EUROPEAN OPEN: SHEL LN trims Q1 production outlook after Qatar disruptions; BN FP explores bid for RKT LN Mead Johnson; BAYN GY sticks to FY26 guidance despite US tariffs; RCO FP launches transformation plan; CBG LN raises FCA redress cost view

• EUROPEAN OPEN: European equities futures opened higher, supported by firmer risk sentiment after the US and Iran agreed a two-week ceasefire linked to access through the Strait of Hormuz, based on proposals from both sides, with teams due to hold talks on Friday. APAC stocks and EM assets also rallied as the deal revived appetite for risk and pushed oil lower. Brent fell below USD 92/bbl before trimming some losses. Treasuries gained as lower oil prices strengthened expectations for Fed rate cuts, with 10yr yields hitting a three-week low. Gold rose above USD 4,850/oz before paring gains slightly, while copper climbed to a three-week high, and aluminium also advanced as easing concerns over global growth lifted sentiment. Bitcoin rose to a three-week high, approaching USD 73K before giving back some ground. In data, German factory orders rose +0.9% M/M in March (exp. 2%, prev. -11.1%); ex-large orders, factory orders increased 3.5%. In the UK, Halifax reported house prices fell by -0.5% M/M in March (exp. +0.1%), and the annual rate pared to 0.8% Y/Y (exp. 1.5%, prev. 1.3%); the building society said that the housing market has slowed amid uncertainty over the Middle East conflict, with higher energy prices lifting inflation expectations and mortgage rates, weakening hopes for rate cuts this year and reducing buyer confidence; it added that house prices may still prove resilient as recent mortgage rate rises have been more modest than in 2022, and many households remain on fixed-rate deals.
• STOCK SPECIFICS: In energy, Shell (SHEL LN) said Q1 results were supported by oil trading, with trading performance significantly higher Q/Q; this came despite the Iran conflict damaging its Middle East assets; it noted weaker Q1 output due to Middle East disruptions, with the impact on Qatari volumes partly offset by the ramp-up of LNG Canada, while Australia weather constraints and Qatar LNG outages also affected volumes. Trading and Optimisation is expected to be in line with Q4 2025, while it noted that long-term LNG contracts typically includes pricing lags. In healthcare, Bayer (BAYN GY) exec said it sees no need to change its 2026 forecasts due to US pharma tariffs; the company had already accounted for tariffs in its guidance, and highlighted the US-EU trade deal capping tariffs on most goods, including medicines, at 15%; the pharma company expects 2026 EBITDA before special items between EUR 9.6-10.1bln. Evotec (EVT GY) reported FY25 revenue of EUR 788.4mln (prev. 810.4mln), and EBITDA of EUR 41.1mln (prev. 52.3mln); sees FY26 revenue between EUR 700-780mln (exp. 785.1mln). In industrials, Airbus (AIR FP) EVP said airlines may speed up retirement of older aircraft as higher oil prices improve the appeal of newer, more fuel-efficient jets. In consumer sectors, Danone (BN FP) is reportedly exploring a bid for Reckitt’s (RKT LN) Mead Johnson unit with Centerview Partners, according to La Lettre; Reckitt bought Mead Johnson for USD 17bln in 2017, and it accounts for around 15% of its revenue. Remy Cointreau (RCO FP) launched a transformation plan to regain momentum in its markets and maximise the potential of its brands, in what it calls a complex economic and geopolitical environment; the plan aims to reduce dependence on macroeconomic cycles, strengthen discipline, rigour and performance focus, and sustainably improve profitability. In communications, UMG (UMG NA) confirmed it received an unsolicited, non-binding proposal from Pershing Square (PSH LN); the board and its advisers will review the proposal and its implications; it added that the board has full confidence in the company’s strategy, in Sir Lucian Grainge, and the management team. Telefonica (TEF SM) sold its Mexican unit, Telefonica Hispanoamerica, to Melisa Acquisition for USD 450mln. In financials, Close Brothers (CBG LN) said the FCA’s latest consumer redress scheme implies an estimated cost of about GBP 320mln (prev. saw GBP 294mln), broadly in line with its existing provision, so no provision change has been recognised; would lower its CET1 ratio by about 25bps to 14.0%, still above its 12-13% medium-term target. In notable broker updates, Senior (SNR LN) was downgraded at Panmure Gordon; Spie (SPIE FP) was upgraded at Morgan Stanley.

