US Market Open: Brent Sept'26 -2.6%, benefitting US equity futures, INTC +4% after strong Q2 report

US and Iran continued to exchange strikes, with CENTCOM conducting a 13th night of attacks on Iranian military targets; US President Trump said Iran wants to reach an agreement but is not yet ready.
Iran reportedly rejected a US ceasefire proposal presented by Iraq’s PM, while Tehran also refused to amend a separate 10-day ceasefire plan linked to discussions over the Strait of Hormuz.
The Trump administration imposed new tariffs of 10-12.5% on imports from 60 countries over claims that they had failed to prevent forced labour.
US equity futures are entirely in the green, supported by the upbeat beat mood in Europe while lower oil prices are also supporting indices (Brent -3.5%).
DXY rangebound; Antipodeans outperform amid the risk-on tone, while EUR helped by positive flash PMIs.
Fixed income benchmarks helped by the lower crude prices.
Looking ahead, highlights include US Flash PMIs (Jul), Canadian PPI (Jun). Comments from ECB's Lane. Scope Ratings update on Norway.

EUROPEAN TRADE

EQUITIES

European bourses start the final trading day entirely in the green, with outperformance in the IBEX 35 and DAX 40, given positive earnings from SAP and the rebound in European banks. Supporting the equity space is the lower energy prices, possibly as investors take profits heading into the weekend. On the data front, flash PMIs surprised to the upside across the EZ and the UK. The commentary broadly highlighted the cooling of cost pressures, however, while noting that inflationary pressures remain elevated. Another caveat is that the survey period was between the 9th-22nd July, which doesn't include the recent return of Brent above USD 100/bbl.
Sectors point to a mixed, but slightly positive, picture. Tech tops the sector pile, with Financial Services and Banks rounding out the top 3 sectors. Telecoms is the sector laggard, followed by Energy and Autos.
Two of Germany's biggest companies reported earnings before the market open. Starting with SAP, its Q2 revenue and cloud revenue beat estimates, with its cloud business increasing 24% Y/Y. This is driving the majority of gains, printing gains in excess of 6%. In terms of guidance, its FY adj. operating profit shifted EUR 100mln lower to 11.8-12.2bln (prev. guided 11.9-12.3bln). On the other hand, Volkswagen reported its Q2 metrics. Revenue beat estimates; however, the Co. cut its FY revenue guidance to between -3% and 0% (prev. guided 0-3%). Co. execs highlighted the increased competitiveness in China, with vehicle sales falling 31.6% in the region. The CFO also stated that current planned initiatives are not sufficient to compete in China. As such, shares have fallen by over 1.5%.
US equity futures initially started on a softer footing but have reversed the majority of the losses. Intel surprised to the upside after-hours, after it topped Q2 expectations and issued stronger guidance underpinned by AI-driven demand for server processors.
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FX

G10s are entirely firmer (excl. NOK) against the Buck, which has been offered throughout the morning, likely due to some profit-taking after gains in energy on Thursday. Generally a risk-on environment with high-beta Antipodeans outperforming.
DXY weakened throughout the morning as crude succumbed to profit-taking after Brent Sept'26 gained c. 7%, and DXY saw gains of 0.3% on Thursday. Another factor potentially is the fresh US tariffs being lower than feared, also exempting oil, gas, fertiliser and foodstuffs. DXY fell from its 101.46 session high to a trough of 101.25. The 21DMA is below at 101.05 before support at 101. The US calendar is light, with the first read for July's PMI scheduled, where EZ figures released this morning were stronger than expected.
EZ PMIs saw modest EUR strength following the French figure, which was extended by a couple of pips after Germany; Bunds were unreactive. EUR was lacklustre overnight in the wake of the ECB, though attempted a bounce towards 1.14 following the strong PMI read, foiled just above that level.
Much stronger than expected UK Retail Sales had little follow-through to Sterling amid World Cup/weather related demand, with the purchase of Fans and Football shirts influencing the figure. Pantheon Macro still looks for consumer spending to ease to 0.1% quarter-to-quarter across H2, with a reversal in the aforementioned components likely to weigh. Elsewhere, UK composite PMI surprisingly rose to expansionary by a decent margin, though the strong caveats of the data not encompassing the recent geopolitical escalation saw the handful of pips strength in EUR/GBP pared. GBP/USD lifted from the 1.33 mark to a session high of around 1.3350.
Barclays' month-end rebalancing model indicates a weak USD buying signal against most majors by month-end. The model suggests moderate bearish signals for CAD and GBP.
US Treasury said no major US trading partner manipulated its currency to gain an unfair trade advantage in 2025, while 10 leading trading partners remain on a list for enhanced monitoring of their foreign exchange practice. The Treasury added that yen weakness has persisted despite narrowing of US-Japan interest rate differentials and excess volatility in the yen is unwanted.

