Newsquawk European Market Wrap - 4th September 2026

• DXY rose, T-notes and Equity futures fell following a healthy US jobs report.
• The probability of a 25bps Fed rate hike at the next meeting increased to ~65% from just under 50% pre-data.
• US President Trump renewed calls for sharply lower interest rates and threatened to halt trade with countries running surpluses against the US if rates remain high.

EQUITIES

• European bourses are set to end Friday's trade mixed, with the DAX 40 finishing as the outperformer, helped by the update from Volkswagen. After starting the week on a weaker footing, equities have managed to rebound slightly, with the Euro Stoxx 50 printing 3 consecutive days of gains. Brief whipsawing was seen following the US jobs report (see more below), but ultimately reversed the fleeting downside.
• Sectors continued to lack a clear bias throughout the session. Autos topped the sector pile, followed by Tech and Travel & Leisure. To the downside was Health Care, with Media and Chemicals closely behind.
• Key movers included: Volkswagen (+8.4%), Board approved further cost-cutting measures; Vivendi (-5.3%), reported H1 revenue and EBIT that fell Y/Y; Wacker Chemie (-3.4%), reportedly considering closing its US plant due to the US' trade policy; Airbus (+1.3%), reportedly reached a preliminary agreement with Spanish unions.
• US cash equities opened broadly softer across the board, given the strong jobs report. In brief, the headline was strong, and saw 162k jobs added to the US economy in August, above the expected 55k and the prior revised-up 21k. The unemployment rate was unchanged at 4.1%, as expected, while the participation rate lifted to 61.6% from 61.4%.

FX

• A broad-based hawkish reaction across all assets after a strong US labour market series, CME Fedwatch pricing moving higher by 15ppts after the data. In brief, the headline was strong, and saw 162k jobs added to the US economy in August, above the expected 55k and the prior revised-up 21k. The unemployment rate was unchanged at 4.1%, as expected, while the participation rate lifted to 61.6% from 61.4%. All eyes now turn to that CPI print next week, where a hot print should cement a Fed hike in September, as indicated by recent Fed speak. Specifically for DXY, it rose from 99.02 to a 99.39 peak, before paring modestly to around 99.10.
• Following the data, G10s are mostly weaker against the Greenback, CHF and CAD seeing the most underperformance. JPY is flat, performing a touch better vs peers.
• CAD ended the European session the clear laggard, alongside CHF, after an unexpected downturn in employment. The headline figure printed at -41.7k (exp. +15k) after a strong +75.1k reading in July. A drop in full-time employment weighed on the headline, down 35.9k (exp. +38.6k), while part-time employment fell 5.8k (prev. +36.6k). That said, the unemployment rate remained at 6.4% as expected.
• EUR softened amid the strong US jobs report, briefly dipping below the 1.1600 handle for EUR/USD, before slightly paring back the post-NFP selloff. Focus will be on the Saxony-Anholt elections in Germany. Polling has AfD clearly in the lead with 40-43% of the vote; if materialised, will add to the pressure on the German Grand coalition nationally, though not change the power balance or impact economic/fiscal policy.
• GBP saw modest weakness on the DMP, which showed easing 1yr inflation expectations, though the reaction was limited to around ten pips. GBP/USD topped at 1.3549 early in the session, fell to a trough of 1.3484, before paring back marginally to close back above the 1.3500 mark.

FIXED INCOME

• Fixed benchmarks initially started the European morning with tentative action, trading on either side of the unchanged mark. This theme remained into afternoon trade, before then reacting to the US Jobs Report.
• The US jobs report was strong, and heightened traders' bets for a September Fed rate hike, with an implied probability of a 25bps hike now priced with 65% probability (vs 50% pre-release). The headline was strong, and saw 162k jobs added to the US economy in August, above the expected 55k and the prior revised up to 21k. The unemployment rate was unchanged at 4.1%, as expected, while the participation rate lifted to 61.6% from 61.4%.
• In an immediate reaction, global fixed benchmarks were pressured. USTs fell from 107-24 to a trough of 107-08, before stabilising around 107-12. The US 10yr now resides around the 4.77% mark; now markets will be awaiting the US CPI report next Friday, which will be a key determinant on whether the Fed decides to hold or hike this month.
• Bunds (+19 ticks) and Gilts (+20 ticks) gained throughout the session, benefiting from lower energy prices. Earlier, Gilts reacted dovishly to lower 1-year ahead BoE DMP expectations. German debt will eye the Saxony-Anhalt state election. The far-right AfD are expected to win, but attention will be on whether it can achieve an absolute majority. This is because other major parties have ruled out forming a coalition with the AfD. Even if the AfD does fall short, the CDU will face the issue of forming a new coalition, potentially leading to political instability and hence reducing confidence in German debt.
• Some Chinese commercial banks have raised US dollar deposit rates above 3% and subsequently increased purchases of US Treasuries in recent months, sources suggest.

