Stocks Rebound on AI Earnings as Hauser Puts an RBA Hike in Play
Wednesday, 21 October 2026 — Stocks rose with US futures as strong results from technology companies eased concerns over the AI trade after last week's selloff, and crude oil climbed.
Our three themes for the day:
The first is the AI trade. SpaceX and Super Micro gave the market the earnings it wanted, and the Kospi led the rebound. However, credit-default swaps on the largest technology borrowers are at record highs ahead of a new round of bond sales, and Anthropic's draft prospectus puts a number on the computing bill. Meta and Tesla report after the close, and in my view the credit market's reaction to their spending plans will matter as much as the share prices.
The second is the hawkish turn in central-bank talk. Hauser has put a November rate rise in Australia on the table, Himino says Japanese financial conditions are still accommodative, and Greene wants the Bank of England to raise rates in November because wage disinflation has stalled. This morning's UK inflation print came in above consensus, supporting that argument, and next week brings the Fed, the Bank of Canada and the RBNZ on Wednesday, the ECB on Thursday and the BoJ on Friday.
The third is Hormuz. Middle East oil flows are back above prewar levels thanks to an improvised shipping system under US protection, yet attacks on vessels are rising, and the cost of moving a barrel has risen sevenfold. Brent is back above $110, and the oil market is pricing in transport costs and the risk of escalation rather than a crude shortage. Today we get the US oil inventory report, which could be interesting.
Chart of the day
UK CPI inflation by component, y/y: headline 3.5% in September, services 3.7%, goods 3.2% and core 2.8%. The Bank of England watches services and core over the fuel-led headline; goods carried the 2021-22 spike. Source: ONS, GGMA.
In brief
SpaceX's profit beat estimates on a surge in AI revenue, lifting AI shares across Asia, and Elon Musk said SpaceX and Tesla have formed special committees to consider a merger.
Credit-default swaps on the biggest technology borrowers hit record highs as investors braced for a wave of post-earnings bond sales, with Meta and Tesla reporting after the close today.
RBA Deputy Governor Andrew Hauser said the inflation outlook looks materially worse and left a November rate rise open, and the Australian dollar firmed towards a three-week high.
BoJ Deputy Governor Ryozo Himino said underlying inflation is close to the target and financial conditions remain accommodative, as a Reuters poll showed most economists expect a December rate rise.
Bank of England Monetary Policy Committee member Megan Greene said wage disinflation has stalled and urged a rate rise in November, and UK inflation came in above consensus this morning.
Brent rose as attacks on ships around the Strait of Hormuz threatened shipments and US industry data pointed to another drop in crude stockpiles, even as Gulf oil flows have recovered above prewar levels.
Franklin Templeton sees a risk that the French bond rout could escalate into a euro-area debt crisis, while analysts say euro-zone banks are better prepared than in the last one.
Today's Macro Roadmap: ECB Executive Board member Piero Cipollone speaks at 10:00 CET, Bank of England Governor Andrew Bailey takes part in a fireside chat at 15:00 CET, US crude inventories are out at 16:30 CET, ECB President Christine Lagarde speaks in Wiesbaden at 18:00 CET, Meta, Tesla and IBM report after the US close, and New Zealand's third-quarter inflation report is due at 23:45 CET.
The full briefing
Stocks rose with US futures as strong results from technology companies eased concerns over the AI trade after last week's selloff, and crude oil climbed (BBG). South Korea's Kospi advanced 2.7%, and Taiwan's Taiex gained 1.3% as the AI bellwethers rallied after earnings from SpaceX and Super Micro Computer topped expectations, and the MSCI Asia Pacific Index rose 1% to snap two days of losses (BBG). Nasdaq 100 futures rose 0.5% to 29,836 this morning, S&P 500 futures rose 0.2% to 7,773, and Dow Jones futures rose 0.1%. Yesterday, the Dow Jones Industrial Average rose 1.02%, and the S&P 500 gained 0.28%, while the Nasdaq Composite was little changed, as strong industrial and consumer earnings offset worries about the sustainability of the debt-funded AI boom (WSJ). Attention now turns to a packed earnings slate, with Meta Platforms and Tesla due to report after the US close today (BBG). Gauges of credit risk for the biggest technology companies hit fresh highs yesterday as investors braced for post-earnings bond sales, with credit-default swaps on Oracle trading as high as a record 343 basis points and a gauge of Meta's credit risk at an all-time high of 114.8 basis points, after companies borrowed more than $450 billion worldwide this year to fund artificial intelligence (BBG). Billionaire Ken Griffin said investors are "almost certainly" in the midst of an AI bubble, while arguing the technology will bring a wave of new business formation (BBG).
