EUROPEAN OPEN: Samsung drags tech lower after prelim Q2 figures; SGRO LN investors urge higher PLD offer; SHEL LN guides lower Q2 gas production; BYD approached RNO FP twice; VOW3 GY prepares broad cost-cutting

EUROPEAN OPEN:

• European equities start Tuesday trade mixed. Overnight, APAC stocks fell as tech stocks retreated on profit-taking after Samsung’s prelim figures, triggering temporary halts on the KOSPI, while geopolitical tensions flared after an tanker was struck near the Omani coast exiting the Strait of Hormuz.
• Iran’s IRGC fired at least two missiles at ships in the Strait of Hormuz, with one vessel reported as a Qatari LNG tanker, which Iran said attempted to pass via the Omani route and ignored repeated warnings. Oil advanced on the renewed tensions, once again stoking inflation concerns and raising the prospects of interest-rate hikes; Brent for September trades up near USD 73/bbl, while WTI for August is up at around USD 69.50/bbl. Gold fell to near USD 4,125/oz.
• Samsung reported a Q2 profit surge, but the result was ‘only’ 6% above analyst estimates, were seen as priced in, and failed to ease concerns about the sustainability of the AI-driven memory chip boom, triggering profit-taking across Asian tech stocks, with investors reportedly rotating into financials and communications names.
• The DXY is slightly higher. Weekly positioning data, released on Monday on account of market closures on Friday, showed net long dollar positioning rose to nearly USD 40bln, the highest in over a decade, as traders turned the most positive on the amid expectations of Fed rate hikes; last week’s weaker-than-expected June payrolls print, however, is likely to have trimmed bullish bets, analyst said.
• The JPY rose against the USD after Japan’s Growth Strategy Minister denied reports that the administration is encouraging low interest rates as part of its fiscal expansion policy. Elsewhere, Japan’s 30yr bonds rose after an auction drew the strongest demand since 2019; cover was at 4.55x (vs prev. 2.94x, and 12-month average of 3.41x).
• In the UK, the FT reports that the Andy Burnham, who is likely to be the next PM, will not split the Treasury department; the early U-turn raised concerns that Burnham may repeat the relative lack of conviction seen under Starmer, the report said. Elsewhere, a Treasury Committee urged the government to reverse a freeze on the student loan repayment threshold, describing successive administrations’ actions as effective mis-selling.
• In data, UK Lloyds House Price Index (formerly the Halifax House Price Index) rose 0.2% M/M in June (exp. 0.1%), with the annual rate ticking up to 0.6% Y/Y (prev. 0.5%). Lloyds said that ahead, it expects the housing market to continue moving at a measured pace. “Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor,” adding that “the outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving.”
• German industrial production rose 0.9% M/M in May (exp. 0.2%); analysts at ING said that the surprisingly strong data defies recession fears, and comes as optimism is gradually returns  to the Eurozone’s largest economy.
• Ahead, the NATO summit gets underway in Ankara, with allies expected to unveil tens of billions in new arms contracts as US President Trump presses for delivery on a 5% GDP defence spending commitment. The summit is also expected to agree a largely symbolic EUR 70bln in military aid to Ukraine. Reports suggest that the final communique is expected to be brief, reaffirming its commitment to Article 5.
• Elsewhere, today’s docket features weekly US ADP employment figures, US and Canadian trade data, NY Fed’s June SCE, an Atlanta Fed GDPnow update for Q2; in energy, the EIA’s STEO will be eyed. Speakers include the Fed’s Bowman and BoE’s Mann.

STOCK SPECIFICS:

