Newsquawk European Market Wrap - 12th August 2026

European bourses are to end Wednesday's trade mixed after a choppy session as markets lacked direction.
US CPI printed in line across the board, pricing tilted marginally dovish at the time, DXY fell.
Crude futures eventually fell following continued optimism from Pakistan.

EQUITIES

European bourses are to end Wednesday's trade mixed after a choppy session as markets lacked direction. With earnings season nearing a close, markets returned to focusing on geopolitical updates. Modest upside was seen after some reports suggested that the US and Iran had agreed to extend the ceasefire; however, this was viewed as a poorly worded report rehashing earlier comments by the Pakistani Foreign Ministry, which said the ceasefire deadline could be extended. A Reuters report, citing a senior Iranian source, refuted Pakistan's comments, stating that there are no discussions over extending the US-Iran ceasefire.
Sectors remained mixed. Basic Resources topped the sector pile, with Construction and Telecoms completing the sector outperformers. Optimised Personal Care was the sector laggard, with Health Care and Consumer Products & Services remaining the underperformers.
Key movers included: Vestas (+20%), raised its FY26 guidance and announced a EUR 400mln share buyback; TKMS (+11.4%), upgraded its FY26 sales growth outlook; Balfour Beatty (+7.5%), lifted its FY26 PFO growth outlook; ABN AMRO (+5.0%), Q2 metrics beat and raised commercial NII guidance; Thyssenkrupp Nucera (-1.1%), cut FY EBIT and Revenue guidance; TUI (-0.4%), Q3 EBIT fell Y/Y.
US cash equities opened entirely in the green. A choppy but broadly positive reaction following the US CPI, which came in line with expectations. The report was modest enough to lower the chances of a September rate hike; however, markets are still pricing a 36% chance of a hike, with another inflation report due before the September Fed meeting. CoreWeave (+20%) and Supermicro (+8%) held onto their pre-market gains after the two companies raised their FY outlook above market forecasts.

G10s initially lacked a bias against the Buck through AM trade, though post-CPI, modest USD weakness emerged, benefitting most peers.
US CPI came in-line with expectations, the monthly Core rate at 0.2%, yearly figure at 2.5%; a series which gave little lead to market pricing, which retains a coin-flip view for the September FOMC, and kept Oct/Dec meeting’s pricing unchanged. USD saw some modest downside on the data, falling c. 0.2% to a 99.61 base; action which was likely led by JPY, the pair chopping 50 pips on the minute of the data without JPY specific catalysts. Following the report, Pantheon estimates the core PCE deflator rose by 0.16% in July, while Oxford Economics’ nowcast implied a 0.2% increase M/M; both outlets reiterating calls for a hold in September. Ahead of that meeting, data includes PPI tomorrow (13th August), PCE on the 26th, CPI on the 11th Sept.
No EUR move to unrevised Italian and German CPI, the single currency saw some strength on in-line US CPI , rising 15 pips on the numbers before paring half of the move within an hour. EUR/USD peaked at 1.1563, now set to complete the session around 1.1550. EUR was mostly flat against CEE, with HUF the outperformer, erasing the prior day’s losses.
SEK and CHF were the laggards vs the USD. Despite headline specific newsflow light, action was likely a function of carry funding amid the recent unwinding of JPY shorts.

