Daily Financial Breakfast 3 November 2026: WSJ Reports US Strike on Qeshm While RBA Raises Rate to 4.85%

Market News Today: Key Takeaways

• The Wall Street Journal reported that the United States struck Iran’s Qeshm Island on Monday, while Iran said contacts over ending the conflict continued.
• The Reserve Bank of Australia raised its cash rate by 25 basis points to 4.85% in a 6-3 vote, with Governor Michele Bullock saying policy options remained open.
• Standard Chartered said Christine Lagarde’s planned early departure had accelerated an ECB leadership reshuffle involving half of the Executive Board.
• U.S. Treasury borrowing estimates put first-quarter funding at $800 billion, up from $618 billion in the fourth quarter, according to Danske Research.
• The U.S. ISM manufacturing index rose to 55.5 in October from 54.5 in September, exceeding the consensus forecast of 54.5.
• WTI recovered to around $95.30 after Monday’s sell-off, while TD Securities reported that restored Middle East oil flows coexisted with falling onshore inventories.
• North Korea rejected U.S. allegations linking its hackers to the $6.3 billion Binance exploit, and Binance said affected assets had been fully replenished.
• Bitget CEO Gracy Chen said the exchange absorbed its $388 million September hack loss and overhauled security controls.
• Brazilian stocks and the real fell following President Lula’s re-election, HSBC said, as the bank highlighted opposition gains in Congress.

Market Developments

Foreign Exchange

AUD/USD fell 0.25% to near 0.6975 after the RBA decision. AUD/JPY eased to around 110.20, while AUD/NZD declined for a second successive day to around 1.2430. EUR/GBP traded around 0.8336, down 0.11%, after an earlier reading near 0.8345. GBP/USD was almost flat around 1.3410 in European trading after slipping to near 1.3405 during Asian hours. The U.S. Dollar Index held near 101.80 in Asian trading following modest losses the previous day.

Geopolitical Developments

WSJ Reports U.S. Strike on Iran’s Qeshm Island

The United States attacked Iran’s Qeshm Island near the Strait of Hormuz on Monday, The Wall Street Journal reported, citing U.S. officials. The newspaper described the attack as the latest in a series of limited strikes Washington had secretly conducted against Iran in recent weeks.

Diplomatic contacts continued alongside the military activity. Iran said discussions with the United States over ending their eight-month conflict remained ongoing, Reuters reported on Monday. Several days of negotiations between Iranian officials and Qatari mediators produced revised proposals but no major breakthrough.

Central Banks

RBA Raises Cash Rate to 4.85% in Split Vote

The Reserve Bank of Australia increased its cash rate by 25 basis points from 4.6% to 4.85% on 3 November, its fifth increase this year. The decision passed by a 6-3 vote and matched market consensus, with inflation remaining above target.

The statement omitted its reference to potential further rate increases for the first time since June. ING’s Francesco Pesole said the economic outlook had been revised sharply lower, with falling house prices weighing on consumers and upside risks to unemployment. At her press conference, Governor Michele Bullock stressed that previous monetary tightening still had to feed through to the economy.

Bullock nevertheless rejected the suggestion that the wording change meant rate increases were finished, saying the RBA was “preserving our options”, according to Standard Chartered’s Nicholas Chia. The statement continued to identify upside inflation risks and acknowledged tighter-than-previously-assessed capacity pressures. Bullock also said the non-accelerating inflation rate of unemployment and the neutral interest rate had risen, without providing estimates.

Standard Chartered Says Lagarde’s Early Exit Accelerates ECB Reshuffle

Christine Lagarde’s announcement that she would leave the European Central Bank presidency nine months ahead of schedule has accelerated a broader leadership transition, Standard Chartered’s Christopher Graham said. Half of the Executive Board must be replaced, including Isabel Schnabel and Philip Lane.

Graham discussed former Dutch central bank governor Klaas Knot and Pablo Hernandez de Cos as potential presidential successors. He argued that the policy significance of the appointments extended beyond a simple hawk-dove distinction, with the other board appointments also important. The succession choices remain prospective rather than confirmed appointments.

