Evening Briefing: Europe

Europe’s earnings season is off to a promising start, with giants LVMH and ASML surprising investors with strong reports. Luxury conglomerate LVMH unexpectedly returned to sales growth, sending its shares soaring the most in 24 years today. ASML said demand for its most sophisticated chip-making machines is booming.

The pattern mirrors that on the other side of the Atlantic, where some of the biggest US banks, from Goldman Sachs to Citigroup, have posted roaring third-quarter revenues. The renewed earnings optimism is lifting stock markets from Asia to North America, even amid renewed US-China trade tensions. Expectations that the Federal Reserve will cut rates further are also helping.

Even so, geopolitical tensions between the West and China — following China’s recent move to control the global supply of rare earths — loom large. China’s new rare-earth controls have drawn rebukes from the US and Europe, where governments fear critical supply chains may become snarled.

US Treasury Secretary Scott Bessent, speaking today in Washington, predicted a coordinated response to China’s move. — Philip Lagerkranser

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Germany will spend €10 billion on military drones to counter the rising threat from Russia, Defense Minister Boris Pistorius said. He said the German drone purchases would be “of all types and altitudes” and include both defense and attack craft. The German plan comes as the European Union will propose launching joint drone and air defense projects in the coming months, according to a document we’ve seen.

London bankers rejoice. Senior UK bankers must now wait four years instead of eight before receiving their bonuses, part of an effort to make the City of London more competitive. Restrictions on the proportion of bonuses above the £660,000 ($881,200) threshold will also be softened. Some of the world’s biggest banks had pushed UK regulators to accelerate plans to ease the rules.

Billionaire Patrick Drahi’s Altice France rejected a €17 billion bid from a trio of French phone carriers to split struggling operator SFR. The offer implied an enterprise value for the whole company that was far below what Drahi had sought. Drahi is selling off a number of his businesses to tackle the massive debt pile he’s built up.

Patrick Drahi Photographer: STEPHANE DE SAKUTIN/AFP

A London judge leveled sharp criticism against Lex Greensill as he ruled in favor of SoftBank in a trial over hundreds of millions of investor losses tied to a series of trades made by Greensill’s collapsed trade finance firm. Greensill concealed the “true position” from Credit Suisse as liquidity at his company dried up, Judge Robert Miles said today in the ruling. Credit Suisse had sued SoftBank accusing it of orchestrating a restructuring of Greensill Capital that left it unable to repay the bank.

The relief in the French bond market looks poised to be short-lived following a breakthrough in the country’s political deadlock. The suspended pension reform that allowed Prime Minister Sebastien Lecornu to gain support from the Socialist Party means much-needed fiscal consolidation is under threat. Lecornu must also get his 2026 budget through parliament. That dims the outlook for bonds: “The scope for further rally is limited,” said Rabobank strategist Stefan Koopman.

Investors with claims tied to about $17 billion of bonds wiped out in the rescue of Credit Suisse are hoping for a big payday following a surprise Swiss court decision. They point to Lehman Brothers, whose epic collapse in during the global financial crisis eventually led to huge gains for some who bought its bonds on the cheap. Credit Suisse holders are now aiming for a similar payout, two investors told us. The Swiss ruling, though, has already been challenged by the nation’s financial regulator.

Kenya’s political landscape looks set to be fundamentally altered after the death of Raila Odinga, a leadership figure for over three decades. As leader of the Orange Democratic Movement, he entered into an alliance with President William Ruto last year in the face of objections from his own party. His death today at the age of 80 will test the cohesion of the fragile ruling alliance. Ruto, in announcing Odinga’s passing, called him a “giant of democracy.”