Stocks
In stocks, Nikkei 225 futures rose 0.7% to 64,860, Hang Seng futures fell 0.6% to 23,735, CSI 300 futures fell 0.4% to 4,083, and MSCI emerging-markets futures rose 0.1% to 1,621. In Seoul, AI infrastructure firm Elice surged 30%, rebounding from one of South Korea's worst IPO debuts on record, while in Australia data-centre developer Nextdc plunged 42% after cutting its outlook (BBG). Asian stocks were mixed in afternoon trade as concerns about aggressive AI spending lingered and markets focused increasingly on AI companies' balance-sheet health, with Hong Kong's Hang Seng Index down 0.4% and the Shanghai Composite down 0.3% (WSJ). South Korea's exports adjusted for working days rose 65.9% y/y in the first 20 days of October, with chip exports up 222.5%, a day before the Bank of Korea's rate decision, at which it is widely expected to hold (BBG). Euro Stoxx 50 futures rose 0.3% to 6,159, DAX futures rose 0.4% to 25,521, and FTSE futures rose 0.1% to 10,778.
Australia
In Australia, RBA Deputy Governor Andrew Hauser said tighter monetary policy is working to slow the economy, but the inflation outlook has deteriorated and looks "materially worse", in part because of oil prices, leaving him unsure whether rates need to rise further next month (Reuters). He said the third-quarter CPI is likely to come in higher than the RBA had forecast, that capacity pressures are probably higher than assumed, and that the labour market is a little weaker than expected and easing (BBG). Goldman Sachs changed its call and now expects a 25 basis point rate rise to 4.85% at the 3 November meeting, having previously forecast no change (Reuters).
Japan
In Japan, BoJ Deputy Governor Ryozo Himino told parliament that the price trend is very close to 2% and will be consistent with the goal (BBG), and that financial conditions remain accommodative even after last month's rate rise, so delaying the necessary adjustment to monetary support could hurt the economy in the long run (Reuters). Finance Minister Satsuki Katayama said the economy is on the cusp of a period of sustained, wage-driven inflation and that she sees no gap between the government and the BoJ on the planned consumption tax cut (Reuters). Nearly 70% of economists in a Reuters poll, 54 of 78, expect the BoJ to raise its policy rate to 1.5% this quarter, with about 80% of those naming a month choosing December rather than the meeting ending on 30 October (Reuters). Former BoJ executive director Eiji Maeda said the bank will probably keep raising rates every three months, with the next move in December and another in March or April, and that it is unlikely to declare the 2% target achieved next week (BBG). Kyodo reported that the BoJ will decide at next week's meeting whether 2% inflation has been reached (Kyodo).
The UK
In the UK, Bank of England Monetary Policy Committee member Megan Greene said wage disinflation has stalled, that there is less slack in the labour market than thought, and that colleagues should "proactively lean" against the risk of second-round effects by raising rates at the 5 November meeting, with forward-looking measures pointing to pay growth plateauing near 3.5% (BBG). She said inflation risks are bigger than thought, adding that the level of inflation at which individuals start to react has fallen to around 3% (LSE). Employer pay awards edged up, according to data from Brightmine (Reuters).
The Fed & ECB
In the US, 94 of 100 economists in a Reuters poll expect the Fed to hold the funds rate at 3.75% to 4.00% at next week's meeting, and all 100 expect a rate rise at the December meeting, up sharply from less than half in the previous poll, with almost 60% seeing the policy rate peaking at 4.00% to 4.25% (Reuters). In the euro area, ECB Chief Economist Philip Lane said in Shanghai that greater international use of the euro would support the ECB's ability to achieve price stability by extending the global impact of its monetary policy (BBG). More than thirty central banks have expressed interest in the enhanced euro repo facility, which offers lines of up to €50 billion, he said (ECB).
What's priced for central banks?
Currently, STIR traders price a 52% probability of an RBA rate rise on 3 November and 18 basis points of tightening by December, an 82% probability of a Bank of Canada rate rise next week and 35 basis points by December, and an 80% probability of an RBNZ rate rise the same day and 37 basis points by December. For the Fed, they price a 15% probability of a rate rise next week and 26 basis points cumulatively by December; for the ECB a 7% probability of a rate rise next week and 23 basis points by December; for the BoJ a 4% probability of a rate rise on 30 October and 20 basis points by December; and for the BoE an 84% probability of a rate rise in November and 37 basis points by December.
