US Market Open: US-Iran hostilities intensify, with Brent surging back above USD 100/bbl and weighing on US equity futures

• US forces struck multiple Iranian tankers tied to the IRGC in response to more attempted missile attacks on a US Navy warship; Iran launched missiles at targets in response to US strikes on tankers, while it launched at least 20 missiles at bases in Jordan.
• IRGC had warned that oil tanker crews in Kuwaiti and Bahraini ports would be targeted in light of the US Army targeting several Iranian oil tankers.
• US equity futures are slightly softer; Google announces a EUR 13bln AI infrastructure in Finland.
• DXY rebounds off lows but remains under pressure; JPY continues to gain after daring comments from US Treasury Secretary Bessent.
• Fixed income benchmarks falter as Brent regains the USD 100/bbl mark, with focus on the Treasury buyback announcement.
• Looking ahead, highlights include US ADP Employment Change Weekly, US Treasury Long-End Bond Buybacks Announcement, NBP Announcement, EIA STEO. Comments from ECB's Lagarde. Supply from the US.

SNAPSHOT

EUROPEAN TRADE

EQUITIES

• European bourses (STOXX 600 -0.9%) are entirely in the red, given the renewed US-Iran tensions overnight. US CENTCOM announced that it destroyed 5 Iranian oil tankers in response to the IRGC targeting a US Navy warship. In retaliation, the IRGC struck back, firing ballistic missiles at a base in Jordan and attacking 10 ships. Energy prices have climbed in turn, with Brent Nov'26 briefly extending above the USD 100/bbl mark.
• Sectors highlight the negative bias. Utilities, Telecoms and Energy are the only sectors in the green. The clear underperformer is Retail, given losses in Inditex amid mixed H1 earnings, while Consumer Products & Services and Banks round out the sector laggards.
• US equity futures are lower across the board. Google announced that it is to invest at least EUR 13bln in Finland's AI infrastructure in 2027-28, with a 22-year PPA with Fortum. In other news, Uber and Amazon kicked off their corporate debt offering, with Uber selling a 5-part EUR offering while Amazon is offering a 4-part GBP bond.
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FX

• G10s are mostly firmer against the USD. The JPY mildly outperforms vs peers, continuing to build on its recent strength. The Kiwi is the slight laggard this morning. Westpac remains short NZD/USD, targeting 0.5700 or lower vs a current price of 0.5843.
• DXY is incrementally lower this morning despite higher oil prices, and currently holding within a 98.61 to 98.82 range. Focus has been on geopolitical updates, after another bout of US-Iran fighting has led to a leg higher in energy prices, which in turn has lifted domestic yields. The US 2yr (4.4%) now holds near recent highs. On the trade front, the Loonie is relatively unmoved to the US announcing an import ban on alcohol and other goods from Canada in response to the latter's tariff retaliation.
• The JPY modestly outperforms this morning, with USD/JPY holding within a 152.93 to 154.01 range. A continued bout of pressure will see the pair trade well within levels seen in mid-February, however, it will likely find some support at the 152.00 level, which was the low on 27 Jan 2026. A breach beyond that level would likely require a dovish US CPI report on Friday, a hold at the Fed next week and a hawkish BoJ policy announcement thereafter.
• The outperformance this morning can be attributed to daring commentary from US Treasury Sec Bessent. He stated that “I am the house now”, and has good insight into what Japanese policymakers and the BoJ will do. He provided a final warning that he has asymmetric information. The strong commentary from Bessent, along with hawkish BoJ speak over the past couple of weeks will keep JPY vigilantes on the sidelines, at least for now. However, once we get past the string of policy decisions next week – markets may begin to shift their attention back to energy dynamics, which JPY is particularly sensitive to.

