EUROPEAN OPEN: UK defence names in focus after Healey appointment; NOVN SW Q2 earnings beat, guidance reaffirmed; CMA seeks comments on MKC-ULVR LN deal; VOW3 GY advances Skoda India stake talks; AIR FP remains on track for delivery target

EUROPEAN OPEN:

• European equities opened flat/mixed. Overnight, APAC stocks were also mixed following the subdued handover from the US amid higher oil prices and yields; reports overnight suggested that China is deploying regulators, state-backed investors, insurers and asset managers to stabilise markets after a technology-stock selloff, Bloomberg reports; Beijing aims to prevent declines in AI and semi shares from undermining broader confidence, amid concerns over high chip valuations and CXMT’s planned listing.
• In geopolitics, the US and Iran exchanged strikes for a 10th day as Pakistan and Qatar sought a truce. Iran attacked US sites, including an Amazon (AMZN) facility in Bahrain, while Washington targeted command centres, launch sites and air defences. Shipping risks have also widened as the Houthis threatened Saudi-bound Red Sea traffic. A senior US official told Fox News that US President Trump is expected to decide whether to expand military operations against Iran in the coming days. Officials described two options: a new 10-day ceasefire to reopen the Strait of Hormuz or full-scale war. Expanded strikes could include Tehran and nuclear sites, a US official said.
• Crude futures edged lower, despite the renewed US strikes on Iran; analysts cited hopes for a renewed US-Iran ceasefire, which has somewhat eased supply concerns. Goldman Sachs warns that Brent could exceed USD 120/bbl if Strait of Hormuz disruptions persist; the bank’s base case assumes normal flows by end-July, while prolonged disruption, geopolitical tensions or OPEC+ changes could drive prices higher, it said.
• Gold rose on dip-buying as traders assessed Middle East clashes and their potential inflationary impact via energy prices; bullion traded near USD 4,080/oz after Monday’s fall. Iron ore fell for a second day as weaker Chinese steel mill profitability and US-Iran tensions clouded demand; China Mill profitability fell to 37.2%, with lower blast furnace activity and rising inventories increasing expectations of production cuts, Bloomberg said.
• UK PM Andy Burnham is set to unveil his first policy measures on Tuesday, with cost-of-living support and funding details as his first cabinet meets, with steps potentially including bus fare caps and energy cost reductions. The government will reportedly remove VAT from electricity bills from 1st October, funded by cancelling the Digital ID programme, which will form part of a broader package of tax cuts. Traders are watching closely after 30-year gilt yields hit a two-month high on Monday following comments about using “flexibility” within existing fiscal rules. Burnham has appointed former defence minister John Healey as Chancellor, a move analysts suggest is intended to reassure NATO allies on defence spending commitments; Ed Miliband was appointed Foreign Secretary, and Wes Streeting as Defence Secretary, while Angela Rayner takes the Housing Secretary role.
• In data, the UK jobless rate was unchanged at 4.9% in May, in keeping with expectations, as the economy added 147k jobs (exp. 85k); average earnings ex-bonuses were unchanged at 3.4% Y/Y, in line with the consensus, while the measure that includes bonuses eased to 4.3% Y/Y (exp. 4.5%, prev. 4.4%). The timelier claimant count for June printed 6.7k (exp. 28k), while the HMRC payrolls change in June printed -4k (prev. 2k).

STOCK SPECIFICS:

• INDUSTRIALS: Of note for defence names, UK PM Burnham appointed former defence minister John Healey as Chancellor, a move analysts suggest is intended to reassure NATO allies on defence spending commitments. Airbus (AIR FP) CEO said it remains on track to meet its FY target of 870 aircraft deliveries after H1 2026 deliveries increased 15% Y/Y. Schindler (SCHN SW) H1 revenue CHF 5.33bln (exp. 5.39bln), adj. EBIT of CHF 706mln (prev. 705mln), orders CHF 5.79bln (exp. 5.8bln); FY26 guidance was reaffirmed.
• MATERIALS: Steel Dynamics (STLD) reported Q2 EPS 3.69 (exp. 3.69), Q2 revenue USD 6.1bln (exp. 5.53bln); steel shipments reached 3.7mln tons; exec said improved pricing, solid demand and lower customer inventories supported results, while management expects strong US steel and aluminium consumption through 2026 and into 2027.
• CONSUMER: UK CMA invites comments on McCormick’s (MKC) acquisition of Unilever’s (ULVR LN) foods business, with the deadline of August 5th; a formal investigation is yet to be launched. Mercedes (MBG GY) is lobbying to raise a proposed US ownership threshold for connected-vehicle sales from 15% to 25%, Bloomberg reports; the draft law would bar automakers more than 15% owned by Chinese entities, while Mercedes-Benz is nearly 20% Chinese-owned. Volkswagen (VOW3 GY) is in advanced talks to sell a majority stake in Skoda Auto Volkswagen India to JSW Group, though valuation and investment terms remain unresolved; a deal would provide Volkswagen with capital and a local partner, while giving JSW access to Volkswagen platforms. Lindt (LISN SW) H1 sales CHF 2.33bln (exp. 2.36bln), EBIT CHF 26.2mln (prev. 259.2mln); execs said geopolitical uncertainty and market volatility hurt consumer sentiment and European tourism, while North America and Rest of the World achieved double-digit growth; it reaffirmed FY guidance. Swatch (UHR SW) reported H1 revenue of CHF 3.12bln (exp. 3.05bln), net income of CHF 16mln (exp. 84.3mln) and operating profit of CHF 52mln (exp. 131.8mln); execs said stronger momentum in May, June and July should improve production utilisation and profitability in H2. Separately, Swiss watch exports rose to 11.2% Y/Y in June (prev. 0.4%). Compass (CPG LN) reported Q3 organic revenue growth of 7.1%, client retention of 96%; reaffirmed FY26 guidance for underlying operating profit growth above 11% and organic revenue growth of around 7%.
• HEALTHCARE: Novartis (NOVN SW) Q2 net revenue USD 14.4bln (exp. 14.1bln), core EPS 2.41 (exp. 2.20), adj. profit USD 5.94bln (exp. 5.34bln); newer cancer medicines offset declining Entresto sales amid growing generic competition; skin disease pill Rhapsido sales topped estimates. CEO said it returned to sales growth in Q2, driven by continued momentum from Kisqali, Kesimpta, Scemblix and Pluvicto, and it expects several important readouts in H2; FY guidance was reaffirmed.
• FINANCIALS: London Stock Exchange (LSEG LN) plans to launch a separate night-time trading venue in H1 2027, enabling round-the-clock trading; the venue will initially offer exchange-traded products tracking UK and US markets. Barclays (BARC LN) is partnering with Samsung Electronics (005930 KS) on a new US credit card, as it moves to expand its US consumer partnerships beyond airlines, cruise operators and General Motors (GM). Julius Baer (BAER SW) H1 net income more than doubled to CHF 673mln (from CHF 295mln), while net new money reached CHF 5.7bln (exp. 5.2bln); it reaffirmed mid-term targets as it continues restructuring after losses linked to Rene Benko, and addresses an ongoing Finma enforcement proceeding; it said that de-risking effects may persist into 2027; it gave no timeline for resuming share buybacks.
• REAL ESTATE: Prologis (PLD) said met Segro (SGRO LN) management in London following a revised proposal, but said discussions failed to provide clarity on a path to a recommended transaction; the offer values Segro at 993p/shr, a 9.7% premium to its pro forma adjusted NAV of 905p; Prologis has until 17:00BST on 22nd July to announce a firm intention or stand down.
• TECH: Nvidia (NVDA) disclosed a 9.3% stake in Nebius (NBIS), comprising roughly 22.26mln shares including a warrant, obtained as part of a USD 2bln investment made earlier this year; Nvidia cannot exercise the warrant before 11th September.
• NOTABLE BROKER UPDATES: Cohort (CHRT LN) initiated with a Buy rating at Berenberg; Veolia (VIE FP) reinitiated with Neutral rating at Citi; Zurich Insurance (ZURN SW) initiated with an Outperform rating at RBC. Swedbank (SWEDA SS) upgraded at Goldman Sachs; Leg Immobilien (LEG GY) upgraded at Morgan Stanley. Intertek (ITRK LN) downgraded at Jefferies; Fraport (FRA GY) downgraded at Barclays; DNB (DNB NO) downgraded at Goldman Sachs; Lifco (LIFCOB SS) downgraded at Danske Bank.

DAY AHEAD:

• EVENTS: US Defence Secretary Hegseth will testify before the Senate Appropriations Committee on President Trump’s USD 87.6bln Iran war funding request; lawmakers are expected to question him about the failed ceasefire, three US service-member deaths and indications that Washington is escalating the conflict. UK PM Andy Burnham is set to unveil his first policy measures.
• DATA: In Europe, Germany ZEW economic sentiment (exp. 18, prev. 10.5) and current conditions (prev. -81.0); Eurozone ZEW economic is seen at 11.5 (from 9.5). In North America, weekly US ADP employment change (prev. 19.75K).
• CENTRAL BANKS: ECB publishes July Bank Lending Survey. Hungary’s MNB expected to cut rates 25bps to 5.75%.
• SUPPLY: UK auctions GBP 5bln of 2029 debt; Germany auctions EUR 6bln of 2031 Bobls.
• ENERGY: API reports weekly energy inventories. NOTE: WTI August 2026 futures expire.
• EARNINGS: Notable US companies reporting today include: Charles Schwab (SCHW), Danaher (DHR), Chubb (CB), Capital One Financial (COF), Marsh & McLennan (MRSH), 3M Company (MMM), Northrop Grumman (NOC), General Motors (GM), MSCI (MSCI), D.R. Horton (DHI), Interactive Brokers (IBKR), EQT (EQT), Halliburton (HAL), KeyCorp (KEY), Synchrony Financial (SYF), Equifax (EFX), Hasbro (HAS).