COMMODITIES

• WTI Oct and Brent Nov futures were softer intraday amid a lack of notable geopolitical updates overnight to shift the dial. The former resides in a USD 88.86-92.17/bbl range (vs yesterday’s 89.57-93.14/bbl), and the latter in a USD 93.40-96.21/bbl parameter (vs yesterday’s 94.03-97.62/bbl). Over the weekend, the OPEC+ JMMC is scheduled to meet, with market sources suggesting no changes will be made to October's overall output targets as the committee focuses broadly on market conditions and member compliance. Note, the JMMC body does not make production decisions. At the same time, the seven OPEC+ producers have completed the rollback of their combined 1.65mln BPD voluntary production cuts. Focus of this meeting will be in compliance and Middle Eastern risks.
• Precious Metals fell following the healthy US jobs report which in turn increased the probability of a 25bps Fed rate hike at the next meeting to ~65% from just under 50% pre-data. Spot gold resided towards the bottom of a USD 4,365-4,491/oz range at the time of writing, within yesterday’s parameter (USD 4,381-4,511/oz).
• Base Metals were mixed and resilient to the aforemented NFP data, with 3M LME copper eking mild gains in a narrow USD 14,283.13-14,392.73/oz.
• Citadel reportedly looking to buy US Shale oil production assets, according to sources.
• The Times reported that "Rosebank is very unlikely to be approved", government sources say.
• Iranian Oil Minister said Tehran is trying to completely bypass the blockade and when it is lifted, oil will be transferred to the other side of the Sea of Oman.
• Oil production in Kazakhstan for 2027 is planned at 96mln tonnes, IFX reported citing the budget project.
• Some Chinese rare earth suppliers have reportedly halted some US shipments over geopolitical worries, Reuters reported. US officials have repeatedly asked China to stick to commitments to ensure the smooth flow of rare earth export licences.
• US Retail Diesel prices hit new ATH, AAA data shows.
• UK Energy Secretary could recommend new North Sea drilling as soon as next week, a Rosebank oilfield announcement expected to follow, The Guardian reported, citing sources.
• Iranian Petroleum Minister said the country maintained crude production and exports throughout the 40-day war despite attacks on energy infrastructure and severe logistical disruptions, Press TV reported.
• Russia's Deputy PM Novak said China will account for more than 60% of Russia's total natural gas exports by 2030.

EUROPEAN DATA

• EZ Retail Sales (Jul YY) 0.6% vs. Exp. 1.1% (Prev. 1.4%).
• EZ Retail Sales (Jul MM) -0.6% vs. Exp. 0.3% (Prev. 0.2%).
• EZ S&P Global Construction PMI (Aug) 43.0 (Prev. 44.3).
• UK DMP 3M Output Price Expectations (Aug) 3.8% (Prev. 3.9%).
• UK DMP 1Y CPI Expectations (Aug) 3.1% (Prev. 3.0%).
• UK S&P Global Construction PMI (Aug) 44.3 vs. Exp. 45.5 (Prev. 44.7).
• UK Final New Car Registrations (Aug) 13.7% (prev. 11.7% Y/Y).
• UK New Car Sales (Aug YY) 13.7% (Prev. 11.7%).
• Italian Retail Sales (Jul YY) 0.8% (Prev. 3.1%).
• Italian Retail Sales (Jul MM) -0.4% vs. Exp. 0.2% (Prev. -0.1%).
• Italian S&P Global Construction PMI (Aug) 41.7 (Prev. 49.1).
• French S&P Global Construction PMI (Aug) 37.3 (Prev. 41.5).
• German S&P Global Construction PMI (Aug) 48.7 (Prev. 42.1).
• German Factory Orders (Jul MM) 2.5% vs. Exp. 0.3% (Prev. 3.1%).
• Swedish Current Account (Q2) 126.2B (Prev. 97.5B).

NOTABLE HEADLINES

• France to announce EUR 1bln in farmers' aid following the summer heatwaves, BFM TV reported.

TRADE/TARIFFS

• US Secretary of State Rubio will visit Colombia, Ecuador and Peru next week between 8th-10th September, the State Department said.