FIXED INCOME

Fixed income contained at first, awaiting US CPI at that point. Action that saw benchmarks in thin ranges, of around five ticks for USTs, 15 for Bunds and marginally more for Gilts; the latter two having a slight bearish bias, vs near-unchanged for USTs.
However, as the morning progressed, a bout of pressure was seen in the USD (mainly in USD/JPY), which filtered through to the broader market and reverberated into fixed income, sparking some modest strength, enough to lift EGBs and Gilts into the green.
No move to UK and German supply thereafter, looking to US 10yr tap this evening following a robust but weaker than the prior 3yr.
The day's main event was US CPI for July. In short, the series has shifted the dial from a coin-flip in September, to marginally in favour of a hold. However, we await PPI on Thursday, before PCE, Jackson Hole, NFP and another CPI series ahead of the September FOMC.
USTs initially lifted to 108-28, firmer by 12+ ticks on the day, before retracing around half of that. Similar action was seen in peers, with Bunds breaching 125.00, but then losing the mark, and Gilts to gains of near 15 ticks before moderating.
Germany sold EUR 1.95bln (vs exp. EUR 2.5bln) 2038 and 2053 Bund. 1.0% 2038: b/c 2.01x (prev. 1.94x), average yield 3.29% (prev. 2.93%), retention 11.3% (prev. 17.9%). 1.8% 2053: b/c 1.32x (prev. 1.6x), average yield 3.65% (prev. 3.60%), retention 29.1% (prev. 38%).
The UK sold GBP 1.5bln 1.125% 2035 I/L Gilt: b/c 3.37x (prev. 3.35x), real yield 1.725% (prev. 1.515%).

COMMODITIES

WTI Sep and Brent Oct futures initially held mild gains amid a lack of constructive updates to resume oil flows through the Strait of Hormuz. Early in the session, Pakistan's Foreign Ministry said they have continued to activate direct and indirect diplomatic channels between the US and Iran and that the ceasefire deadline, which ends in 5 days, could be extended. However, a Reuters report, citing a senior Iranian source, refuted Pakistan's comments, stating that there are no discussions over extending the US-Iran ceasefire. Elsewhere, the IEA OMR forecasted an oil market deficit of around 1.8mln BPD in Q3, more than double its prior 800k BPD forecast, and noted that inventory buffers are rapidly depleting, increasing the urgency of reopening the Strait. The OPEC MOMR meanwhile was uneventful. Nonetheless, the complex gradually dipped into flat territory throughout the morning and then into the red. WTI resided towards the bottom end of a USD 82.46-84.35/bbl range (vs yesterday’s USD 84.61/bbl high), while Brent traded within a USD 88.38-90.07/bbl range (vs yesterday’s USD 90.03/bbl peak).
Spot gold surged following the US CPI report, which printed in line across the board but weighed on the USD as market pricing tilted slightly dovish, albeit the report does not shift the dial much for the Fed. Spot gold traded within a USD 4,363-4,441/oz range, inside yesterday’s USD 4,356-4,435/oz parameter.
Base Metals were firmer across the board, although gains were capped ahead of US CPI; little move was seen on the release itself. Meanwhile, ongoing hopes of Chinese stimulus kept the complex underpinned. 3M LME copper resided within a USD 14,134.03-14,252.00/t range.
OPEC MOMR (Aug): In July, crude oil production by countries participating in the DoC increased by 1.42mln BPD M/M to average about 37.66 mb/d (vs average of 36.28mln BPD in June), according to available secondary sources. World Oil Demand:. * Global oil demand is forecast to grow by 0.6mln BPD Y/Y (prev. 0.8mln BPD Y/Y) in 2026; global oil demand in 2027 is forecast to grow by about 2.2mln BPD (prev. 1.9mln Y/Y BPD). World Oil Supply: In July, crude oil production by countries participating in the DoC increased by 1.42mln BPD M/M to average about 37.66 mb/d (vs average of 36.28mln BPD in June), according to available secondary sources. Non-DoC liquids production (i.e. liquids production from countries not participating in the DoC) is forecast to expand by about 0.6mln BPD Y/Y in 2026, unchanged from the prior month’s assessment. The main drivers of growth in liquids production are expected to be Brazil, the US, Canada, and Argentina. Balance of Supply and Demand:. * The demand for DoC crude (i.e., crude from countries participating in the DoC) in 2026 is revised down from last month’s assessment to 42.1mln BPD, 0.2mln BPD lower than the 2025 level. The demand for DoC crude in 2027 remains unchanged from the previous month’s assessment to stand at 43.6mln BPD, which is about 1.4mln BPD above the 2026 forecast.
Russia's Orsk refinery suspended processing on August 11th following a drone attack, according to sources.
ADNOC OSPs (Sep):. Murban crude USD 79.07/bbl.
Kuwait set September export crude to Asia at a USD 3.75/bbl discount.
Russia's Novorossiysk grain terminal has halted operations after being hit by an attack and damaged, sources say.

