EUROPEAN OPEN: TSMC Q1 profit tops expectations on AI demand; RI FP sees FY sales falling; EZJ LN warns of wider H1 pretax loss; TSCO LN warns war is clouding outlook; EN FP-led consortium in advanced talks for SFR

• EUROPEAN OPEN: European equities opened mostly higher, with sentiment supported by optimism around diplomacy on the Iran war and a supportive update from TSMC (TSM) aiding technology shares. Regional mediators are working to extend the US-Iran ceasefire and secure a second round of talks; both sides have reportedly agreed in principle to meet again, though no date or venue has been finalised. US Central Command said no ships evaded its blockade of Iranian ports in the first 48 hours. In crude, prices were steady as traders weighed signs the ceasefire could be prolonged and negotiations restarted, with Brent holding above USD 95/bbl and WTI near USD 92/bbl. Gold traded higher, above USD 4,800/oz. Overnight data showed China’s Q1 growth accelerated on strong exports, while March retail sales rose but slowed from February; analysts said the Iran war still poses risks to the outlook. In fixed income, Pimco said it has moved from underweight to overweight European government bonds after the recent war-driven selloff, adding exposure across global bond funds as executives pointed to mispricing caused by the rapid unwinding of crowded positions. Bloomberg reports ECB officials are leaning towards leaving rates unchanged in April, preferring to delay any judgement on whether fallout from the Iran war requires a policy response; policymakers reportedly see tighter financing conditions as helping to anchor inflation expectations, while a rate hike may have limited influence on market pricing. Analysts at Goldman Sachs now expect the ECB to deliver 25bps rate hikes in June and September 2026 (prev. saw April and June), citing expectations that energy prices will stay high through 2026, feed through materially into inflation in the coming months and keep ECB communication largely hawkish. In the UK, GDP rose 0.5% M/M in February (exp. 0.1%, prev. 0.0%), while the annual rate accelerated to 1.0% Y/Y (exp. 1.0%, prev. 0.8%). Overnight, BoE Governor Bailey said he is in no rush to raise rates, arguing it is too early to assess the economic effects of the Iran conflict, which he described as a very large energy shock whose duration will be key for inflation. Elsewhere, Chancellor Reeves is set to confirm GBP 600mln per year of energy bill support for British manufacturers.
• STOCK SPECIFICS: In tech, TSMC (TSM) reported a 58% rise in Q1 profit, topping expectations, and also posted a better-than-expected 35% rise in revenue, reflecting strong AI-driven demand; Q” guidance was above forecasts, and FY CapEx is guided towards the top-end of guidance ranges. Of note for UK tech names, ministers are reportedly seeking involvement in the EUR 5bln Scaleup Europe Fund as part of efforts to deepen ties with the EU. In consumer sectors, Tesco (TSCO LN) guided FY adj. operating profit between GBP 3.0-3.3bln (exp. 3.23bln), saying uncertainty over the Middle East conflict had widened the range; the supermarket reported revenue of GBP 66.6bln (prev. 63.63bln Y/Y), adj. EPS of 29p (prev. 27.4p Y/Y), and said it is targeting a further GBP 500mln of cost savings this year. Pernod Ricard (RI FP) expects FY sales to fall as much as 4%, citing the Iran war alongside weak demand in the US and China; the spirits maker had previously guided for H2 improvement, but reversed that outlook, marking the first time it has issued such specific FY guidance. Kering (KER FP) expects to complete a structural reset by end of 2026 as it seeks to revive growth, particularly at Gucci; targets sustainable growth by end of 2028. Entain (ENT LN) Q1 net revenue GBP 696mln (prev. 657mln Y/Y), iGaming revenue GBP 481mln (prev. 443mln Y/Y), online sports GBP 203mln (prev. 194mln Y/Y), adj. EBITDA GBP 25mln (prev. 22mln Y/Y); affirmed its FY26 outlook, sees adj. EBITDA of GBP 300-350mln, and net revenue of GBP 2.9-3.1bln. In financials, UK lenders began cutting fixed-rate mortgages this week after a month of sharp interest rate rises caused by market turmoil following the Iran war, FT reports. In materials, PPG (PPG) announced global price increases of up to 20% across its paints, coatings and specialty products portfolio, citing volatility and supply constraints in petrochemical, energy and transport markets. Heidelberg Materials (HEI GY) said revenue and order intake remained on track, but the geopolitical situation hurt operating performance towards the end of FY25/26; now expects adj. EBITDA margin of about 6.6% (prev. saw 7.1%), based on preliminary figures. In industrials, a consortium led by Bouygues (EN FP) is in advanced talks on a potential deal for Altice’s French telecom business SFR; Patrick Drahi is seeking a valuation above EUR 20bln; an announcement could come in the next few days if negotiations progress. A US House Select Committee on China says Airbus (AIR FP) Space unit likely provided satellite imagery of US military assets to China before Operation Epic Fury commenced. Carnival’s (CCL) Princess Cruises said it signed agreements with Fincantieri (FCT IM) to build three new cruise ships on a next-generation platform, with deliveries planned for late 2035, 2038 and 2039. EasyJet (EZJ LN) warned of an H1 headline pretax loss of GBP 540-560mln (prev. GBP 394mln), citing surging fuel costs from the Middle East war and higher legal provisions; the airline saw GBP 25mln in additional fuel costs in March due to the conflict, and GBP 30mln in higher legal provisions. In energy, Repsol (REP SM) is set to take back operational control of its Venezuelan oil assets and boost production following an agreement with the country’s government. In healthcare, a Cochrane review found Alzheimer’s drugs targeting amyloid do not meaningfully slow cognitive decline in patients with mild symptoms, raising questions over treatments from Eli Lilly (LLY) and  (ESAIY). In notable broker updates, Kingspan (KGP LN) was initiated with Neutral at Goldman Sachs; BP (BP/ LN) was upgraded at UBS; Antofagasta (ANTO LN) was downgraded at Berenberg; Telia (TELIA SS) was downgraded at Kepler. Going ex-dividend today: Games Workshop (GAW LN), Antofagasta (ANTO LN), Convatec (CTEC LN), Diageo (DGE LN), LSEG (LSEG LN).

