EUROPEAN OPEN: MC FP to sell Marc Jacobs label; STLAM IM & Dongfeng to produce Jeeps in China; VOW3 GY labour leaders reject German plant closures; HSBA LN pauses planned USD 4bln private credit fund investment

EUROPEAN OPEN: 

• European equities have started in the red, despite a positive lead from Wall Street, where the Dow topped 50k, and the S&P 500 closed above 7,500 for the first time, led by Tech, as the AI-rally continues. Overnight, EM stocks fell as rising oil prices and pre-weekend caution weighed on sentiment, with the MSCI Emerging Market Index falling by the most in six weeks; South Korea led losses as overseas investors sold holdings and the AI trade faded.
• Global bond yields have picked up as higher oil prices raised inflation concerns. US 2yr Treasury yields climbed above 4% and 10yr yields rose above 4.5%, both the highest in a year. Some traders think the Fed is now behind the curve on inflation; Yardeni Research notes that 2yr Treasury yields are trading above the 3.50-3.75% Federal Funds Target range, which signals policy may be too loose. In Japan, bond yields also rose across the curve as high oil prices fuelled global inflation concerns; 20yr yields rose to the highest since 1996, while 30yr and 40yr yields moved towards their highest levels since their debuts.
• FX traders are watching for possible Japanese intervention after the yen fell 1% this week, currently trading around 158.50, reversing more than half the gains from interventions between 30th April and Japan’s Golden Week holidays, and heading for its biggest weekly loss in two months. Bloomberg said that the recurring brief JPY spikes against the USD have prompted debate over whether Japanese authorities are using smaller “warning shot” operations to limit further weakness. Nikkei reports that high oil prices from Iran war uncertainty, Japan’s widening trade deficit and stronger US inflation data have driven USD buying and JPY selling, while markets saw no new currency signals from this week’s US-Japan meetings. Japan’s PPI rose 2.3% M/M in April (prev. 0.8%), the biggest increase since April 2014, and the annual rate was lifted to 4.9% (exp. 3.0%, prev. 2.6%), adding to signs that the Iran war is lifting inflationary pressure, supporting the case for a BoJ rate hike.
• Crude is on course for weekly gains as the Strait of Hormuz remains effectively closed and efforts to end the Iran war remain stalled. Brent prices have picked up again in the European premarket, trading around USD 107.80/bbl, amid reports that the US has rejected Iran’s 14-point proposal to end the war, according to the Tehran Times citing sources.
• Gold is headed towards a weekly drop as war-driven US inflation strengthened rate-hike expectations; bullion is lower by around 2% vs last Friday amid a stronger USD and higher Tsy yields, and heads into the last European session of the week around USD 4,560/oz. Copper extended its pullback from record-highs as faster US inflation reduced rate-cut expectations and a stronger USD also impacted. Copper is now down about 3% vs Wednesday’s close, after an eight-day rally driven by mine disruptions, tech stocks and AI-related demand optimism.
• In UK politics, PM Starmer continues to face a leadership crisis after MP Josh Simons said he would resign his Makerfield seat so Andy Burnham could seek a return to parliament; Burnham needs to become an MP before challenging for Labour leader. Reports suggest Starmer will not block him, while Reform UK plans a major by-election campaign.

STOCK SPECIFICS:

• TECH: Samsung Electronics’ (SSNLF) South Korean union will proceed with an 18-day strike from 21st May despite Samsung offering unconditional pay talks, Reuters reports; shares fell sharply overnight due to the production and delivery concerns. Analysts at JPM estimate that a strike could hit operating profit by between KRW 21tln-31tln, and sales by about KRW 4.5tln. Applied Materials (AMAT) shares initially rose over 5% in extended US trading after a Q2 beat and Q3 guidance which topped expectations, however, the stock eventually gave back the gains.
• INDUSTRIALS: Of note for Airbus (AIR FP), President Trump said China has agreed to order 200 Boeing (BA) jets, disappointing traders who had expected a figure closer to 500 aircraft. BAE Systems (BA/ LN) was awarded a USD 535.6mln US Army contract for self-propelled howitzer systems, vehicles and total package fielding kits. Fraport (FRA GY) said Frankfurt Airport handled 4.8mln passengers in April 2026, -11.0% Y/Y; aircraft movements -11.6% to 34,623 take-offs and landings, while cargo volumes -0.6% to 168,526 metric tonnes. EasyJet (EZJ LN) received a positive mention in the FT’s Lex column.
• FINANCIALS: HSBC (HSBA LN) has not transferred a planned USD 4bln investment into its own private credit funds and has no current plans to do so, according to the FT citing sources; the pause follows concerns over US private credit and a USD 400mln hit linked to an Apollo-owned (APO) credit fund. HSBC said it remains committed to its private credit offering.
• REAL ESTATE: Unite Group (UTG LN) backed FY26 guidance, and said its student lettings and portfolio shift remain on track; it notes that for FY26/27, 79% of Unite Students beds are reserved, with expected occupancy at 93-96%, rental growth of 2-3% and adj. EPS guidance of GBP 41.5-43.0p. Added that its The Hello Student portfolio is progressing towards about 85% occupancy.
• CONSUMER: Volkswagen (VOW3 GY) labour leaders said they will not allow German plant closures, Reuters reports. Works council head Cavallo, IG Metall chief Benner and regional leader Groeger said 2024 restructuring commitments must stand, though they remain open to proposals such as defence partnerships or Chinese collaboration to address under-used plants. Stellantis (STLAM IM) and Dongfeng Motor agreed to jointly produce Jeep vehicles in China, deepening their partnership; the Dongfeng Peugeot Citroen Automobile venture is expected to start making two Jeep off-road new-energy vehicles and two Peugeot models in Wuhan from 2027; the vehicles will be sold in China and overseas. LVMH (MC FP) has agreed to sell the Marc Jacobs label to WHP Global, FT reports. Terms were not disclosed. Marc Jacobs, the brand’s founder, will remain creative director of the label.
• HEALTHCARE: Meta’s (META) Summer Sale cuts Ray-Ban Meta smart glasses (EL FP) to record-low prices, The Verge reports.

DAY AHEAD:

• EVENTS: Presidents Trump and Xi will participate in photo session and a working lunch.
• DATA: In Europe, Italy reports final April inflation figures. In North America, US industrial production is seen rising 0.3% M/M (prev. -0.5%), and manufacturing output expected to rise 0.2% M/M (prev. -0.1%), while capacity utilization is seen rising to 75.8% (prev. 75.7%). Empire manufacturing is seen easing to 7.3 (prev. 11.0). In Canada’s April housing starts, final March manufacturing sales, international transactions data are due.
• CENTRAL BANKS: ECB’s March Economic Bulletin will be published.
• CRA: Potential credit rating agency reviews include: Fitch on Germany (AAA); S&P on Italy (BBB+); Morningstar DBRS on Portugal’s (A high); Morningstar DBRS on UK (AA); Scope Ratings on Poland (A).
• OPTION EXPIRIES: May 2026 FTSE 100, Euro Stoxx 50, DAX 40, E-mini S&P/Nasdaq/Dow Jones, CAC 40.
• ENERGY: Baker Hughes will report weekly rig counts (prev. oil/gas/total 410/129/548).