BoE and BoJ decisions to come – Peak earnings flow

EU mid-market update: BoE and BoJ decisions to come; Peak earnings flow; Russia heavy hits Ukraine and scares Poland on border; Awaiting post-earnings hyperscalers' issuance to finance AI Capex.

Notes/observations

- European indices are mostly higher this morning after Wednesday's mixed session, with the heavy earnings slate - and a run of guidance upgrades - providing the main support, offsetting the drag from rising bond yields post-Fed and continued Middle East tensions. The 30-year Bund yield touched a two-month high tracking Treasuries, sterling is softer into the BoE, and the dollar has recovered from Wednesday's one-week low. Asia was mostly lower (Nikkei +1.0% the outlier), but crucially the extreme Korean volatility has faded. With energy prices contained despite fresh US strikes on Iran, the tape is trading earnings first, macro second - with the BoE at midday and Apple/Amazon plus US Core PCE tonight the next catalysts.

- Fed held as expected, but three dissenters voted for a hike and Chair Warsh doubled down on his no-forward-guidance approach, telling markets to "play the ball, not the referee." The reaction was sharp: 10-year yields rose ~10bps during the presser and the 30-year hit a 19-year high (5.24%), with the curve steepening. Sell-side consensus is that markets are challenging the Fed's inflation-fighting credibility and must adjust to a high-uncertainty communication regime, a drag on equities, long bonds and the dollar, which still prices a hike by year-end.

- AI spend divides winners and losers. Meta fell ~8% on earnings miss and soft revenue guidance, with soaring AI capex and four-year-low FCF reviving ROI scrutiny. Microsoft jumped +9% after hours on EPS/revenue beats, Azure strength and Cloud revenue topping $100B, proof some hyperscale's are monetizing the AI build. Qualcomm slid ~5% on a miss and weak outlook. Apple and Amazon report tonight, alongside US Core PCE and prelim Q2 GDP.

- During its earnings call, Samsung said it sees memory shortage is structural through 2028: AI demand will outrun supply, HBM4 revenue more than triples next quarter under multi-year contracts that already lock 60–70% of capacity with prepayments and price floors, while advanced foundry nodes sit at peak utilization. Microsoft is answering the same scarcity with 31 new data centers this quarter and ~$175B of 2026 CapEx, monetizing every incremental GPU almost immediately as Azure guides near 45% growth and commercial RPO surges 84% to $678 billion. Meta is spending $130–145B this year in attempt to maximize near-term capacity yet deliberately postponing large 2028+ chip commitments, acknowledging it has “nowhere near enough” compute and is already being offered premiums to sell excess. Reminder: weeks ago FT reported that Meta was exploring a large equity (stock) offering - potentially tens of billions of dollars - to help fund its surging AI infrastructure CapEx. The three calls describe one tightly coupled market: hyperscalers front-load CapEx because demand remains extreme and short-cycle hardware can still be throttled, while Samsung converts that urgency into locked volume, pricing power, and multi-year visibility.

- EU earnings barrage: upgrades outweigh misses. Guidance raises dominated: Sanofi, Schneider, Capgemini, Accor, Adidas, UCB and Rolls-Royce all lifted outlooks, while banks impressed, SocGen (€1.5B buyback), BBVA (€2.0B buyback), Erste and Lloyds. Shell beat with a $3B buyback. Softer spots: BMW confirmed 8K job cuts, while Atos, Technip Energies and Air France cut guidance and ArcelorMittal missed.
- For macro, Q2 GDP beat across Germany, Italy and Spain, though hot Spanish and German state CPI prints keep inflation in focus ahead of tomorrow's Eurozone reading.

- Other key themes: US strikes on dozens of IRGC targets drew a muted crude response amid de-escalation signals from Saudi and reported US-Iran talks, though reports of China shipping rocket launchers to Iran add friction. Poland scrambled jets amid Russian strikes on Kyiv, with a missile reportedly crashing on Polish (NATO) soil. Korea stabilized after its leveraged-ETF rout (Kospi -0.4%), though SK Hynix fell another 5%. BoE decides at midday (hold expected, focus on the vote split) with the BoJ Friday.

- Asia closed mixed with KOSPI underperforming -1.2%. EU indices +0.2-1.3%. US futures +0.3-0.6%. Gold 0.0%, DXY +0.1%; Commodity: Brent -0.4%, WTI -0.2%; Crypto: BTC -0.5%, ETH -0.3%.

