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EUROPEAN OPEN: BAB LN trading in line, backs guidance; GLEN LN faces USD 2bln Singapore lawsuit; VOD LN could miss EUR 1.1bln OXG proceeds; Italy probes ISP IM bid for BMPS IM; RNO FP & Geely invest BRL 2bln in Brazil

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EU Commission President von der Leyen says that a stronger, independent Europe is now emerging

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EUROPEAN OPEN: BAB LN trading in line, backs guidance; GLEN LN faces USD 2bln Singapore lawsuit; VOD LN could miss EUR 1.1bln OXG proceeds; Italy probes ISP IM bid for BMPS IM; RNO FP & Geely invest BRL 2bln in Brazil

European Movers: Soitec (SOI FP) +10%, Babcock (BAB LN) +2.3%, BMW (BMW GY) +1%, Intesa Sanpaolo (ISP IM) +0.8%, Entain (ENT LN) -1.4%,

Russian plans to expand its diesel-export ban through October, according to Russian press

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EUROPEAN OPEN

  • European equities have begun the mid-week session on the front foot; basic resources leads, optimised personal care lags. Overnight, APAC equities were mixed in choppy trade following the declines on Wall St and recent upside in oil, though sentiment gradually improved, and APAC stocks and bonds edged higher ahead of today’s Fed policy decision.
  • The FOMC is expected to raise rates by 25bps today, to 3.75-4.00%, with markets pricing over 90% probability of such an outcome. Updated forecasts and rate projections will accompany the decision; attention will also fall on Chair Warsh’s guidance (and whether he actually submits any forecasts), and if policymakers signal further tightening ahead amid persistent inflation concerns, though Warsh has become notorious for avoiding any forward guidance. A link to Newsquawk’s FOMC preview is below.
  • Bitcoin fell further after the US Senate failed to advance the Clarity Act, while expectations of a Fed rate hike added pressure. Bitcoin stabilised around USD 75,700; Bloomberg said that more than USD 560mln of bullish crypto bets were unwound.
  • Gold rose above USD 4,340/oz as Treasury yields eased and oil prices retreated, but has pared back towards USD 4,320/oz as the European day gets underway. LME copper rose as Treasury yields eased ahead of the Fed policy announcement. Reports note that rising LME inventories signal ample supply, reducing squeeze concerns.
  • Crude prices fell after recent supply-driven gains, with Brent near USD 108/bbl, and WTI around USD 105/bbl. API data reportedly showed US crude inventories posting a surprise build of 7.1mln bbls in the latest week. Analysts say that Saudi pipeline disruptions, Middle East tensions and tight diesel supply still remain supportive.
  • In data, UK CPI rose 3.1% Y/Y in August (exp. 3.1%; prev. 2.9%), a five-month high, driven by higher motor fuel prices amid the ongoing Iran war (the BoE had forecast 2.8%). Services CPI held at 3.4% Y/Y, and core CPI was unchanged at 2.6% Y/Y (exp. 2.6%). The BoE is set to meet on Thursday, and is currently expected to hold rates, though Governor Bailey has warned of new risks to food prices from UK drought and El Nino, leaving some hawkish risks in play.

STOCK SPECIFICS

  • INDUSTRIALS: Babcock (BAB LN) said trading in the first five months of FY27 was in line with expectations, with FY and medium-term guidance unchanged. Nuclear and Aviation led performance, while new work included a CAD 1.2bln Canadian submarine-support extension and preferred-bidder status for a French Air Force training contract. CATL (CYATY) shares have fallen around 10% over two days amid concerns over Q3 profitability, possible September production cuts and increasing supply diversification by EV makers, with shares now around 35% below their May peak.
  • MATERIALS: Sapphire Minmetals and Radiant World have filed a USD 2bln lawsuit against Glencore (GLEN LN) in Singapore; the action follows Glencore’s claims that Radiant World and associated companies submitted falsified invoices to lenders. Glencore said it had incurred losses and been exposed to risks and would take appropriate action.
  • COMMUNICATIONS: Vodafone (VOD LN) could miss up to EUR 1.1bln of potential proceeds after Patrick Drahi’s Geodesia sold its 50% OXG stake to Societe Generale; SG will not inherit EUR 487mln of deferred payments or a potential EUR 595mln earnout.
  • FINANCIALS: Italy’s competition authority opened an investigation into Intesa Sanpaolo’s (ISP IM) bid for Monte Paschi (BMPS IM); the review will assess potential effects on competition across multiple local and national banking and insurance markets. JPMorgan (JPM) expects its Q3 investment banking fees and markets revenue to rise mid-to-high teens, with execs citing broad-based strength across products and regions.
  • CONSUMER CYCLICALS: Of note for gambling-related stocks, UK Chancellor Healey is reportedly considering higher gambling taxes in the Autumn Budget, with officials examining changes to machine gaming duty aimed at betting shops and adult gaming centres. Renault (RNO FP) and China’s Geely (0175 HK) will invest BRL 2bln in Brazil through Renault Geely do Brasil to produce a new Renault vehicle based on the Global Intelligent Electric Architecture; production is scheduled to begin in 2027. Of note for the Travel & Leisure sector, Trip.com (TCOM) shares rose after adj. earnings beat expectations, revenue was broadly in line and management highlighted continued momentum in inbound and international travel.
  • CONSUMER DEFENSIVE: The US FDA said that Danone’s (BN FP) US business is voluntarily recalling So Delicious Dairy Free Salted Caramel Cluster Non-Dairy Frozen Dessert pints due to possible foreign materials, including small stones and other hard objects, in the cashew inclusions.
  • HEALTHCARE: GSK (GSK LN) is targeting six approved oncology medicines by the end of 2026 and nine by 2029; multiple new drugs are expected to support the company’s ambition to exceed GBP 40bln in sales by 2031. UK NICE recommended Merck’s (MRK GY) Ezmekly for treating symptomatic, inoperable plexiform neurofibromas associated with neurofibromatosis type 1 in patients aged 2-17 years. Galderma (GALD SW) reported positive topline results from a Chinese study of Restylane Volyme for moderate-to-severe temple hollowing; the 162-patient study met its primary endpoint.
  • TECH: OpenAI has reportedly held early talks with investors about a private funding round at a valuation of about USD 1.2tln before its IPO. The company raised USD 122bln at an USD 852bln valuation in March. Other reports said OpenAI could possibly delay its IPO if it takes a fresh funding round. SK Hynix (SKHY) union members approved a revised wage agreement with 57.1% support, Yonhap reports. The deal raises the cash portion of performance-based incentives to 50% from 40%, while reducing the share-based portion to 50% from 60%. Separately, SK Hynix is reportedly in talks with Intel (INTC) about producing memory chips in the US; options include leasing Intel’s Ohio facility, or forming a JV involving Intel and major cloud companies. Microsoft (MSFT) raised its quarterly dividend +8% to USD 0.98/shr.
  • NOTABLE BROKER UPDATES: KBC Group (KBC BB) initiated with Buy at Jefferies; SIG Group (SIGN SW) initiated with Neutral at JPMorgan. AB InBev (ABI BB) upgraded Deutsche Bank; BMW (BMW GY) upgraded at Berenberg; Soitec (SOI FP) upgraded at JPMorgan; Campari (CPR IM) upgraded at Deutsche Bank. Stellantis (STLAM IM) downgraded at Berenberg; Norsk Hydro (NHY NO) downgraded at RBC.

