EUROPEAN OPEN: SU FP to buy SLYG GY for EUR 1.27bln; ENR GY approves EUR 2bln buyback; RIO LN plans metals trading expansion; EL FP unveils next-gen AI glasses with META; HMB SS Q3 op profit beats; MBG GY plans EUR 800mln labour savings

EUROPEAN OPEN:

• European equities start the day on the back-foot. Overnight, APAC stocks were lower following the declines in global peers, alongside the recent bond turmoil and jump in yields, owing to several factors including strong US data, hawkish Fed rhetoric and reports regarding a US diesel export ban.
• On the trade front, US President Trump welcomed Chinese President Xi with a red carpet and military flyover as Xi began a three-day US visit. The leaders then travelled to Washington. Chinese President Xi said he looks forward to in-depth exchanges with US President Trump and expanding bilateral cooperation across various areas. Xi said he is confident his US trip will produce fruitful results, adding that China and the US must be allies rather than adversaries, and expressed confidence that the two countries can find the right path to coexist in a new era. Tariffs, AI, Iran and Taiwan are among issues expected to feature in talks. US Treasury Secretary Scott Bessent said the US-China trade truce was extended to 10th January, and could simply be rolled forward if a broader deal is not reached. He said Presidents Trump and Xi are expected to meet four times this year, and that China is so far meeting its 2026 commitments.
• In geopolitics, the US reportedly dismissed Iran’s Hormuz Strait offer during UN talks, saying Tehran does not control the Strait. An Iranian Foreign Ministry spokesperson said another round of message exchanges and clarifications took place between Iran and the US via a Qatari mediator on Tuesday, during which Iran clarified its conditions for reviving diplomacy over the two-hour process.
• Oil prices pared overnight losses as the European day got underway, having fallen after Iran said it remained open to diplomacy to end the conflict.
• Yen intervention risk is back in focus as USD/JPY approaches 160. Japanese FinMin Katayama said FX principles established since joint US-Japan intervention remain in effect. She declined to comment on specific FX levels. Strategists said a rapid move through that level could increase the likelihood of official action, while lasting support may depend on US participation and further BoJ tightening.
• Gold held near USD 4,280/oz after falling on Wednesday amid stronger US data, higher oil prices, rising Treasury yields on increased Fed hike expectations.
• In ECB-speak, ECB’s Kocher said the central bank must prevent excessively high inflation from becoming entrenched, adding that the Eurozone economy remains fragile, though he did note signs of somewhat stronger Eurozone momentum since the summer. Elsewhere, Spanish PM Sanchez backed former central banker Pablo Hernandez de Cos to become the next ECB President.
• In UK fiscal news, PM Burnham signalled reluctance to repeat recent large tax rises as Chancellor Healey prepares the 28th October Budget; Burnham said the government must balance revenue needs after two tax-raising budgets, while higher borrowing costs and the Iran war have reduced fiscal headroom. Healey may accept a smaller fiscal buffer to limit tax rises in the 28th October Budget, according to the FT; the Treasury and Number 10 are debating lower headroom than the GBP 23.6bln forecast in March; analysts estimate around GBP 14bln could be tolerated.

STOCK SPECIFICS:

• INDUSTRIALS: Schneider Electric (SU FP) will acquire smart device maker Shelly Group (SLYG GY) for EUR 70/shr, valuing Shelly at around EUR 1.27bln ex-debt. Siemens Energy (ENR GY) approved a share buyback of up to EUR 2bln, starting 24th September.
• MATERIALS: Rio Tinto (RIO LN) plans to expand metals trading by increasing third-party purchases and sales and using derivatives to hedge exposures, according to Bloomberg. Focus areas include alumina and North American copper. Rio said marketing its own production remains core, while third-party trading is intended to improve infrastructure utilisation and profitability.
• ENERGY: Shell (SHEL LN), Petronas, PetroChina, Mitsubishi and Korea Gas are poised to approve doubling LNG Canada’s capacity to 28mln tonnes annually; a final investment decision could come as soon as next week, though the project said approval remains subject to commercial, fiscal, regulatory and governance requirements.
• HEALTHCARE: EssilorLuxottica (EL FP) unveiled the next gen of AI glasses with Meta Platforms (META), announcing a new line of audio glasses, a third generation of Ray-Ban Meta, as well as new models, features and geographies for existing products. UK NICE recommended Sanofi’s (SAN FP) Sarclisa (isatuximab) with pomalidomide and dexamethasone for adults with relapsed and refractory multiple myeloma.
• CONSUMER CYCLICAL: H&M (HMB SS) Q3 2026 revenue SEK 57.2bln (exp. 57.1bln), operating profit SEK 6.04bln (exp. 5.27bln), net income SEK 4.1bln (exp. 3.56bln); operating margin rose to 10.6% (from 8.6% Y/Y). Operating profit included a positive one-time tariff effect. September sales are seen up 1%. Christian Dior (CDI FP) said the Arnault family plans to simplify the structure holding LVMH (MC FP) by consolidating control under Agache SCA after Christian Dior is delisted; Agache would hold 49.76% of LVMH and 65.55% of voting rights, representing almost the entire Arnault family stake. ACEA said EU car registrations totalled 832,637 vehicles in August (+5.3% YTD), with electrified models accounting for over 73% of new registrations; battery-electric registrations +52% Y/Y in August, including 75% growth in Germany, while petrol and diesel registrations -23.5% Y/Y and -23.1% Y/Y, respectively; Chinese brands reached nearly 12% European market share. Mercedes-Benz (MBG GY) plans to save up to EUR 800mln in labour costs, according to WirtschaftsWoche; potential measures include increasing working hours, reducing or eliminating holiday and Christmas bonuses, and foregoing special payments.
• CONSUMER DEFENSIVE: Of note for tobacco stocks, the Trump administration reportedly plans to revise FDA rules to speed authorisations for newer tobacco products including flavoured vapes and nicotine pouches; changes could simplify scientific study requirements, and shorten reviews.
• TECH: TSMC (TSM) is reportedly planning a 3-6% wafer foundry price increase for 2027; supply chain sources cited by Digitimes said the company’s order visibility now extends to 2030.
• EX-DIVS: Going ex-dividend today: Standard Life (SDLF LN), Computacenter (CCC LN).
• NOTABLE BROKER UPDATES: MTU Aero Engines (MTX GY) upgraded at Citi; Covivio (COV FP) upgraded at Societe Generale. Getinge (GETIB SS) downgraded at Pareto; Segro (SGRO LN) downgraded at Societe Generale; Smiths Group (SMIN LN) downgraded at Citi; BMW (BMW GY) downgraded at HSBC.

DAY AHEAD:

• EVENTS: US President Trump will greet Chinese President Xi at 10:00EDT/15:00BST, leaders will give remarks at 10:15EDT/15:15BST, with bilateral meeting at 11:30EDT/16:30BST; they will also speak at State Dinner at 19:55EDT/00:55BST.
• DATA: In Europe, Germany September Ifo is due, with the business climate seen at 89.0 (prev. 88.8), expectations at 89.3 (prev. 89.1), current conditions at 89.0 (prev. 88.5). UK CBI distributive trades (prev. -48). In North America, US weekly initial jobless claims (exp. 201K, prev. 196K) and continuing claims (exp. 1,750K, prev. 1,730K); new home sales (prev. 0.607mln; prev. -10.5% M/M); the Q2 current account (prev. USD -226.8bln); Kansas City Fed manufacturing (prev. 17), and composite (prev. 10). Canada releases retail sales data for July (exp. -0.8% M/M, prev. 0.6%).
• CENTRAL BANKS: Norges Bank expected to hike 25bps (exp. 4.50%, prev. 4.25%); Riksbank (exp. 1.75%, prev. 1.75%), SNB (exp. 0%, prev. 0%) and Banxico (exp. 6.5%, prev. 6.5%) all expected to hold. Norges Bank’s Bache and Riksbank’s Thedeen speak post-decision; SNB’s Schlegel post-announcement. Fed publishes its September Senior Loan Officer Opinion Survey (SCOOS). There is a busy slate around the macro policy forum: BoE’s Lombardelli (neutral) delivers remarks; BoE’s Dhingra (dove) on a panel and Breeden (dovish) in a fireside chat. Fed’s Williams (neutral), Barkin (2027 voter, neutral), Hammack (2026 voter, hawk) and Paulson (2026 voter, neutral) all speak. ECB’s Schnabel (hawk) holds a conversation (no text), and chief economist Lane (dovish) delivers a lecture (slides released). ECB publishes Economic Bulletin Issue 6/2026.
• OPTION EXPIRIES: Gilt Sep 2026 futures; Bund, Bobl and Schatz Oct options on Dec futures; Gold, Silver and Copper Oct 2026 options; Brent Nov 2026 options.
• SUPPLY: US sells USD 44bln of 7yr notes, and a 20-30 year liquidity support buyback. Italy auctions EUR 2.25-2.5bln of 2028 BTPs and EUR 1.5-2bln of 2031 and 2037 BTPeis.
• ENERGY: EIA reports weekly natural gas stocks change (prev. +44bcf).
• EARNINGS: Notable corporates reporting today includes: COST, DRI.