FIXED INCOME

A contained start for most benchmarks as Brent held at just over USD 100/bbl throughout APAC trade and into the European morning. Thereafter, as energy pulled back from highs taking Brent down to a USD 98/bbl handle, yields followed suit and by extension fixed lifted.
At most, USTs to a 108-09 peak, notably shy of Thursday’s 108-15 best and while firmer by c. five ticks today, it remains near enough a full point lower WTD. Ahead, we have Flash PMIs which will help to inform the debate around the Fed tightening this year or not, though as we have seemingly seen with the EZ figures it is perhaps too early for the energy resurgence to be fully visible in the flash data.
Bunds lifted to a 124.46 peak around the cash equity open, spurred by the mentioned energy move and as the German Cabinet reshuffle was relatively limited and as expected. Since, a kneejerk lower occurred on the French flash figures before more pronounced pressure after the German and EZ metrics. Albeit, energy continues to trim and and the c. 10 tick pullback has unwound, with Bunds back at highs and firmer by over 20 ticks.
Moving to Gilts, the morning’s stronger than expected Retail Sales were overshadowed by the mentioned pullback in energy and as such Gilts opened on the front foot by 17 ticks and have since extended another 30 to a 86.36 peak, where it remains.
On the morning’s data, the EZ PMIs were firmer across the board aside from France’s Manufacturing. Commentary was encouraging and pointed to a rebound after a “largely stagnant” Q2 (reminder, Flash Prelim. EZ GDP next week) and cost pressures “cooling sharply”. However, the survey period only runs until the 22nd of July, and as such misses out on around USD 6/bbl of additional Brent upside if we assume that day’s USD 95.63/bbl close was captured, but equally the open that session was USD 91.50/bbl which may more closely align with the responses being provided, and would equate to around USD 10/bbl of upside being missed out on since.
A similar point can be made for the UK Flash PMIs and also the DMP. As such, the Final reads will draw more scrutiny than usual to see how respondents' views changed once the energy extension to over USD 100/bbl was accounted for.
Australia sells AUD 900mln 3.25% April 2029 bonds b/c 3.56, avg yield 4.6752%.

COMMODITIES

Geopolitics have shown no signs of abating, although a fresh escalation outside of the daily strikes is yet to occur. To briefly recap the main geopolitical points, the US and Iran continued to exchange strikes, with CENTCOM conducting a 13th night of attacks on Iranian military targets and Iran targeting neighbours. US President Trump said Iran wants to reach an agreement but is not yet ready. Further, Iran reportedly rejected a US ceasefire proposal presented by Iraq’s PM, while Tehran also refused to amend a separate 10-day ceasefire plan linked to discussions over the Strait of Hormuz. Crude has been pulling back from yesterday’s extremes despite a lack of a clear driver during the European morning. Against the backdrop of a lack of fresh escalation today, traders could be booking profits in oil heading into another uncertain weekend. Further adding to the downside could be trade war woes after the Trump administration imposed new tariffs of 10-12.5% on imports from 60 countries over claims that they had failed to prevent forced labour, with China condemning unilateral tariffs this morning.
WTI and Brent futures are softer by over 3% after surging some 6-7% intraday yesterday, with the former toward the lower end of a USD 88.75-90.66/bbl range and the latter back under USD 100/bbl in a USD 96.51-101.19/bbl range. Dutch TTF is choppy but ultimately flat at the time of writing around the EUR 62/MWh mark after finding support at EUR 61/MWh.
Precious metals see some reprieve from the pullback in the energy space. Spot gold rebounded from a USD 4,022/oz intraday low and currently resides towards session highs of USD 4,053/oz. Spot silver sees more momentum after hitting a low near USD 57/oz yesterday before rebounding to a current USD 58.42/oz peak today.
Base metals are flat/mixed and fail to benefit from the pullback in energy amid pressure from tariff woes. 3M LME copper resides in a narrow USD 13,574.88- 13,683.63/t range.
South Korea extended fuel tax cuts through to September 30th, with the government maintaining 15% gasoline and 25% diesel tax reductions.