Asia

- South Korea July Business Manufacturing Survey: 103.2 v 101.2 prior.

- New Zealand July ANZ Business Confidence: 56.1 v 36.6 prior.

- Australia Jun Building Approvals M/M: +7.2 v -0.5%e.

- Australia Q2 Export Price Index Q/Q: 1.1% v 0.8%e; Import Price Index Q/Q: 5.7% v 0.0%e.

- Japan cabinet cut its FY26 GDP growth forecast from 1.3% to 0.9% and raised the CPI outlook from 1.9% to 2.2%, citing higher oil prices.

- Japan PM Takaichi announced a plan to lower the consumption tax rate on food products to 1% from April 2027.

Global conflict/tensions

- US launched a new wave of strikes against Iran on Tuesday night in response to recent attacks on U.S. military bases in region.

- US Def Sec Cooper said to have presented Trump on option for a 10- to 14-day air campaign aimed at severely degrading Iran’s missile capabilities

- China said to send 400 rocket launchers to Iran in a “secret deal“ arms agreement.

Americas

- FOMC left the Target Range unchanged between 3.50-3.75% (as expected) for its 5th straight pause under the current phase of its easing cycle. Statement noted that the Vote to keep policy steady was 9-3, with three dissenters, Hammack, Kashkari, and Logan who preferred to raise rates by 0.25%. Economic activity was expanding at a solid pace despite elevated uncertainty that owed, in part, to the conflict in the Middle East. Inflation remained elevated relative to the Committee's 2% target, in part reflecting supply shocks that had driven price increases in certain sectors, including energy.

- Fed Gov Warsh post rate decision press conference noted there was no soft inflation target; Markets were learning to play the ball, not the referee (market rates were doing the Fed's work); Where necessary and appropriate the Fed would not hesitate to act. Discussed a lot on recent economic shocks. (**Note: remarks were taken as a dovish surprise, yields dropping in response).

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE +0.53% at 10,966.75, DAX +0.13% at 25,483.07, CAC-40 +0.91% at 8,484.76, IBEX-35 +1.20% at 19,622.43, FTSE MIB +0.04% at 51,466.00, SMI +0.06% at 14,494.50, S&P 500 Futures +0.30%].

Market focal points/key themes: European shares trade slightly higher in early Thursday trade as a flood of impressive corporate results, headlined by Shell’s blockbuster earnings, largely neutralized macro uncertainty and geopolitical risks. The STOXX 600 hovered near the flatline, with Germany’s DAX down a modest 0.2% while France’s CAC 40 climbed nearly 1%, reflecting a classic earnings-driven resilience amid mixed signals from the Federal Reserve, which kept rates on hold but offered no clear guidance on future cuts or hikes. Shell stood out sharply, more than doubling its second-quarter adjusted profit to $9.8 billion and beating forecasts comfortably thanks to strong operational performance and trading gains, which gave energy stocks and the broader market an early lift. Other notable positives included record profits at Societe Generale, solid beats from BBVA and Amundi in financials, Schneider Electric’s raised guidance on energy infrastructure demand, and reassuring updates from ArcelorMittal, while technology sentiment held up better after Samsung and Microsoft results even as Meta’s sharp drop in free cash flow raised fresh questions about AI spending. On the downside, Adidas tanked more than 17% after weak profits and a new CFO announcement, with mixed results also hitting Renault, Capgemini, and Sanofi. Markets were also watching rising tensions after fresh U.S. strikes inside Iran and preparing for the Bank of England rate decision later in the day.

Equities

- Consumer discretionary: Adidas [ADS.DE] -17.0% (earnings; new CFO).

- Consumer staples: AB InBev [ABI.BE] -2.0% (earnings).

- Energy: Shell [SHEL.UK] +1.5% (earnings; buyback).

- Financials: Societe Generale [GLE.FR] +2.5% (earnings).

- Healthcare: Sanofi [SAN.FR] -3.0% (earnings).

- Industrials: Rolls Royce [RR.UK] +5.5% (earnings), BMW [BMW.DE] +1.5% (earnings).

- Technology: ASML [ASML.NL] +1.5% (Samsung, Meta and Microsoft results), Capgemini [CAP.FR] -1.5% (earnings).

- Materials: ArcelorMittal [MT.NL] +1.0% (earnings).