EUROPEAN DATA

German Current Account (Jun) 19.0 (Prev. 10.4).
German HICP Final (Jul YY) 2.8% vs. Exp. 2.8% (Prev. 2.4%).
German HICP Final (Jul MM) 0.9% vs. Exp. 0.9% (Prev. -0.2%).
German CPI Final (Jul YY) 2.8% vs. Exp. 2.8% (Prev. 2.3%).
German CPI Final (Jul MM) 0.8% vs. Exp. 0.8% (Prev. -0.3%).
Italian HICP Final (Jul MM) -1.0% vs. Exp. -1% (Prev. 0.0%).
Italian CPI Final (Jul YY) 2.9% vs. Exp. 2.8% (Prev. 3.0%).
Italian CPI Final (Jul MM) 0.3% vs. Exp. 0.2% (Prev. 0.0%).
Italian HICP Final (Jul YY) 2.9% vs. Exp. 2.9% (Prev. 3%).
Norwegian Consumer Confidence (Q3) -16.60 (Prev. -20.00).
Swedish Household Consumption (Jun YY) 4.3% (Prev. 2%).
Swedish Household Consumption (Jun MM) 1.6% (Prev. -0.3%).
Finnish Current Account (Jun) 2.80 (Prev. -0.60).

NOTABLE HEADLINES

SNB welcomes measures to strengthen ‘too big to fail’ regulations. "The draft version of the Liquidity Ordinance stipulates that systemically important and medium-sized banks must prepare sufficient collateral for accessing liquidity support from central banks. For the SNB to be able to provide liquidity support when needed, banks must be in a position to transfer their assets as collateral to the SNB. In order to strengthen financial stability, it is also important that as many banks as possible make the preparations to participate in the Extended Liquidity Facility (ELF), which will be available from the beginning of 2027.".
Swiss government proposes 12-year VAT hike of 0.5ppt to fund defence.
UK Treasury reportedly sees 2027 GDP growth at 0.3% if the Strait of Hormuz stays closed, according to reported.
Reform UK leader Farage abandoned potential alliance talks with Restore Britain after Restore founder Rupert Lowe refused to dismiss campaigns director Charlie Downes, according to iPaper.

TRADE/TARIFFS

Indian government officials said India will advance preferential trade agreements with Mexico, Brazil and Mercosur.
Maersk (MAERSKB DC) has warned that low Rhine water levels could worsen to the point barge transport is no longer possible.

CENTRAL BANKS

PBoC Q2 Monetary Policy Implementation Report:. To boost counter-cyclical adjustment. Will expand domestic demand, deepen financial reform and high-level opening. Continues to implement moderately loose monetary policy. Will use comprehensive tools and adjust as needed to keep liquidity ample and social financing relatively loose. Will keep Yuan exchange rate basically stable at reasonable level. China's inflation likely to maintain reasonable rebound.
The PBoC is to conduct overnight reverse repos on August 14th and between August 17th-19th.
Indian CPI (Jul MM) 0.88% (Prev. 1.03%).
Indian CPI (Jul YY) 4.45% vs. Exp. 4.5% (Prev. 4.38%).

