EUROPEAN OPEN: MU rises after beat and stronger AI-led guidance; CMCSA's Sky agrees GBP 1.6bln ITV LN unit deal; VOW3 GY sells 51% Everllence stake to Bain for EUR 7.4bln; EZJ LN rejects Castlelake fourth's approach; HMB SS Q2 earnings miss expectations

EUROPEAN OPEN:

• European equities start mostly higher. Overnight, APAC stocks were mixed, albeit with a mostly positive bias, with the KOSPI led the gains, while Japanese stocks also rose, as tech and Nasdaq futures rebounded from the prior day’s lows following strong earnings from Micron, whose upbeat forecast revived confidence in the AI trade.
• Copper edged higher after touching a seven-week low, with a weaker USD and an AI stock rally supporting sentiment after higher-rate concerns drove a slump.
• Gold extended declines beneath USD 4,000/oz after a stronger USD and higher-rate expectations weighed. Silver also declined. Bloomberg commentator John Authers said the debasement trade is unwinding as markets reassess fears that loose fiscal and monetary policy will erode currency value; he cites new Fed Chair Warsh’s hawkish appearance, which weakens the case for gold and Bitcoin, and has revived the USD and Treasuries, making renewed debasement bets harder to justify unless inflation re-accelerates. The US is due to release PCE inflation data, the Fed’s preferred gauge, later today (primer below).
• Crude also continues its descent, with Brent having now erased its wartime gains as flows through the Strait of Hormuz increased following progress on a US-Iran peace deal, helping to ease inflation concerns. September Brent trades sub-USD 73/bbl as Europe gets underway, while August WTI is below USD 70/bbl.
• Elsewhere, Bloomberg notes Bitcoin faces about USD 10bln of Deribit options expiry; positioning is skewed toward bullish calls, but with spot near USD 62K, much higher-strike call open interest remains out of the money, potentially encouraging defensive hedging into expiry.
• In data releases, Germany’s GfK Consumer Confidence printed -29.2 for July (exp. -28, prev. -29.8); Gfk said the consumer climate is currently stabilising at a low level, income expectations are recovering only slightly, and the willingness to buy remains in the pessimistic range, while the willingness to save is not decreasing either. Gfk added that there are no signs yet of a return toward pre-war levels.
• Looking ahead, the German Finance Agency Issuance Outlook for Q3 is due; today’s data highlights include US PCE inflation data, final US Q1 GDP, weekly jobless claims, durable goods; Banxico is expected to keep rates unchanged. There is also a decent amount of central bank speakers, with ECB’s Lane and Cipollone, Fed’s Bowman, Williams & Goolsbee due.

STOCK SPECIFICS:

• TECH: Micron (MU) shares rose almost 18% in extended US trading after the memory maker beat expectations and issued stronger guidance, benefiting from surging AI-driven demand, rising memory prices and long-term customer agreements. Qualcomm (QCOM) shares gained almost 12% in extended US trading after it announced that it has expanded its strategic relationship with Hugging Face to advance open, developer-driven AI from devices to cloud infrastructure, and it raised its FY29 non-handset revenue target.
• FINANCIALS: The Fed said that all 32 banks tested remained above minimum capital requirements after absorbing over USD 708bln in hypothetical losses, with aggregate capital falling 1.6ppts from 12.8% to 11.2%. The scenario included a 39% drop in commercial real estate prices, a 30% drop in house prices, and unemployment reaching 10%. The Fed said that current capital requirements remain unchanged until 2027, and the Fed will next update capital buffers after the 2027 test. After the announcement, JPMorgan (JPM), Goldman Sachs (GS), Morgan Stanley (MS), Citigroup (C), State Street (STT) and Wells Fargo (WFC) all raised dividends. Jefferies (JEF) shares slipped in extended US trading after earnings missed expectations, outweighing record investment banking and equities revenues.
• COMMUNICATIONS: Comcast (CMCSA)-owned Sky has agreed terms to buy ITV’s (ITV LN) broadcast and streaming unit for GBP 1.6bln, with ITV acquiring Love Productions as part of the deal; the total value includes ITV Studios acquiring Love Productions for GBP 80-120mln, plus an earn-out reportedly worth about GBP 200mln. A deal could be announced within two weeks, Reuters said.
• CONSUMER: H&M (HMB SS) Q2 sales SEK 54.8bln (exp. 55.3bln), net income SEK 3.96bln (exp. 4.38bln), EBIT SEK 5.91bln (exp. 6.34bln); it said tighter inventory management affected its ability to fully meet demand, while organisational changes resulted in one-time costs of SEK 679mln, adding that June sales are expected to be on par with the prior year. Volkswagen (VOW3 GY) agreed to sell a 51% stake in diesel engine unit Everllence to Bain Capital in a EUR 7.4bln deal, Reuters reports; Volkswagen will retain 49% in the medium-term. Everllence makes shipping diesel engines, and Reuters notes that it sees growth potential in data centre generators too. Renault Group (RNO FP) chief technology officer said it plans to cut 800 engineering jobs in France by the end of 2027 to make its organisation leaner and better compete with Chinese rivals. Tesco Mobile (TSCO LN) is reportedly relaunching broadband services, having held initial talks about offering broadband over Virgin Media O2 and Nexfibre’s fibre networks. Ocado (OCDO LN) board has reportedly intensified its search for a new CEO to replace Tim Steiner amid pressure from shareholders, according to the FT, and has approached potential candidates. Of note for gambling names, Kalshi is in talks to raise funds at a valuation of about USD 40bln, with a deal possible in Q3 2026, FT reports; it follows Kalshi raising USD 1bln at a USD 22bln valuation last month, and up from an USD 11bln valuation in December 2025.
• INDUSTRIALS: EasyJet (EZJ LN) said its board unanimously rejected Castlelake’s fourth proposal to acquire the company for GBP 6.50/shr, saying it substantially undervalues the airline; the board has also requested a nine-day extension to the ‘PUSU’ deadline, requiring Castlelake to announce any firm offer by 5th July.
• ENERGY: TotalEnergies (TTE FP) signed entry into the Bab Gas Cap Concession in Abu Dhabi with a 10% interest, alongside ADNOC (60%), BP (BP/ LN) (10%), CNPC (8%), JODCO/INPEX (5%), ZhenHua (4%) and GS Energy (3%). The concession targets production of 1.5bln cubic feet per day of gas.
• NOTABLE BROKER UPDATES: Lindt & Sprungli (LISN SW) initiated with an Underperform rating at Jefferies; Qiagen (QIA GY) initiated with a Hold at Kepler Cheuvreux; Sampo Oyj (SAMAS FH) reinitiated with Buy at Kepler Cheuvreux. RWE (RWE GY) upgraded at AlphaValue; Sika (SIKA SW) upgraded at BofA. Man Group (EMG LN) downgraded at Deutsche Bank; Swatch (UHR SW) downgraded at SocGen.