Speakers

- France Fin Min Lescure noted that Q2 GDP reading supports 2026 growth forecast of 0.7% but could be difficult to reach the 5% budget deficit to GDP target.

- Japan PM Takaichi pledged to finance sales tax cut without relying on debt; would review revenues and expenditures in budget process.

- China held its July Politburo meeting which reiterated the govt’s moderately loose monetary policy and a more proactive fiscal policy as it sought to expand domestic demand.

- China President X Economic Work Seminar comments reiterated govt stance to expand domestic demand; look to introduce incremental policies at the suitable time.

- Pakistan official noted that talks with US-Iran were were still ongoing in regards to de-escalation of the situation.

Currencies

- USD was steady in the session as markets debated the Fed decision and press conference. Fed held rates steady in a divided decision amid doubts about the monetary path. Fed Gov Warsh again refused to offer any clues about future moves. Warsh instead stated that he wanted markets to “play the ball, not the referee”. Warsh pointed out the market had effectively raised by 2 hikes in recent months without the Fed having to move at the front end of the curve.

- EUR/USD at 1.1455 by med-session as EU GDP data was resilient but inflation readings coming in ‘hot’.

- GBP/USD at 1.3375 ahead of the BOE rate decision later today. MPC vote seen at 7-2 to keep policy steady. Chief Economist Pill and MPC member Greene viewed as dissenters with risk that another policymaker would back a hike.

- USD/JPY at 163.50 as Japan pledged to finance sales tax cut without relying on debt; Markets appeared skeptical about the Fed's commitment to reducing price pressures. Oil prices remained elevated. The 10-year German Bund yield last at 3.17%, France 10-year Oat at 3.97% and 10-year Gilt yield at 5.03%; 10-year Treasury yield: 4.69%; 10-year JGB: 2.78%.

Economic data

- (FI) Finland Jun GDP Indicator Y/Y: 1.8% v 2.7% prior.

- (FI) Finland Q2 GDP Indicator Q/Q: 0.9% v 0.9% prior.

- (FR) France Q2 Preliminary GDP Q/Q: 0.2% v 0.2%e; Y/Y: 0.9% v 0.9%e.

- (FR) France Jun Consumer Spending M/M: +0.4% v -0.1%e; Y/Y: 0.1% v 0.1%e.

- (SE) Sweden Jun Retail Sales M/M: 1.0% v -0.1% prior; Y/Y: 6.6% v 8.1% prior.

- (SE) Sweden May Non-Manual Workers Wages Y/Y: 2.8% v 3.2% prior.

- (FI) Finland May Final Trade Balance: -€0.9B v -€0.9B prelim.

- (DK) Denmark Jun Unemployment Rate: 2.7% v 2.7% prior; Gross Unemployment Rate: 3.1% v 3.1% prior.

- (HU) Hungary Q2 Preliminary GDP Q/Q: 0.4% v 0.8%e; Y/Y: 1.7% v 1.9%e.

- (HU) Hungary Jun Trade Balance: €1.3B v €1.2Be.

- (FR) France Q2 Preliminary Private Sector Payrolls Q/Q: -0.1% v -0.1%e.

- (ES) Spain Q2 Preliminary GDP Q/Q: 0.7% v 0.6%e; Y/Y: 2.7% v 2.4%e.

- (ES) Spain July Preliminary CPI M/M: 0.2% v 0.0%e; Y/Y: 3.5% v 3.2%e.

- (ES) Spain July Preliminary CPI EU Harmonized M/M: -0.1% v -0.1%e; Y/Y: 3.8% v 3.7%e; CPI Core Y/Y: 3.0% v 2.9% prior.

- (AT) Austria Q2 GDP Q/Q: 0.0% v 0.2% prior; Y/Y: 0.8% v 0.9% prior.

- (AT) Austria Jun PPI M/M: 0.1% v 0.5% prior; Y/Y: 3.1% v 2.8% prior.

- (CH) Swiss July KOF Leading Indicator: 103.5 v 100.9e.

- (SE) Sweden July Consumer Confidence: 97.1 v 94.2 prior; Manufacturing Confidence: 107.9 v 105.2 prior; Economic Tendency Survey: 104.7 v 102.1 prior.

- (CZ) Czech Q2 Advance GDP (1st of 3 readings) Q/Q: 0.4% v 0.5%e; Y/Y: 2.0% v 2.2%e.

- (TR) Turkey July Economic Confidence: 99.8 v 98.9 prior.