GEOPOLITICS

MIDDLE EAST

IRGC Commander Naqdi said Iran produces more missiles daily than it fires and that, even if the war lasts years, Iran's rockets will continue to be launched until the final day. If conditions are favorable and orders are given, the IRGC must be able to push operations into enemy territory.
There are no discussions over extending the ceasefire between the US and Iran, according to reported citing a senior Iranian source; one issue being discussed is the US returning to the MoU and defining a time frame for implementation. From Iran's perspective, there was no ceasefire start date so there is nothing to extend. The US violated the interim pact 48 hours after it was reached. Absolutely no progress has been made on the potential return of the US to the MoU.
Pakistan's Foreign Ministry said there is a possibility of extending the 60-day MOU period between the US and Iran. Note, some reported citing sources suggest that the sides have "agreed" to extend the ceasefire.
Yemeni sources say the Houthis are re-bombarding the port of Mokha with ballistic missiles, Sky News Arabia reported.
IRGC said if a threat against Iran occurs again, "hundreds of thousands of miles of energy transmission lines, thousands of power plants, all US and non-US systems, and even global infrastructure connected to the Internet are at risk.", Sepah reported.
Pakistani Foreign Ministry spokesperson said “As a mediator, we remain optimistic. Not discouraged by escalations”, Journalist Mallick reported. US-Iran 60 day MoU deadline is approaching, deadline can be extended "we are not closing the chapter". Hope the parties return to dialogue.
Iranian Army official said Iran intends to maintain control and oversight of the Strait of Hormuz as a key source of its geopolitical power, Mehr News reported.
Yemeni Deputy Foreign Minister said there has been no direct or indirect negotiations with the Houthis, Al ArabyTV reported.
Pakistan said it continues to activate direct and indirect diplomatic channels between the US and Iran, Al Arabiya reported; working to bring both sides to the negotiating table in Islamabad. Pakistani Interior Minister is in Tehran to meet with Iranian officials and dialogue. Pakistani interior minister is said to have given an important message to Iran.
Israeli forces carry out large explosions in southern Lebanon, Al Jazeera reported.

RUSSIA-UKRAINE

Russia's Orsk refinery suspended processing on August 11th following a drone attack, according to sources.
Russian President Putin said Russia will retaliate if Western countries seize Russian merchant ships.
Russia said they targeted a Ukrainian forces fuel depot in Odessa.
Russia's Novorossiysk grain terminal has halted operations after being hit by an attack and damaged, sources say.

OTHERS

Japanese PM Takaichi said the Iranian President explained that efforts are being made to resolve the the Bab el-Mandab issue while engaging in dialogue with Saudi Arabia as well.
Japanese PM Takaichi held a phone call with the Iranian President, Kyodo reported, citing sources; spoke on de-escalation of tensions in the Middle East and the security of maritime transit.
North Korea on South Korea's nuclear submarine project, said "We must have the strength to respond with non-viable retaliatory attacks", Yonhap reported.
Pakistani Foreign Minister said three Pakistani citizens were killed in the Red Sea Ship attack, Sky News Arabia reported.

NORTH AMERICAN DATA

US Core CPI (Jul MM) 0.2% vs. Exp. 0.2% (Prev. 0.0%). 3dp: 0.215% (prev. -0.017%).
US CPI (Jul MM) 0.1% vs. Exp. 0.1% (Prev. -0.4%). 3dp: 0.074% (prev. -0.422%).
US CPI (Jul YY) 3.4% vs. Exp. 3.4% (Prev. 3.5%).
US CPI (Jul) 333.92 vs. Exp. 333.99 (Prev. 333.95).
US Core CPI (Jul YY) 2.5% vs. Exp. 2.5% (Prev. 2.6%).
US CPI s.a (Jul) 332.81 (Prev. 332.57).
US MBA Mortgage Applications (Aug/07) 3.6% (Prev. -2.9%).
US MBA Purchase Index (Aug/07) 157.9 (Prev. 154.0).
US MBA 30-Year Mortgage Rate (Aug/07) 6.77% (Prev. 6.81%).
US MBA Mortgage Refinance Index (Aug/07) 744.4 (Prev. 709.1).
US MBA Mortgage Market Index (Aug/07) 248.6 (Prev. 240.0).