DAY AHEAD:

• DATA: In North America, US PCE inflation data is the highlight (full primer below), where the headline is seen rising +0.5% M/M (prev. 0.4%) and is seen rising to 4.1% Y/Y annualised (prev. 3.8%); the core measure is seen rising +0.3% M/M (prev. 0.2%), and the annual rate of core PCE is seen rising to 3.4% Y/Y (prev. 3.3%). Final Q1 US GDP is expected at 1.6% Q/Q (prev. 0.5%). Elsewhere, US durable goods orders for May are seen falling by -4.3% M/M (prev. +7.9%). Weekly initial jobless claims are seen little changed at 225K (prev. 226K), while continuing claims are seen at 1.8mln (prev. 1.81mln). After today’s releases, the Atlanta Fed will update its Q2 GDPnow tracking estimate (currently tracking growth of 3.0%).
• CENTRAL BANKS: Fed’s Bowman (dovish), Williams (dovish) and Goolsbee (hawkish) all are due to speak today. The Fed will also release its Senior Credit Officer Opinion Survey. From the ECB, chief economist Lane and Cipollone are scheduled. The ECB will also release its Economic Bulletin. Banxico is expected to keep rate unchanged at 6.5%.
• SUPPLY: US auctions USD 44bln of 7yr notes. UK to sell GBP 1.5bln of 2029 debt. Germany is set to publish its Q3 issuance outlook.
• ENERGY: EIA natural gas storage change is expected to print a build of 67BCF (prev. build 73BCF).
• EARNINGS: Notable corporates reporting today include: FedEx Freight (FDXF), Darden (DRI), McCormick (MKC).
• OPTION EXPIRIES: Copper, Silver and Gold July 2026 options expiry; Brent August 2026 options expiry.
• PRIMER - US PCE (13:30BST/08:30EDT): The headline is seen rising +0.5% M/M (prev. 0.4%) and is seen rising to 4.1% Y/Y annualised (prev. 3.8%); the core measure is seen rising +0.3% M/M (prev. 0.2%), and the annual rate of core PCE is seen rising to 3.4% Y/Y (prev. 3.3%). WSJ’s Timiraos highlights that with the May PPI and CPI in hand, forecasters expect core PCE to print around 0.35% M/M in May, which would raise the annual rate to 3.4% Y/Y. The six-month annualised rate would climb to 4.1%, the highest since June 2023. Recent CPI and PPI headlines were hot, although the core measures were more contained. Still, analysts noted some areas of broadening price pressures outside of energy. Nonetheless, the data is for May and may be deemed as stale given the sharp weakness seen in energy prices in June so far, as the US and Iran came to an agreement to end the war. There are still risks ahead, however, particularly if the stage two talks on nuclear issues do not yield positive results and the war resumes, or if the return of oil through the Hormuz is slower than expected. Meanwhile, after the latest FOMC policy announcement, there has been added focus on inflation from Fed officials; the statement was completely rewritten to remove forward guidance, but it did stress that it “will deliver price stability”. Meanwhile, the updated rate projections shifted hawkishly, with the median now pencilling in one rate hike this year (vs one rate cut in the previous SEP). Additionally, new Chair Warsh stressed several times in his Q&A that the Fed is committed to bringing inflation to target. The hawkishness of the Fed and the enhanced focus on price stability will make inflation even more important ahead.