- (TR) Turkey Jun Unemployment Rate: 7.6% v 8.1% prior.

- (NL) Netherlands Q2 Preliminary GDP Q/Q: 0.4% v 0.4%e; Y/Y: 1.3% v 1.4% prior.

- (DE) Germany Q2 Preliminary GDP Q/Q: 0.2% v 0.1%e; Y/Y: 0.9% v 0.6%e; GDP NSA (unadj) Y/Y: 0.9% v 0.6%e.

- (DE) Germany July CPI North Rhine Westphalia M/M: % v -0.4% prior; Y/Y: %2.7 v 2.1% prior.

- (DE) Germany July CPI Hesse M/M: +0.7% v -0.2% prior; Y/Y: 2.7% v 2.3% prior.

- (DE) Germany July CPI Bavaria M/M: +0.6% v -0.2% prior; Y/Y: 2.8% v 2.5% prior.

- (DE) Germany July CPI Brandenburg M/M: +0.7% v -0.2% prior; Y/Y: 2.7% v 2.4% prior.

- (DE) Germany July CPI Saxony M/M: +0.7% v -0.3% prior; Y/Y: 2.8% v 2.3% prior.

- (DE) Germany July CPI Baden Wuerttemberg M/M: +0.9% v -0.2% prior; Y/Y: 2.5% v 2.1% prior.

- (IT) Italy Q2 Preliminary GDP Q/Q: 0.2% v 0.1%e; Y/Y: 1.0% v 0.7%e.

- (PT) Portugal Q2 Preliminary GDP Q/Q: 0.8% v 0.1% prior; Y/Y: 2.5% v 2.4% prior.

- (PT) Portugal July Consumer Confidence: -22.6 v -25.9 prior; Economic Climate Indicator: 2.8 v 2.8 prior.

- (EU) Euro Zone Q2 Advance GDP Q/Q: 0.4% v 0.2%; Y/Y: 1.0% v 0.7%e.

- (EU) Euro Zone July Economic Confidence: 96.9 v 96.0e; Industrial Confidence: -6.1 v -7.0e; Services Confidence: 4.7 v 3.8e; Consumer Confidence (final): -15.9 v -15.9 prelim.

- (EU) Euro Zone Jun Unemployment Rate: 6.3% v 6.2%e.

- (IT) Italy Jun Unemployment Rate: 5.7% v 5.0%e.

- (BE) Belgium Jun Unemployment Rate: 6.3% v 6.3% prior.

Fixed income issuance

- (IT) Italy Debt Agency (Tesoro) sold total €B vs. €4.75-6.0B indicated range in -5-year and 10-year BTP bonds.

- (IT) Italy Debt Agency (Tesoro) sold €2.0B vs. €1.5-2.0B indicated range in Apr 2036 floating Rate Bonds (CCTeu).

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (BE) Belgium Jul CPI M/M: No est v -0.3% prior; Y/Y: No est v 3.4% prior.

- 05:30 (ZA) South Africa Jun PPI M/M: 0.2%e v 2.6% prior; Y/Y: 7.8%e v 7.8% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills; Avg Yield: % v % prior; bid-to-cover: x v x prior (xxx) (**Note: bi-monthly issuance).

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (IT) Italy Jun PPI M/M: No est v -0.5% prior; Y/Y: No est v 9.1% prior.

- 06:00 (IE) Ireland Jul Preliminary CPI EU Harmonized M/M: No est v 0.3% prior; Y/Y: No est v 3.2% prior.

- 06:00 (PT) Portugal Jun Retail Sales M/M: No est v 0.0% prior; Y/Y: No est v 1.5% prior.

- 06:00 (RO) Romania to sell RON200M in 7.25% 2040 Bonds.

- 07:00 (UK) Bank of England (BOE) Interest Rate Decision: Expected to leave Bank Rate unchanged at 3.75%.

- 07:00 (UR) Ukraine Central Bank (NBU) Interest Rate Decision: Expected to leave Key Rate unchanged at 15.00%.

- 07:00 (BR) Brazil Jul FGV Inflation IGPM M/M: No est v -0.5% prior; Y/Y: No est v 3.2% prior.

- 07:30 (BR) Brazil Jun Total Outstanding Loans (BRL): No est v 7.3T prior; M/M: No est v 0.6% prior; Personal Loan Default Rate: No est v 7.6% prior.

- 08:00 (DE) Germany July Preliminary CPI M/M: +0.7%e v -0.3% prior; Y/Y: 2.7%e v 2.3% prior.