U.S. Fiscal Policy & Economic Data

U.S. Borrowing Estimates Rise to $800 Billion for First Quarter

U.S. Treasury borrowing estimates put first-quarter borrowing at $800 billion, compared with $618 billion in the fourth quarter, according to Danske Research’s account of the quarterly refunding estimates. The end-first-quarter cash balance target was set at $1,000 billion.

The fourth-quarter borrowing estimate was reduced by $10 billion because the starting cash balance was slightly higher than expected. The year-end cash balance target remained unchanged at $850 billion.

U.S. ISM Manufacturing Index Climbs to 55.5

The U.S. ISM manufacturing index increased to 55.5 in October from 54.5 in September, beating the consensus forecast for an unchanged 54.5 reading. New orders edged higher and production increased notably, according to Danske Research.

A separate measure gave a softer account of activity. The S&P Global manufacturing PMI was revised down to 54.9 from an initial 55.9, still indicating growth but at a slower pace than the previous month and the preliminary estimate.

Energy & Commodities

WTI Recovers Near $95.30 After Diplomatic Headlines Drive Sell-Off

West Texas Intermediate crude traded around $95.30 in early Asian trading on Tuesday after reaching $94.30 in the previous session, its lowest since 16 October. Monday’s decline exceeded 5% as headlines on U.S.-Iran diplomacy eased concerns about further supply disruptions; a later account put the fall at 6.50%.

Physical supply conditions remained uneven. TD Securities’ Ryan McKay said Middle East flows through the Strait of Hormuz, the Gulf of Oman and bypass pipelines had returned to pre-war levels. However, the tanker shuttle trade around Oman remained expensive, required constant U.S. Navy support and involved longer loading and travel times because of ship-to-ship transfers.

TD Securities’ high-frequency estimates showed a crude surplus approaching 2–3 million barrels a day, accumulating primarily in oil on water while onshore commercial inventories continued to decline. The bank estimated a petroleum-products deficit exceeding 2 million barrels a day. McKay attributed elevated pricing to improved demand, tight product markets and supply risks from Houthi attacks on Saudi infrastructure and IRGC tanker attacks.

Cryptocurrency Security

North Korea Rejects U.S. Attribution of $6.3 Billion Binance Hack

North Korea rejected U.S. allegations that state-backed hackers were responsible for the $6.3 billion Binance exploit. The FBI attributed the attack to North Korean hackers operating under the TraderTraitor cyber activity designation.

Kim Yo-jong, the sister of North Korean leader Kim Jong-un, called the accusations a political provocation and an attempt to portray the country as a cybercriminal state. Her statement was carried by the Korean Central News Agency and reported by Yonhap late Monday. Binance said it had fully replenished the affected assets and completed a new zero-knowledge proof-of-reserves snapshot.

Bitget CEO Details Security Overhaul After $388 Million Hack

Bitget CEO Gracy Chen said the exchange decided within hours to absorb the loss from its $388 million September hack rather than pass it to users. In an interview with FXStreet, she described an attack that began with small unauthorized transfers before escalating to larger withdrawals across multiple chains.

The exchange said its security systems detected the anomalies and stopped withdrawals within minutes. Its internal investigation identified a vulnerability in a third-party security product affecting transaction authorization; neither private keys nor cold wallets were compromised. Bitget subsequently restructured access to sensitive systems, introduced layered approvals for critical operations and tightened monitoring.

The incident formed part of wider industry losses: CertiK put cryptocurrency security-breach losses in 2026 at approximately $8.65 billion to $8.98 billion.

Regional Political Developments

HSBC Reports Brazilian Asset Losses Following Lula’s Re-Election

Brazilian stock indices fell markedly and the real lost ground against the U.S. dollar following President Lula’s unexpected second-round election victory, HSBC strategists said. The bank described a significant repricing across Brazilian assets.

HSBC also highlighted opposition gains in Congress, arguing that the resulting political division complicated efforts to restore fiscal credibility and kept the country’s fiscal risk premium elevated.

Upcoming Key Events

• U.S. Midterm Elections (3 November 2026): United States: Midterm voting is scheduled for Tuesday. Danske Research said tentative results were due Wednesday morning, while final outcomes could take weeks or longer.
• Bank of England Rate Decision: United Kingdom: The Bank of England’s next interest-rate decision remains upcoming.