Currencies
In currencies, the dollar was a touch stronger against most of its Group-of-10 peers (BBG), and the dollar index rose 0.1% to 101.82 after slipping to a three-week low yesterday as Treasury yields and crude prices dipped (Reuters). The euro fell 0.1% against the dollar to 1.1222, sterling was little changed at 1.337, and the yen was little changed at 158.18 per dollar. The Australian dollar rose 0.2% to 0.7015 after Hauser's remarks, while the New Zealand dollar fell 0.2% to 0.5675 and the Canadian dollar was unchanged at 1.406 per dollar. The Aussie is hovering close to a three-week high against the greenback (Reuters). The won firmed 0.2% to 1,324.01 per dollar, the rupee firmed 0.3% to 94.6575 per dollar, and the offshore yuan was little changed at 6.6775. A strategist at an Australian bank wrote that safe-haven demand for the dollar is likely to fade once the Middle East conflict ends and energy prices retreat, but that foreign capital inflows into US markets could still push the currency modestly higher in coming months (Reuters).
Bonds
In bonds, Treasuries pared some of yesterday's gains (BBG), with the ten-year yield up 1.9 basis points at 5.13%, the two-year up 1.5 basis points at 4.79%, and the thirty-year up 1.8 basis points at 5.44%. Japan's ten-year yield slipped 0.4 basis points to 2.90%, and the two-year was little changed at 1.91%. China's ten-year yield slipped 0.5 basis points to 1.63%, and Bund futures fell 0.2%. Franklin Templeton sees a risk that the French bond rout could escalate into a euro-area debt crisis that would eclipse the Greek debt blowup of nearly two decades ago (BBG). Soaring euro-zone government borrowing costs are reviving fears of a replay of that crisis, but analysts and investors say banks are better prepared: net sovereign bond holdings have doubled to €4.3 trillion since then while capital buffers have risen even more, although sovereign concerns contributed to a 10% drop in European bank stocks over the past six weeks and a 17% fall for France's top three lenders (Reuters).
Commodities
In commodities, Brent rose 1.6% to $110.51 a barrel, and WTI traded near $99 as attacks on ships around the Strait of Hormuz threatened shipments, with Iranian state media saying a supertanker hit a sea mine, while the American Petroleum Institute reported that US crude inventories fell by 4.9 million barrels last week (BBG). Attacks on vessels near Hormuz have risen to as many as 12 a week from two to four over the summer, according to analysts at a US bank, and non-Iranian crude left the Persian Gulf at around 9.1 million barrels a day in the first 20 days of the month, suggesting a slowdown in flows through the strait (BBG). Middle East oil flows including alternative routes averaged more than 24 million barrels a day in the week to 18 October, above prewar levels of 23.3 million, as an improvised shipping system under US protection moves cargoes through the strait, with Hormuz flows at around 14 million barrels a day, or 82% of prewar levels (WSJ). Global shipping costs for oil have risen about sevenfold over the past year, with the average rate for hauling crude above $20 a barrel from $3 a year ago, and the higher freight could reduce refiners' demand for crude, analysts at another US bank wrote (BBG). Oil-product markets will likely remain tight through mid-2027 even if the war-related disruptions ease, a US bank's analysts wrote, as planned refinery outages through the second quarter of next year rise by 3.4 million barrels a day, two and a half times the norm (BBG). Nickel rose 1.7% to $15,925 a ton on the London Metal Exchange as Chinese producers planned to discuss output cuts at their Indonesian operations (BBG), and copper was little changed. Wheat fell 0.4% to $6.4075 a bushel, the lowest since early August, as traders wound back risk premiums after President Donald Trump increased pressure on Ukraine to strike a peace agreement with Russia (BBG). Gold fell 0.2% to $4,117 an ounce, Bitcoin fell 0.2% to $82,598, and Ether fell 0.4% to $2,436.
Geopolitics
In geopolitics, Iran told Pakistan's army chief, Field Marshal Asim Munir, that there would be no talks with Washington until Tehran's demands are met, including an end to the US blockade of its ports and the lifting of sanctions on its oil exports, and security chief Mohsen Rezaei said all enriched nuclear material would remain in Iran (Reuters). Three senior Iranian officials told Reuters that Tehran is deliberately prolonging the stalemate to hurt Trump politically before the 3 November midterm elections and is preparing for renewed US attacks rather than a quick deal, with Iran's inflation at 73.6% in September (Reuters). Arab media claim that both sides have given preliminary approval to a compromise proposal presented by Pakistan and Qatar that includes the release of $6 billion of frozen Iranian funds, according to Mehr News (Mehr). US special envoy Steve Witkoff will fly to St Petersburg today to offer President Vladimir Putin direct talks with Trump and Ukraine's Volodymyr Zelenskyy, Norwegian Prime Minister Jonas Gahr Støre said after hosting talks in Oslo (Politico). In France, Prime Minister Sébastien Lecornu said targeted curfews helped keep the peace overnight (Reuters), and the EU is probing pro-Kremlin disinformation around the riots (FT). Trump is promising financial benefits to voters to curb Republican losses in the midterms, including an $8 billion bailout for farmers to offset diesel costs, payments of up to $30,000 for tips on government fraud, and $5,000 cheques for every adult if the party keeps control of Congress (WSJ). In the UK, the welfare bill will keep rising until the next election despite Andy Burnham's benefit reforms, the Telegraph reports (Telegraph), and The Times carries Andy Haldane on Labour's and the Conservatives' growth plans (The Times).