TRADE/TARIFFS

US Trade Representative Greer announced 10 to 12.5% new tariffs related to forced labour, while exempting oil, gas, fertiliser and food stuffs from the labour tariffs. Countries that implemented forced labour prohibition get 10% tariff rate, those that have not get 12.5%.
China's Foreign Ministry said it opposes all unilateral tariffs, saying its position on China-US economic and trade issues are clear.
EU's Kallas said the new US tariffs on EU goods are not really grounded, and questioned the forced labour rationale, while she stated the US tariff move is a negative surprise after the EU kept its side of the trade deal. Furthermore, she said the EU was not expecting to be included in new US tariffs and that officials will seek clarifications from Washington on the new tariffs.
Mexico's President Sheinbaum said Mexico and the US are making progress regarding the USMCA review, while Mexico's Economy Minister Ebrard said that they see no change in the effective tariff that Mexico pays, following the US announcing new tariffs.
Brazil's government rejected the US 12.5% tariffs on Brazilian goods related to forced labour, calling the tariffs completely arbitrary and unjustified, while it will start procedures to use its reciprocity law and will take the matter before the WTO's dispute settlement mechanism.
Japan's Trade Minister Akazawa said the US's latest move on tariffs is regrettable, and confirmed that the US will not go beyond the 2025 tariff deal.
Canadian PM Carney said everything is on the table if Canada and US fail to reach a deal on the latest US tariff threats, adds Canada has not signed a partial USMCA deal as talks remain focused on critical sectors

NOTABLE EUROPEAN HEADLINES

German Chancellor Merz said Nina Warken will be appointed chief of staff and Linnemann will be appointed health minister. Merz added that further cabinet changes in the future, but will take more time.

NOTABLE EUROPEAN DATA RECAP

EU S&P Global Composite PMI Flash (Jul) 51.9 vs. Exp. 50.3 (Prev. 50.0).
EU S&P Global Manufacturing PMI Flash (Jul) 52.0 vs. Exp. 51.3 (Prev. 51.4).
EU S&P Global Services PMI Flash (Jul) 51.6 vs. Exp. 49.8 (Prev. 49.4).
German S&P Global Composite PMI Flash (Jul) 51.2 vs. Exp. 49.8 (Prev. 49.5).
German S&P Global Manufacturing PMI Flash (Jul) 52.2 vs. Exp. 50.1 (Prev. 50.3).
German S&P Global Services PMI Flash (Jul) 49.6 vs. Exp. 48.8 (Prev. 48.6).
German GfK Consumer Confidence (Aug) -29.6 vs. Exp. -28.5 (Prev. -29.2).
French S&P Global Composite PMI Flash (Jul) 49.6 vs. Exp. 48.4 (Prev. 47.2).
French S&P Global Manufacturing PMI Flash (Jul) 50.0 vs. Exp. 51 (Prev. 51.2).
French S&P Global Services PMI Flash (Jul) 49.8 vs. Exp. 47.2 (Prev. 46.8).
UK S&P Global Composite PMI Flash (Jul) 52.1 vs. Exp. 49.7 (Prev. 49.3).
UK S&P Global Manufacturing PMI Flash (Jul) 52.8 vs. Exp. 52.1 (Prev. 52.5).
UK S&P Global Services PMI Flash (Jul) 51.8 vs. Exp. 49.4 (Prev. 48.8).
UK Retail Sales MoM (Jun) M/M 1.0% vs. Exp. 0.2% (Prev. 1.2%).
UK Retail Sales ex Fuel MoM (Jun) M/M 1.1% vs. Exp. -0.4% (Prev. 1.2%).
UK Retail Sales YoY (Jun) Y/Y 4.2% (Prev. 3.2%).
UK Retail Sales ex Fuel YoY (Jun) Y/Y 5.4% vs. Exp. 3.2% (Prev. 4.6%).
UK GfK Consumer Confidence (Jul) -17 vs. Exp. -21 (Prev. -23).

CENTRAL BANKS

BoJ is expected to keep rates unchanged at its meeting next week, while it is likely to maintain its inflation overshoot warning and is seen signalling easing inflation risks at the July meeting, according to sources. Additionally, the Nikkei reported something similar, stating that the majority of members currently favour a steady approach, citing a desire to monitor the impact of June's hike amid geopolitical tensions and inflation risks and that many suggest that there is no rush to raise rates.
ECB's Nagel said the ECB is in a good position to closely monitor further developments.
ECB's Simkus said uncertainty has been evident over the past six weeks and oil over USD 100/bbl will have repercussions. The inflationary environment has increased with risks to the upside. Simkus added that there is no value in rushing but sees a higher probability of a hike than a hold.
ECB's Kocher said the recent developments in oil markets are concerning and said a 50bps hike was not discussed and hopefully something ECB will not have to consider.
ECB's Sleijpen told Econostream that the ECB could hike in September even without second-round effects as long as the broader inflation outlook warrants it. He said second-round effects are important, but will assess the entire inflation outlook. There is no evidence of second-round effects yet. Markets understand the reaction function and decision triggers. From a cyclical perspective, the economy has held up reasonably well. Neutral rate estimates are not a decisive factor in setting policy. Conditions are again more consistent with the June baseline.
ECB Consumer Expectations Survey (Jul): Median consumer perceptions of inflation over the past 12 months decreased significantly, as did the next 12 months.
BoE Monthly Decision Maker Panel data: Expectations for 1yr-ahead CPI inflation fell to 3.4% in the three months to July (prev. 3.7% in the three months to June); 3yr-ahead CPI inflation expectations was 2.8% in the three months to July (prev. 2.9%).