FIXED INCOME

• Unsurprisingly, given the late-Tuesday action, Gilts gapped lower at the open. Down by 19 ticks and then another 19 to a 85.62 low, but clear of Tuesday’s 85.56 base. Since, in a morning of somewhat less macro newsflow than the last few days, the benchmark has held in proximity to that low, unable to find and respite as peers did overnight; though, they too have faded in recent trade.
• Bunds spent the APAC session modestly in the red, but in a very thin range, as the complex awaited a major update on the geopolitical front. Since, in the European morning as energy climbs and after Brent surpassed the USD 100/bbl handle, further pressure has emerged taking Bunds to a 121.64 low. Concerning for Europe, and lifting short-end yields in particular, is the ongoing climb of TTF, to over EUR 79/MWh today, a high for the October contract. An ascent that underscores the expected ECB hike on Thursday.
• USTs were flat/firmer in APAC trade, holding around 107-10 for the most part. Since, given the above, some modest pressure has emerged to take the benchmark just into the red by a couple of ticks and prints a low at 107-07+. Today is focused firmly on the Treasury buyback announcement, the first after the move to at least double the long-end operations from the current USD 2bln maximum. Given the “at least” language, and the commentary from Secretary Bessent that operations could be above the implied USD 4bln level if required, we are attentive to the announced size, any scheduling update and/or accompanying commentary the Treasury may choose to provide.
• Germany sells EUR 4.201bln vs exp. 5.5bln 3.00% 2036 Bund: b/c 1.47x (prev. 1.15x), average yield 3.39% (prev. 3.26%), retention 23.62% (prev. 37.2%).
• Amazon (AMZN) begins the sale of its four-part Sterling bond. Guidance: 3-year +70bps to Gilts, 6-year +90bps to Gilts, 12-year +105bps to Gilts, 19-year +110bps to Gilts.

COMMODITIES

• In geopolitics, US forces destroyed five Iranian crude oil tankers tied to the IRGC in response to repeated attempted missile attacks on US Navy warships, with US Secretary of State Rubio warning that Iran will lose tankers each time it targets American vessels. Iran retaliated with further missile strikes, including at least 20 missiles targeting bases in Jordan, although Jordan said 18 were intercepted and no casualties were reported, while the IRGC claimed attacks on US warships and commercial vessels and threatened further retaliation against US interests. Meanwhile, Iran said it remains committed to its MoU with Washington despite reportedly demanding new conditions for negotiations, while explosions were also reported in Saudi Arabia’s Jazan region and oil fields.
• Crude futures are on a firmer footing, with Brent Nov extending above USD 100/bbl this morning for the first time since late July. Attention has been on some UKMTO updates, which have appeared to outline some of the activity seen on Wednesday. Both benchmarks are towards the upper end of intraday bands, WTI Oct in a USD 93.76-95.19/bbl (vs yesterday’s 90.87-94.73/bbl range) and Brent Nov within USD 98.80-100.68/bbl (vs yesterday’s 96.78-99.46/bbl range). Dutch TTF firms by almost 4% intraday and resides close to EUR 79/MWh after briefly topping the level this morning from a base under EUR 77/MWh, with winter heating demand also taking focus.
• Metals are mixed. Precious metals cheer a weaker Dollar irrespective of the firmer oil prices, with a weaker Buck allowing geopolitical risk premium to be baked in. Spot gold found support at its 100 DMA (USD 4,343/oz), with the bullion trading in a current USD 4,341-4,413/oz range, with yesterday’s peak at USD 4,443/oz. Spot silver found support near yesterday’s low around USD 65.50/oz, and resides not far from its 100 DMA (USD 67.15/oz) in a current USD 65.52-67.01/oz range.
• Base metals are mixed, with copper prices subdued following recent record highs on the LME, and with the mood cautious against the backdrop of higher energy prices and its impact on inflation and growth. 3M LME copper trades in a USD 14,596.50-14,725.03/t range.
• Iraq is reportedly seeking a significant output quota increase during OPEC+ audits, wanting to target 6mln bbls/day, Bloomberg reported.
• Turkish Energy Minister said that they are starting an oil exploration in the Western Black Sea in the coming days.

TRADE/TARIFFS

• US President Trump said he is directing the General Services Administration, working with the USTR, to take all necessary steps to remove Canadian-origin products from GSA’s Multiple Award Schedules unless Canada restores full and fair reciprocity for American farmers and companies.
• White House posts proclamations regarding modifying scope of Canadian products subject to additional duties and excluding certain products from importation to the US, with respect to motor vehicles, dairy and alcoholic beverages.
• US senior administration official said President Trump approved a series of proclamations on Canadian trade measures, with the ban on dairy, most alcohol and motorcycle imports from Canada under Section 338, while the official stated the restrictions are to take effect in about 3 weeks and that Trump's stance on the January 1st, 2027 auto tariff hike remains in effect.
• Canada's Minister Responsible for US Trade LeBlanc said they are assessing the latest tariffs from the US, while he is in contact with USTR Greer and will work in good faith when the US is ready to engage.
• US Commerce Secretary Lutnick will meet with Mexican President Sheinbaum and Economic Minister Ebrard and will discuss US tariffs on Mexican autos and metals, according to POLITICO.