CENTRAL BANKS

• BoJ Governor Ueda is scheduled to address Japan’s National Securities Convention on October 6, according to Jiji.
• BoE Governor Bailey said Fed Chair Warsh is "right to see some dangers in forward guidance". Central Bankers should avoid giving unconditional guidance. We do exercise choice on how fast to bring inflation back to target, "but must do so".
• BoE DMP (Aug): 1-year CPI expectation 3.1% (prev. 3.4%), 3-year CPI expectation 2.8% (prev. 2.8%). Year-ahead wage growth 3.4% (prev. 3.4%).
• RBI is to conduct second 3-day variable rate reverse repo auction for INR 1.5tln under its LAF today.

GEOPOLITICS

MIDDLE EAST

• "Oman and Qatar are intensifying efforts to resume Iran-US talks", Nour News reported citing diplomatic sources; "the Strait of Hormuz, sanctions, and the nuclear file are the focus of new disputes".
• An Iranian army spokesperson said we will carry out pre-emptive operations wherever we feel threatened, Fars reported.
• Iranian foreign minister recently held talks with the Pakistani army chief, Al Arabiya reported citing sources.
• "Pakistan, Qatar, and Oman are continuing their contacts with Tehran and Washington to halt the escalation", Al Hadath reported citing sources.
• US Envoy Witkoff and Kushner are reportedly to travel to Kyiv and Moscow in the coming days, TASS reported citing sources.
• Kpler data shows four commodity vessels transited the Strait of Hormuz on Thursday, which is down from nine the day before and also below the 10-day average of around 15.

RUSSIA-UKRAINE

• Russia's Kremlin decline to confirm if US Special Envoy Witkoff and Kushner will visit Moscow; said the possibility of a peace settlement remains but there are no clear indications of it happening right now.
• US Special Envoy Witkoff and Kushner is to visit Russia and Ukraine on September 5th-6th, TASS reported citing sources.
• Russia launched a large-scale missile and drone attack on energy infrastructure in Ukraine’s Odesa region, Al Arabiya reported.

NOTABLE NORTH AMERICAN NEWS

• US President Trump posted "Great jobs number just announced, breaking all estimates...Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!"; renewed calls for sharply lower interest rates and threatened to halt trade with countries running surpluses against the US if rates remain high.
• US White House NEC Director Hassett praises the strong jobs report, argument for Fed to hold is pretty strong.
• Chinese President Xi is reportedly bringing a large group of CEOs in the visit to the US, Reuters reported citing sources.

NORTH AMERICAN DATA

• US Non Farm Payrolls (Aug) 162K vs. Exp. 56K (Prev. 21K); 2-month net revision +55k; Birth-Death 154K.
• US Unemployment Rate (Aug) 4.1% vs. Exp. 4.1% (Prev. 4.1%).
• US Average Hourly Earnings (Aug YY) 3.1% vs. Exp. 3% (Prev. 3.2%).
• US Nonfarm Payrolls Private (Aug) 127K vs. Exp. 45K (Prev. 71K).
• US U-6 Unemployment Rate (Aug) 7.7% (Prev. 7.9%).
• US Participation Rate (Aug) 61.6% (Prev. 61.4%).
• US Manufacturing Payrolls (Aug) 16K vs. Exp. 5K (Prev. 14K).
• US Average Hourly Earnings (Aug MM) 0.3% vs. Exp. 0.3% (Prev. 0.2%).
• US Average Weekly Hours (Aug) 34.4 vs. Exp. 34.3 (Prev. 34.3).
• US Government Payrolls (Aug) 35.0K (Prev. -50.0K).
• Canadian Participation Rate (Aug) 65.0% (Prev. 65.1%).
• Canadian Full Time Employment Chg (Aug) -35.9K (Prev. 38.6K).
• Canadian Unemployment Rate (Aug) 6.4% vs. Exp. 6.4% (Prev. 6.4%).
• Canadian Part Time Employment Chg (Aug) -5.8K (Prev. 36.6K).
• Canadian Employment Change (Aug) -41.7K vs. Exp. 15K (Prev. 75.1K).
• Canadian Average Hourly Wages (Aug YY) 2.0% (Prev. 3.0%).

NOTABLE US EQUITY HEADLINES

• Apple's (AAPL) initial foldable iPhone production is limited to just a few hundred units per day as the company and its suppliers work to ramp up output while meeting quality standards, Nikkei sources report.
• Micron (MU) said no agreement has been reached in mediation with Taiwan's Taoyuan union; second meting has been scheduled. Will share further details of additional employee rewards in the coming week.