GEOPOLITICS

MIDDLE EAST

US President Trump posted "Please let this statement serve to represent, until further notice, that from this point forth, any and all damages done to Ships, Cargo, or anything related thereto, will be paid for by Iranian Money". However, N12's Ravid commented that it is unclear if Trump has the legal ability to do such a thing, adding the president can freeze Iranian funds in the US, but using them to pay private shipping companies would likely require a court decision or new legislation.
US President Trump is said to be losing patience over an Iran war with no clear end in sight, while he has grown skeptical of diplomacy and is in ‘revenge mode’ against Tehran, according to a senior administration official cited by WSJ.
US CENTCOM said forces started another night of strikes against Iranian military targets, adding this is the 13th consecutive night of strikes aimed to hold Iran accountable and diminish threats from the IRGC to commercial shipping.
Explosions were reported in Iran's Taft, Shirkuh, Isfahan, Jask and Konarek. There were also reports of explosions in Khorramabad, Bandaa Abbas, Qeshm, Larak Island and Hengam.
Iran's army said it has launched another wave of drone attacks against US military facilities in Kuwait. Earlier, there were reports of explosions at US bases in Jordan and the Sheikh Isa airbase in Bahrain.
Iran reportedly rejected the US ceasefire deal presented by Iraqi leader, according to the NYT.
Iranian diplomat said Iran has not closed the door to diplomacy, and messages are still being exchanged through intermediaries, ISNA reported.
Iran's Foreign Minister Aragchi said seizing another nation's assets to pay for unrelated future claims is an incendiary precedent. He also said that "perhaps before the war a compromise could have been made. But now, for reasons that I do not want to open up too much, compromise has become difficult."
US President Trump reportedly told Lebanese President Aoun he would seek to curb Israeli escalation in Lebanon and support expanded US assistance to the Lebanese army, Saudi newspaper reported. In other reports in IRIB, US President Trump reportedly gave Lebanese President Aoun an ultimatum during the latter's visit to Washington, stating either coordinate and destroy Hezbollah or return to Netanyahu's nightmare.

RUSSIA-UKRAINE

Ukrainian President Zelensky told Trump ally Laura Loomer that he may visit Washington next week and plans to meet President Trump again.
US Senate eyes a vote on Russia sanctions package next week, according to Axios.

OTHER

China's Coast Guard said it imposed control measures on several Philippine vessels operating "illegally" in the waters around Scarborough Shoal.

CRYPTO

Bitcoin trades in a USD 64.69k-65.76k range as the crypto consolidates from 2 days of selling.

APAC TRADE

APAC stocks followed suit to the losses on Wall Street where the Nasdaq was heavily pressured following Alphabet and Tesla earnings, while sentiment was also weighed on by rising oil prices and yields as geopolitical escalation continues.
ASX 200 retreated with underperformance in tech and miners leading the downside, while the improvement in Australian flash PMIs did little to spur a rebound.
Nikkei 225 fell beneath the 65,000 level with tech stocks heavily pressured and over-represented in the list of worst performers, while inflation data did little to shift the dial and printed in line with expectations.
KOSPI suffered the brunt of the tech selling with sidecars activated on the KOSPI and KOSDAQ.
Hang Seng and Shanghai Comp conformed to the broad downbeat mood with notable pressure in miners and tech stocks.

NOTABLE APAC DATA RECAP

Japanese Inflation Rate YoY (Jun) Y/Y 1.7% vs. Exp. 1.7% (Prev. 1.5%).
Japanese Core Inflation Rate YoY (Jun) Y/Y 1.6% vs. Exp. 1.6% (Prev. 1.4%).
Japanese Inflation Rate Ex-Food and Energy YoY (Jun) Y/Y 1.7% vs. Exp. 2% (Prev. 1.8%).
Japanese Inflation Rate MoM (Jun) M/M 0.3% vs. Exp. 0.2% (Prev. 0.4%).
Japanese S&P Global Composite PMI Flash (Jul) 53.10 vs. Exp. 52.8 (Prev. 52.8).
Japanese S&P Global Manufacturing PMI Flash (Jul) 54.7 vs. Exp. 54.5 (Prev. 54.8).
Japanese S&P Global Services PMI Flash (Jul) 51.9 vs. Exp. 53 (Prev. 52.2).
Australian S&P Global Composite PMI Flash (Jul) 52.6 vs. Exp. 50.1 (Prev. 50.4).
Australian S&P Global Manufacturing PMI Flash (Jul) 51.7 vs. Exp. 51.1 (Prev. 51.5).
Australian S&P Global Services PMI Flash (Jul) 53.0 vs. Exp. 50.2 (Prev. 50.5).