Corporate news
In corporate news, SpaceX posted net income of $4.4 billion for the September quarter against an average projection of $1.88 billion, with revenue up 161% y/y and its AI business generating $7.56 billion, and Elon Musk said SpaceX and Tesla have formed special committees of independent directors to consider a merger that he called a good idea but far from certain (BBG). Super Micro Computer said sales in the quarter to 30 September will be $18.5 billion to $19.5 billion against analysts' estimate of $15 billion, and its shares gained about 12% in extended trading (BBG). Netflix reported its slowest revenue growth in three years, with sales up 12% to $12.9 billion, cut its 2026 revenue forecast to $51.1 billion, and its shares fell about 6% after hours (WSJ). Anthropic's draft IPO prospectus shows revenue of $16.3 billion in the first half of the year, up from $1.1 billion a year earlier, a net loss of $80.7 billion driven by accounting charges on convertible notes (WSJ), and the company has signalled that it could spend $750 billion on computing capacity in the coming years (BBG). DayOne Data Centers is weighing options for its US initial public offering, including a potential delay or size cut, amid the volatility around data centres (BBG). Nvidia is in talks to invest in Firmus Grid after the Australian AI cloud company abandoned its IPO, and CATL's shares fell after third-quarter earnings rose less than estimated (BBG).
Research trade ideas
JPMorgan Asset Management has included Bitcoin in its long-term capital market assumptions for the first time, forecasting annualised returns of 10% over the next decade that could beat stocks, bonds and gold, while assuming volatility of 55%, more than three times that of US large-cap stocks, and stopping short of adding it to its main portfolio models because of its unstable correlations with other assets (BBG).
Data and the day ahead
Data and the day ahead: UK inflation accelerated to 3.5% y/y in September from 3.1% in August, above the 3.4% consensus, with prices up 0.4% m/m against 0.3% expected after 0.5%, while core inflation rose to 2.8% from 2.6%, in line with consensus, and RPI inflation rose to 3.9% from 3.4%, as expected (ONS) (you can find our preview here). The rate is an 11-month high, driven by motor fuel costs after diesel prices hit a record in late September, and services inflation climbed to 3.7%, which leaves the Bank of England on track for its first rate rise since 2023 at the 5 November meeting (BBG). Producer input prices rose 8.3% y/y after an upwardly revised 6.7%, well above the 7.2% consensus, and factory-gate prices rose 4.6% after 3.8%, against 4.3% expected (ONS). Japan's exports rose 16.7% y/y in September after 19.3% in August, below the 21.3% consensus, as shipments of semiconductors and chip-making equipment surged, while imports rose 18.9% after 28.0%, against 20.4% expected, and the trade deficit narrowed to ¥536.6 billion from a revised ¥1,111.9 billion, wider than the ¥210.4 billion expected (BBG). US pending home sales fell 7.3% m/m in September and 11.3% y/y to the lowest level since the series began in 2001, as fast-rising mortgage rates weakened the market (NAR), and housing starts fell 5.2% to a 1.22 million annual rate (WSJ).
Still to come: ECB Executive Board member Piero Cipollone speaks at 10:00 CET, Bank of England Governor Andrew Bailey takes part in a fireside chat at 15:00 CET, US crude inventories are out at 16:30 CET, with consensus for a 340k-barrel draw after an 8,557k drop, and ECB President Christine Lagarde speaks in Wiesbaden at 18:00 CET. Meta Platforms and Tesla report after the US close (BBG), along with IBM, Texas Instruments and Lam Research, and New Zealand's third-quarter inflation report is due at 23:45 CET, with consensus at 3.8% y/y from 4.1% and 0.8% q/q from 1.5%. Tomorrow, the Bank of Korea decides, with a hold widely expected (BBG), and Japan's September inflation data on Friday are expected to show headline inflation at 2.1% and the core rate at 2.3% (BBG). Next week, the Fed, the ECB and the BoJ announce decisions on consecutive days from Wednesday, with the RBNZ and the Bank of Canada deciding on the same day as the Fed (Reuters), and the RBA meets on 3 November (Reuters).
Time Stamp: 21 October 2026, 08:06 CET
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Yesterday's Briefing: Asian Tech Stocks Slide on AI Jitters as Canada Hike Bets Climb
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Tags: SpaceX earnings, Super Micro results, RBA rate rise November, BoJ December rate hike, Bank of England Greene, Hormuz oil flows, Anthropic IPO prospectus, Meta Tesla earnings