• TECH: Samsung (SSNLF) shares fell overnight after it announced prelim, where despite stronger-than-expected record profit, the results were seen as priced in and failed to ease concerns about the sustainability of the AI-driven memory chip boom, and as results included one-off employee bonus provisions. Asia tech shares fell after the update, and weakness is being seen in European peers after the open.
• FINANCIALS: HSBC (HSBA LN) is halting back leverage to riskier private credit clients, telling funds in recent weeks it will not renew facilities where returns do not justify the risk, FT reports; the bank said it is adjusting its risk tolerance to the sector, and will continue providing other services to affected funds.
• REAL ESTATE: Segro (SGRO LN) investors are urging Prologis (PLD) to improve the GBP 12.6bln all-stock offer (925p/shr), rejected at end of June as “opportunistically timed”; PLD must PUSU by 22nd July; analysts at Jefferies predict a potential additional 80-140p/shr.
• ENERGY: Shell (SHEL LN) guided Q2 upstream production of 1.75-1.85mln boepd (vs Q1’s 1.843mln boepd), with integrated gas production of 610-650k boepd (vs Q1’s 909k boepd), reflecting the impact of the Middle East conflict on Qatari volumes. Q2 indicative refining margins were guided at approximately USD 20/bbl (vs Q1’s USD 17/bbl), with gas trading expected significantly higher Q/Q. Separately, Adnoc agreed to acquire Shell’s South Africa fuel station network at a USD 1bln enterprise value. Saipem (SPM IM) has been awarded a USD 2bln contract for the engineering, procurement, construction and installation of a floating production, storage and offloading unit for the Kutei North Hub Field Development project in the Kutei basin, Indonesia.
• CONSUMER: BYD (BYDDY) approached Renault’s (RNO FP) management on two separate occasions in recent years to propose acquiring a stake in the French carmaker, Les Echos reports; the first approach came around two years ago during Luca de Meo’s tenure as chief executive and last Autumn, BYD’s number two Stella Li met Renault chairman Senard; neither approach succeeded. Volkswagen’s (VOW3 GY) board intends to present a far-reaching cost-cutting programme to the supervisory board on Thursday, WiWo reports; the measures extend beyond employee costs, and sources indicate that no agreement between the company and employee representatives is expected on Thursday given the scale of the proposals.
• INDUSTRIALS: LG Energy (373220 KS) reported Q2 operating profit KRW 113.3bln (exp. 210.7bln), Q2 revenue KRW 7.56tln (exp. 7.22tln); operating profit fell 77% Y/Y as sluggish EV demand continued to weigh on battery sales.
• HEALTHCARE: Genmab (GMAB DC) said the European Commission granted marketing authorisation for TEPKINLY (epcoritamab) in combination with lenalidomide and rituximab for the treatment of adult patients with relapsed or refractory follicular lymphoma. AbbVie (ABBV) said Q2 prelim adj. EPS is seen between 3.57-3.61 (exp. 3.79); the range includes USD 291mln of acquired IPR&D and milestone expense on a pre-tax basis, representing an unfavourable impact of 0.17/shr; ABBV also lowered its FY26 guidance; sees adj. EPS between 13.91-14.11 (exp. 14.28; prev. saw 14.08-14.28), reflecting the impact of Q2 expenses.
• NOTABLE BROKER UPDATES: DuneIm (DNLM LN) initiated with Neutral rating at BNP Paribas; Rentokil (RTO LN) upgraded at Goldman Sachs; Legrand (LR FP) upgraded at Barclays; Ferguson (FERG LN) downgraded at Goldman Sachs; ITV (ITV LN) downgraded at JPMorgan.

DAY AHEAD:

• EVENTS: NATO Ankara Summit underway; President Trump to meet Turkish President Erdogan bilaterally before attending the NATO Leaders’ Social Dinner.
• DATA: In North America, weekly ADP employment figures will be published (the prior weekly figure stood at 30,750). The US trade deficit is expected to widen to USD -78.0bln in May (from USD -55.9bln); The NY Fed Survey of Consumer Expectations for June is due; after today’s data, the Atlanta Fed will update its Q2 GDPNow tracking estimate (which currently tracks growth of 1.20%). Canada’s trade balance is seen little changed at CAD 2.7bln (prev. CAD 2.72bln); Canada Ivey PMI is seen edging up to 59.1 in June (prev. 58.2).
• CENTRAL BANKS: The BoE will publish its Financial Stability Report. BoE’s Mann (hawkish) takes part in a leadership panel. Fed’s Bowman (voter) is due to give opening remarks.
• SUPPLY: US auctions USD 58bln of 3-year notes. UK auctions GBP 4bln of 2033 Treasury debt; Germany auctions EUR 0.5bln of 2027 Green, and EUR 1bln of 2041.
• ENERGY: EIA Short-Term Energy Outlook published. API weekly energy inventories due after hours.