NOTABLE EUROPEAN HEADLINES

• French PM Lecornu is considering plans to reduce the exceptional contribution imposed on very large companies, TF1 reported.

NOTABLE US HEADLINES

• US Treasury Secretary Bessent said markets are not efficient and are run by humans, who make mistakes, while he added the Treasury's narrative in August was that the sky is falling and that the narrative was absurd.

GEOPOLITICS

MIDDLE EAST

• US Central Command confirmed that forces destroyed five Iranian crude oil carriers on Tuesday after the IRGC targeted a US Navy warship with ballistic missiles twice over the past two days.
• US Secretary of State Rubio said every time Iran tries to hit US Navy ships, they will lose tankers.
• Iran launched missiles at targets in response to US strikes on tankers, while it launched at least 20 missiles at bases in Jordan, with the Al-Salti and Prince Hassan bases targeted, according to SNN. However, Jordan said air defences intercepted and destroyed 18 of 20 Iranian missiles, and two fell away from population centres, while it stated that no casualties were reported after the Iranian missile strike. Furthermore, it was later reported that Jordan intercepted additional missiles in the east.
• IRGC claimed missile strikes on US combat destroyers, while it announced that it attacked two US vessels, eight oil vessels and ten violating ships that intended to cross the prohibited and unsafe area of the Strait of Hormuz.
• Iran's MP said there is a "possibility of re-examining the plan to withdraw from the NPT in the parliament", ILNA reported.

RUSSIA-UKRAINE

• Russia is anticipated to prolong the Ukraine war into 2027 as peace talks stall, with President Putin believed to be waiting for a stronger military and political position before serious negotiations. Furthermore, Western officials warned that Moscow will intensify winter attacks on Ukraine's energy infrastructure whilst escalating cyber attacks, sabotage and influence operations across Europe.
• Ukraine Drone Forces Commander said that Ukraine hit military vessels at Russia’s Novorossiysk naval base.
• Russian strikes hit port infrastructure in Mykolaiv, according to Ukrainian officials.
• CPC oil terminal on the Black Sea was reportedly attacked by drones overnight.

OTHER

• Top US diplomat in Taiwan said, aside from the human toll, any conflict across the Taiwan Strait would have a bigger impact on the global economy than the Second World War.

CRYPTO

• Bitcoin has steadily climbed, amid a softer dollar, and resides at the upper end of its USD 78.5k-79.7k range.

APAC TRADE

• APAC stocks traded mixed as the region attempted to shrug off the weak lead from Wall Street, where all major indices declined on return from the long weekend amid rising oil prices and geopolitical escalation.
• ASX 200 was subdued as gains in energy, resources, mining and materials were offset by weakness in healthcare, financials and the consumer-related sectors.
• Nikkei 225 swung between gains and losses with few fresh catalysts and as further reports continued to point to a BoJ rate hike next week, while Nintendo was among the laggards after its Legend of Zelda 40th Anniversary Direct announcements underwhelmed.
• KOSPI resumed its regional outperformance and climbed above the 7,000 level with Samsung underpinned following several recent announcements and with SK Hynix unfazed by reports that Kioxia's CEO dismissed prospects of closer ties with the South Korean chipmaker.
• Hang Seng and Shanghai Comp were mixed, with price action contained after the PBoC continued to refrain from open market operations and as participants digested the Chinese inflation data in which CPI matched estimates, but PPI was firmer-than-expected and showed an acceleration in factory gate prices.

NOTABLE ASIA-PAC HEADLINES

• US Treasury Secretary Bessent said he has good insight when they intervene on the yen and dared people to bet against him, while Bessent commented that he has information and good insight into what the BoJ and policymakers will do.
• Japan cabinet reshuffle is set for September 17th, according to Asahi.

NOTABLE APAC DATA RECAP

• Chinese CPI (Aug YY) 0.8% vs. Exp. 0.8% (Prev. 0.5%).
• Chinese CPI (Aug MM) 0.4% vs. Exp. 0.3% (Prev. -0.1%).
• Chinese PPI (Aug YY) 3.8% vs. Exp. 3.7% (Prev. 3.5%).