-over-year input rate of 0.8%, up from -0.1% previously, while output year-over-year was 3.4%.
In corporate news, several major companies unveiled their third-quarter results. Luxury goods powerhouse Hermes (HRMS.PA) reported Q3 revenue of €3.88 billion, slightly below the €3.9 billion estimate, but saw robust sales at constant exchange rates, increasing by 9.6% against an estimated 9.32%. Asia Pacific sales at constant FX grew by 6.2%.
Consumer health and hygiene giant Reckitt Benckiser (RKT.L) posted Q3 net revenue of £3.61 billion, marginally above the £3.6 billion estimate, with like-for-like (LFL) sales rising 7%, outperforming the 6.06% estimate. Volume growth stood at 4.2%, beating the 3.9% estimate, and the company maintained its full-year LFL sales outlook of +3% to +4%.
Barclays (BARC.L) announced a strong Q3, with pretax profit reaching £2.08 billion, surpassing the £2.05 billion estimate. The bank's Fixed Income, Currencies, and Commodities (FICC) revenue was £1.26 billion, above the £1.22 billion estimate, and net interest income came in at £3.75 billion, exceeding the £3.55 billion estimate. Loan-loss provisions were lower than expected at £632.0 million. Barclays also revised its full-year Return on Tangible Equity (ROTE) outlook to above +11% and maintained its +12% ROTE target for 2026.
On the geopolitical front, the European Union's bureaucracy overhaul is being framed as an outreach effort to former U.S. President Trump, according to Politico. Separately, Japanese Prime Minister Takaichi is reportedly set to pledge significant U.S. purchases, including soybeans, pickup trucks, and liquefied natural gas (LNG), during talks with Trump. However, PM Takaichi stated that no new defense spending target would be announced during this meeting. In other international news, Sweden's Prime Minister Kristersson is slated to discuss a key export industry deal with Ukrainian President Zelenskiy at Saab.
Domestically, a cyber attack on Jaguar Land Rover is estimated to have cost the UK economy £1.9 billion, as reported by the Financial Times. Meanwhile, U.S. retailer Walmart (WMT) has halted H-1B visa hiring following a Trump administration mandate imposing a $100,000 fee, a move that is reportedly shaking employers and foreign talent.
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.