TODAY’S AGENDA:

• DAY AHEAD: The European morning will see the release of construction PMI data, ahead of Eurozone retail sales (exp. 1.6% Y/Y from 2.0%), while Eurozone PPI is seen falling -0.7% M/M (prev. +0.7%), with the annual rate expected to fall to -3.0% Y/Y from -2.1%. Stateside, weekly MBA mortgage applications data are due. In afternoon trade, the Fed will release minutes from its March confab (see below for primer). In energy, API weekly energy inventory data was said to show headline crude stocks posting a surprise build of +3.7mln bbls (exp. -1.6mln), Cushing stocks drawing down by -0.6mln bbls, distillate inventories seeing a smaller than expected draw of -0.6mln bbls (exp. -0.9mln), and gasoline inventories posting a larger than expected draw of -4.0mln bbls (exp. -1.4mln). the more widely followed DoE inventory data will be released later on Wednesday. Notable corporate earnings due today include: Delta Air Lines (DAL), Constellation Brands (STZ). In supply, Germany will sell EUR 5.0bln of 2036 Bunds; US Treasury will auction USD 39bln of 10yr notes. On the speakers' slate, Fed's Daly (2027 voter, dove) will speak on the outlook for policy and the economy; Fed's Waller (voter, dove) will deliver a speech at Bemidji State University.
• PRIMER - FOMC MINUTES (14:00EDT/19:00BST): The FOMC left rates unchanged at 3.50-3.75%, with no change to forward guidance, balance sheet plans or implementation guidance. Miran was the sole dissenter, favouring a 25bps rate cut. The statement was little changed, though it now says unemployment has been "little changed in recent months" and adds that developments in the Middle East pose uncertain implications for the US economy. The updated projections were modestly hawkish: growth forecasts were raised across 2026-2028, inflation projections were also revised higher, most notably for 2026, while the unemployment forecast for 2026 was unchanged at 4.4%, with only a slight upward revision for 2027. The median rates path was unchanged through 2028, though the longer-run fed funds estimate edged up to 3.1%. Powell's press conference came across as hawkish despite the unchanged median dots. He stressed that persistent inflation, not weak growth, remained the main concern, highlighting sticky non-housing services, the need for more goods disinflation and upside risks from tariffs, oil and the Middle East. He said rate cuts would require renewed progress on inflation, while also noting that a rate rise was discussed, although most officials did not see it as the base case. Since the meeting, policymakers have generally endorsed the hawkish hold, with most favouring keeping rates steady until inflation shows clearer progress. Cuts remain possible only if the labour market weakens, but the bar is higher after the oil and war shock. Hikes are not the base case, though several officials say they cannot be ruled out if inflation worsens. Policymakers generally see a baseline of resilient growth, moderating inflation and only gradual labour market softening, but uncertainty has risen sharply. Officials have repeatedly stressed the "fog" around the outlook and a more difficult growth-inflation trade-off, though they have said policy is well placed to wait for clearer evidence before moving. On the Middle East conflict, officials noted possible two-sided shocks: it can lift inflation through energy and supply chains while also weighing on growth, sentiment and jobs. Policymakers have said that any short-lived shock could be looked through, but a prolonged conflict would likely delay cuts and raise the risk of a more hawkish response. Meanwhile, inflation is still seen as too high and as the main policy risk. Most say there is no clear evidence yet of second-round effects or a wage-price spiral, and expectations remain broadly anchored, but many have warned that persistent oil or supply shocks could bleed into core inflation and expectations, complicating policy.