DAY AHEAD

  • DATA: In Europe, Eurozone final Q2 labour cost index is seen at 3.0% Y/Y (prev. 3.2%), alongside the ECB wage tracker (prev. 2.30%); July industrial production is also due. In North America, US August retail sales are expected to rise by 0.9% M/M (prev. -0.6%), with the ex-autos measure at 0.6% M/M (prev. -0.3%), ex-gas/autos at 0.2% M/M (prev. -0.2%) and the Control Group at 0.4% M/M (prev. -0.4%). US import prices (prev. -0.4% M/M; prev. 5.9% Y/Y) and export prices (prev. -1.3% M/M; prev. 8.2% Y/Y) are also due; NAHB housing market index (prev. 35). After today’s data, the Atlanta Fed will update its Q3 GDPNow tracking estimate (prev. 4.70%). In Canada, housing starts (prev. 229.1K) and building permits (prev. 18.5% M/M) will be released.
  • CENTRAL BANKS: The Fed is expected to raise rates by 25bps to 4.00% (out preview is below); new economic projections are also due. Fed Chair Warsh will deliver remarks after the policy announcement. Canada’s BoC will release September meeting minutes. Brazil’s BCB is expected to cut rates by 25bps (exp. 13.75%, prev. 14.00%). In speakers, ECB’s Nagel, ECB’s Vujcic (neutral), and ECB’s Elderson (neutral) are due.
  • SUPPLY: Germany auctions EUR 2.5bln of 2047 and 2056 debt.
  • ENERGY: Afterhours on Tuesday, weekly API inventory data reportedly showed headline crude stocks posting a surprise build of +7.1mln bbls (exp. -1.8mln), though stocks at Cushing saw a draw of -0.2mln bbls; in the products, gasoline inventories posted a surprise build of +1.5mln bbls (exp. -1.2mln), while distillate stocks saw a larger than expected build of +1.6mln bbls (exp. +0.8mln). The more widely followed DoE data will be published later today.
  • FOMC PREVIEW: Markets expect the FOMC to hike rates by 25bps to 3.75-4.00%, with money markets assigning around a 90% probability, following a hotter-than-expected August core CPI print and a robust August labour market report. However, around 15% of economists surveyed by Reuters expect a hold. Our full preview is available here

Context

The session is framed around an FOMC at which a 25bp hike carries near-full pricing and the decision itself is the least of it. In well-telegraphed moves of this kind the market's history is to sell the rumour and buy the fact in rates, with the durable repricing coming from the projections and the press conference rather than the statement. Here the unusual feature is a chair with a record of withholding forward guidance and an open question over whether forecasts are even submitted; in past episodes where the chair declined to anchor the path, the dot plot and the median projections have carried more weight than usual, and volatility has concentrated in the belly of the curve where the terminal rate is priced. The distinction worth drawing is between a hawkish surprise in the dots, which lifts the whole front end, and a divided committee revealed through dissents or absent forecasts, which tends to steepen the front and cheapen the long end on term premium. UK CPI printing a multi-month high with services sticky ahead of the BoE is a familiar pattern, where the domestic release matters for gilts only insofar as it shifts the hold-versus-hike debate at the margin. The follow-ons are the projections, the tone of the press conference, and whether DoE inventories confirm the API surprise build that took the edge off crude's supply-driven bid.

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