EUROPEAN OPEN: A constructive start as crude failed to climb on the latest strikes and as the market welcomes Trump saying Iran wants to make a deal

A firmer start for European equities despite the tit-for-tat strikes conducted by the US on around 90 Iranian targets, and by the IRGC on military bases in Bahrain and Kuwait. Upside in futures was spurred by US President Trump saying he spoke with Iran, and they want to make a deal, a dynamic that has continued into cash trade.
Euro Stoxx 50 +0.8%, with modest underperformance in the FTSE 100 -0.2% on account of energy benchmarks, while the IBEX 35 +1.1% rebounds after the Trump-related pressure on Wednesday. Sectors are mostly firmer, reflecting the risk tone with Basic Resources & Tech leading while Food/Beverage and Personal Goods lag.
As it stands, WTI and Brent are modestly softer on the day, having given up the modest upside they held overnight following the POTUS comment regarding Iran this morning. Metals are firmer, welcoming the softer USD and the retreat in global yields.
Overnight, APAC trade began on a fairly resilient note before slipping into the red for all benchmarks aside from the Nikkei 225, which closed higher by 1.7%.
Fixed income has benefited from the mentioned energy moderation in the early European morning, enough to lift Bunds to gains of around 20 ticks. Gilts begin with gains of 28 ticks, but remain shy of the peaks from earlier in the week, as was the case on Wednesday.
FX has the USD under modest initial and since increasing pressure, with the above dictating. To the modest benefit of FX across the board, NZD continues to lead post-RBNZ. CHN also firmer, shrugging off a cooler-than-expected June inflation series.

STOCK SPECIFICS:

Defence Names – Germany has approved orders including a EUR 12bln ship order for TKMS (TKMS GY) +2.9%, and a Rheinmetall (RHM GY) +0.6% laser deal.
Volkswagen (VOW3 GY) U/C, board is meeting today to discuss the restructuring plans.
Ipsen (IPN FP) +0.2%, Positive top-line results from the Phase III BEOND study, met the primary endpoints.
AstraZeneca (AZN LN) -8.9%, CARDIO-TTRansform Phase III trial did not meet the primary endpoint of efficacy around CV mortality.
Maersk (MAERSKB DC) -0.9%, Some insurers have advised owners to pause Hormuz voyages following the recent flare up.
Deutz (DEZ GY) +6.7%, To acquire FFG Flensburger Fahrzeugbau Gesellschaft for EUR 1.6bln.
Suedzucker (SZU GY) +0.5%, Q1 revenue as expected, EBITDA higher Y/Y. Revenue performance was hit by the sugar unit.
Barry Callebaut (BARN SW) +0.6%, sales -9.5%, amid lower volumes and unfavourable cocoa pricing. However, market share increased in China.

DAY AHEAD

We have already seen the German Trade Balance for May, with a strong headline figure supported by exports, while the import metric unexpectedly fell M/M.
Ahead, the data docket has US weekly jobless claims (does not coincide with the BLS window), and existing home sales.
Events include the ECB and Banxico minutes. From the ECB account, we look for any insight into how the committee viewed the July vs September argument at the time; however, the MoU signing and associated market action then, and the escalation since, mean the minutes are more stale than typical.
Remarks from Fed’s Williams (voter; spoke extensively on Tuesday), and Logan (2026; hasn’t commented on policy since the start of June), in addition to BoE’s Breeden, who we look to for further insight into potential Gilt market reform.
Supply comes from the US, with a 30yr due after Wednesday’s strong 10yr and the well received 3yr on Tuesday.
Finally, earnings from PepsiCo.