- 08:00 (DE) Germany July Preliminary CPI EU Harmonized M/M: +0.8%e v -0.2% prior; Y/Y: 2.8%e v 2.4% prior.

- 08:00 (ZA) South Africa Jun Monthly Budget Balance (ZAR): +76.0Be v -14.6B prior.

- 08:00 (MX) Mexico Q2 Preliminary GDP Q/Q: +1.3%e v -0.6% prior; Y/Y: 1.6%e v 0.2% prior.

- 08:00 (BR) Brazil Jun National Unemployment Rate: 5.4%e v 5.6% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (UK) BOE Gov Baily post rate decision press conference.

- 08:30 (US) Q2 Advance GDP Annualized Q/Q: 2.0%e v 2.1% prior; Personal Consumption: 2.3%e v 0.5% prior.

- 08:30 (US) Q2 Advance GDP Price Index: 4.0%e v 3.6% prior; Core PCE Price Index Q/Q: 3.5%e v 4.4% prior.

- 08:30 (US) Jun Personal Income: 0.3%e v 0.7% prior; Personal Spending: 0.4%e v 0.7% prior; Real Personal Spending: 0.4%e v 0.3% prior.

- 08:30 (US) Jun PCE Price Index M/M: -0.1%e v +0.4% prior; Y/Y: 3.7%e v 4.1% prior.

- 08:30 (US) Jun Core PCE Price Index M/M: 0.2%e v 0.3% prior; Y/Y: 3.3%e v 3.4% prior.

- 08:30 (US) Initial Jobless Claims: 200Ke v 187K prior; Continuing Claims: 1.80Me v 1.796M prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- (BR) Brazil Jun Central Govt Budget Balance (BRL): -48.0Be v -53.3B prior (08:30 ET).

- 09:00 (RU) Russia Gold and Forex Reserve w/e July 24th: No est v $722.9B prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 5-year bonds.

- 18:00 (NZ) New Zealand July ANZ Consumer Confidence: No est v 91.3 prior.

- 19:00 (KR) South Korea Jun Industrial Production M/M: +2.9%e v -3.0% prior; Y/Y: 3.0%e v -0.9% prior; Cyclical Leading Index Change: No est v 0.7% prior.

- 19:01 (UK) July Lloyds Business Barometer: No est v 44.0 prior; Own Price Expectations: No est v 55.0 prior.

- 19:30 (JP) Japan July Tokyo CPI Y/Y: 1.8%e v 1.7% prior; CPI (ex-fresh food) Y/Y: 1.8%e v 1.6% prior; Tokyo CPI (ex-fresh food/energy) Y/Y: 2.0%e v 1.9% prior.

- 19:30 (JP) Japan Jun Jobless Rate: 2.5%e v 2.5% prior; Job-To-Applicant Ratio: 1.17e v 1.17 prior.

- 19:50 (JP) Japan Jun Retail Sales M/M: -1.6%e v 1.7% prior (revised from 1.9%); Y/Y: 3.1%e v 5.0% prior (revised from 5.3%); Dept. Store, Supermarket Sales Y/Y: No est v 5.0% prior.

- 19:50 (JP) Japan Jun Preliminary Industrial Production M/M: 1.0%e v 0.1% prior; Y/Y: 3.2%e v -2.1% prior.

- 21:30 (CN) China July Manufacturing PMI (Govt Official): 50.1e v 50.3 prior; Non-manufacturing PMI: 50.0e v 50.2 prior; Composite PMI: No est v 50.6 prior.

- 21:30 (AU) Australia Q2 PPI Q/Q: No est v 0.4% prior; Y/Y: No est v 3.0% prior.

- 21:30 (AU) Australia Jun Private Sector Credit M/M: 0.6%e v 0.7% prior; Y/Y: No est v 8.2% prior.

- 22:00 (SG) Singapore Jun M1 Money Supply Y/Y: No est v 8.8% prior; M2 Money Supply Y/Y: No est v 4.1% prior.

- 22:30 (SG) Singapore Jun Unemployment Rate: 2.1%e v 2.1% prior.

- (JP) Bank of Japan (BOJ) Interest Rate Decision: Expected to leave Target Rate unchanged at 1.00%.

- (JP) BOJ Quarterly Outlook for Economic Activity and Prices.

- (UK) Greater Manchester mayoral by-election.