EUROPEAN OPEN: G7 to discuss oil reserve release; AZN LN’s Enhertu gets US priority review for breast cancer; GSK LN grants Alfasigma linerixibat rights for USD300mln upfront; VOW3 GY dealers sue over Scout DTC sales plan; AIR FP, RHM GY weigh satcom bid

EUROPEAN OPEN: European equities are opening in the red as traders begin pricing in the possibility of a more extended war in the Middle East. Oil prices surged, with Brent rising towards USD 120/bbl overnight, and global equities have started the week sharply lower as the war with Iran intensified, disrupting flows through the Strait of Hormuz. Iran has chosen Mojtaba Khamenei, son of the former supreme leader, as its new leader, which analysts say represents continuity rather than regime change, or any signal of surrender. President Trump’s demanded Iran’s “unconditional surrender” and there are reports that he is considering sending US special forces to seize Iranian uranium, adding to the market’s angst. Oil prices did pare their sharp gains in early European trade, after an FT report suggested that the G7 will discuss a joint release of emergency oil reserves at an emergency meeting on Monday; three G7 countries, including the US, have so far expressed support for the proposal, and a joint release in the range of 300-400mln barrels (25-30% of the IEA’s reserves) may be appropriate. Elsewhere, US Energy Secretary Wright on the weekend said global energy supplies were sufficient and that the rise in oil prices reflects a temporary “fear premium”; he said the conflict would disrupt markets and ship traffic only briefly and, in the worst case, for weeks rather than months. Global bond markets have declined amid higher oil prices which are fuelling fears of higher inflation and weaker growth, limiting central banks’ ability to lower interest rates as energy and crop prices surge. Benchmark 10yr Treasury yields rose more than 7bps, the biggest move since January, while German bund futures fell to an almost 15yr low. The USD strengthened against most major peers amid haven appeal. Gold prices, however, fell towards USD 5,100, hindered by the stronger USD, and concerns that central banks will struggle to cut interest rates in the near term as energy and crop prices surge as a result of the Middle East conflict. Bitcoin fell to a seven-day low overnight as oil prices surged on escalating Iran war concerns ,falling to around 65,630, before trading above USD 66,000. Aluminium rose towards USD 3,500/ton on the LME, the highest since April 2022, after gains of nearly 10% last week, as the Iran war disrupts Persian Gulf shipments; analysts note that the region accounts for about 9% of global supply. Copper and other industrial metals fell as risk appetite weakened. In data, Chinese inflation data showed CPI rising to a 37-month high in February, and PPI rising to a 19-month high, driven by the Lunar New Year; analysts noted that the data was not influenced by events in the Middle East, implying that the oil price surge seen of late could feed through into inflation readings in the months ahead. Closer to home, REC said the UK jobs market showed signs of stabilising in February, with permanent staff appointments still falling but at the slowest pace since March 2023; its hiring index rose to 49.2, moving closer to the 50 level that separates growth from contraction. Elsewhere, German industrial production fell by -0.5% M/M in January (exp. 0.9%).
STOCK SPECIFICS: In healthcare, AstraZeneca (AZN) and Daiichi Sankyo’s Enhertu received US Priority Review as a post-neoadjuvant treatment for HER2-positive early breast cancer, with potential to become a new standard of care if approved. Roche (ROG SW) said a late-stage trial of giredestrant combined with Pfizer’s (PFE) Ibrance failed to show a statistically significant improvement in progression-free survival in advanced breast cancer patients. Separately, Roche Chair said the company expects medicines to remain exempt from US import tariffs, while diagnostics could face duties after 150 days. GSK (GSK LN) agreed to grant Alfasigma worldwide rights to linerixibat, receiving USD 300mln upfront and USD 100mln upon FDA approval. In communications, Telefonica (TEF SM) will consider further takeovers of UK broadband providers to strengthen Virgin Media O2, the FT reports. In industrials, Airbus (AIR FP) Defence and Space is reportedly considering a joint bid with Rheinmetall (RHM GY) and OHB to build a Starlink-like internet service for Germany’s Bundeswehr under the SATCOM Bw Stage 4 project. In consumer sectors, Volkswagen (VOW3 GY) dealers are opposing the carmaker’s plan to sell Scout Motors SUVs and trucks directly to consumers, with the latest in a series of lawsuits seeking to block the move, WSJ reports. Renault’s (RNO FP) CEO is expected to present a cost-cutting plan to make the carmaker more like lower-cost Chinese rivals, including increased use of Geely technology to cut development costs, Bloomberg reports. Of note for semiconductors and automakers, China’s Commerce Ministry warned that a dispute between Nexperia and its Chinese subsidiary could trigger a global semiconductor supply chain crisis, noting the chips’ widespread use in automakers. In tech, STMicroelectronics (STMPA FP) said it had entered high-volume production of its silicon photonics platform to support AI infrastructure demand, expecting the market to grow 17% CAGR in 2025-2030, and to exceed USD 34bln. In notable broker updates, Morgan Stanley European Equity Strategy downgraded Media & Entertainment to Underweight, Diversified Financials to Equal Weight and Software & Services to Underweight, while upgrading Energy and Telecommunication Services to Overweight. JPMorgan downgraded Antofagasta (ANTO LN), Anglo American (AAL LN), Rio Tinto (RIO LN) and Voestalpine (VOE AV); Ferrovial (FER SM) was downgraded at Jefferies; Zealand Pharma (ZEAL DC) was downgraded at BNP Paribas; Barclays upgraded IAG (IAG LN) and Leonardo (LDO IM); Norsk Hydro (NHY NO) was upgraded at Danske Bank.

TODAY’S AGENDA:

NOTE: The time differential between London and New York is down to 4 hours after the US moved onto Summer Time on the weekend; In the UK, the clocks will go forward to BST on 29th March, restoring the usual 5hr time differential.

DAY AHEAD: After Brent crude prices surged towards USD 120/bbl amid the escalating war with Iran, G7 finance ministers will discuss a coordinated release of emergency oil reserves with the IEA today, the FT reports; the report said a joint release of between 300-400mln barrels (25-30% of the IEA’s reserves) may be appropriate. Elsewhere, the data slate is quiet, with only the NY Fed’s Survey of Consumer Expectations on tap for release (last month, median 1yr ahead inflation expectations fell 0.3ppts to 3.1%, while 3yr and 5yr expectations held at 3.0%). The data comes ahead of this week’s CPI and PCE inflation data, however, many analysts are noting that the monetary policy signalling from this month’s inflation readings may not be very useful, since the periods are before the Iran War started, and since then, energy and crop prices have increased, signalling further inflation upside in the months ahead, potentially limiting central banks’ hand in lowering interest rates. The FOMC is now on blackout ahead of its 19th March confab. From the ECB, Cipollone and Elderson are scheduled to speak. Notable corporate earnings due today include Hewlett Packard Enterprise (HPE).
WEEK AHEAD: Highlights include US inflation data (both PCE and CPI), though the monpol signal may not be as relevant this month given the subsequent upside in energy and crop prices; UK GDP, China Trade data, and a CBRT policy announcement.
Click here for Newsquawk’s week ahead preview
THIS WEEK’S EARNINGS: Notable companies reporting this week include: Oracle (ORCL), Adobe (ADBE), Ulta Beauty (ULTA), Hewlett Packard Enterprise (HPE), Lennar (LEN), Dollar General (DG), Casey’s (CASY), Dick’s (DKS), Campbell’s (CPB), Kohl’s (KSS), NIO (NIO).
Click here for Newsquawk’s Weekly US Earnings Estimates note