TODAY’S AGENDA:

• DAY AHEAD: In geopolitics, US Defense Secretary Hegseth and General Caine will hold a press briefing about US military operations in the Middle East at 08:00EDT/13:00BST. In data, Swiss producer/import prices, SNB minutes, Italian final CPI/HICP, Norges Bank’s lending survey, final Eurozone CPI, ECB minutes and Polish CPI stats are due. Stateside, weekly initial (215k expected from 219k) and continuing claims (exp. 1.84mln from 1.794mln(, NY Fed services activity, Philly Fed manufacturing, industrial (exp. +0.1% m/M) and manufacturing production (exp. 0.1%) are due. In energy, EIA will report weekly natural gas stocks data. On the speaker slate, ECB’s chief economist Lane (dovish), markets chief Schnabel (hawkish) and Nagel (hawkish); Riksbank’s Jansson; Fed’s Williams (voter) will speak at a Federal Home Loan Bank of New York event, and Miran (voter, dove) will speak on the global outlook; BoE’s Taylor (dove). In supply, Spain will sell EUR 5-6.0bln of 2031, 2033 and 2041 debt; France will sell EUR 11-13.0bln of 2029, 2031, 2032 and 2033 debt, as well as EUR 1.5-2.0bln of 2038, 2039, 2043 and 2053 OATei; UK will sell GBP 900mln of 2049 linkers; the US Treasury will announce sizes for next week’s 20yr Bond and 5yr TIPS auctions (analysts aren’t expecting any changes). Notable corporates reporting today include: Netflix (NFLX), PepsiCo (PEP), Abbott (ABT), Charles Schwab (SCHW), Prologis (PLD), Bank of New York Mellon (BK), US Bancorp (USB), Marsh McLennan (MRSH), Travelers (TRV), Citizens (CFG), KeyCorp (KEY), Alcoa (AA)
• PRIMER - ECB MINUTES (12:30BST/07:30EDT): On 19th March, the ECB maintained its three key rates, with the deposit rate held at 2.00%. The accompanying statement and an unusually short press conference but President Lagarde stressed that policymakers were not pre-committing to a particular path and were well positioned to navigate Middle East uncertainty. Specifically, Lagarde said they were “well positioned and well equipped”. The baseline forecasts, as of the 11 March cut-off, were contingent on market pricing at the time, which implied around 45bps of tightening across 2026; despite this implied tightening, the baseline showed a marked rise in HICP to 2.6% for 2026 (1.9% in the December MPR). However, the adverse and severe alternative scenarios saw this rise to 3.5% and 4.4%, respectively. These scenarios are notable as the conflict continues and the energy shock has increased markedly since mid-March, and given ECB sources on the day of the March announcement said the baseline was already outdated. From the minutes, participants will be attentive to any updates on what governors are looking for in terms of second-round effects and, by extension, any early insight into the timing of a hike. Since then, sources and some officials have said a move as soon as April could theoretically be appropriate, with ECBʼs Nagel, for instance, saying such a move would be warranted if the price outlook deteriorates.
• PRIMER - SNB MINUTES (08:30BST/03:30EDT): The SNB will release the minutes of its March meeting, when it kept rates steady at 0.00% as expected and formalised its stance on FX intervention. Soon after the US-Iran war began, the bank said it was “more prepared to intervene in the FX market”, a position formalised at the March meeting, highlighting that the “willingness to intervene in the foreign exchange market has increased”. Beyond FX, the statement and forecasts suggest the SNB expects higher energy prices to lift inflation in the short term. This should help ease concerns about a return to negative interest rates, although policymakers have long reiterated that the bar for such a move is high. Markets will scrutinise the minutes for clues on how policymakers view the current geopolitical environment, alongside any commentary on FX intervention.