Oil prices continue their momentum after Trump's counter-demands to Iran

EU mid-market update: Calmness transcends global trade ahead of US CPI; Oil prices continue their momentum after Trump's counter-demands to Iran; Gold prices above 2-month highs.

Notes/observations

- Effectively in a holding pattern ahead of Wednesday's US July CPI print, and the tone into it has turned distinctly less comfortable. Immediate driver is oil: with negotiations to reopen the Strait of Hormuz apparently stalled, Trump signaling he will demand war reparations from Iran after Tehran made compensation part of its own conditions, crude has stayed elevated and dragged inflation expectations up with it. Rate markets have responded accordingly. Probability of a Federal Reserve hike in September back above 50%, having briefly been scaled back after Friday's softer-than-expected nonfarm payrolls, and the hawkish Fed commentary has not let up, with Hammack arguing it is time to start acting and that "some number" of hikes will probably be needed.

- RBA left the cash rate at 4.35% for a second consecutive pause on a unanimous vote, but the accompanying message was anything but dovish. The statement reiterated the commitment to hike further if upside inflation risks materialise, flagged that CPI will not return to the target midpoint until beyond late-2027, and noted that headline inflation remains too high; Gov Bullock went further at the press conference, confirming a hike was actively discussed, warning that Middle East-related commodity cost pressures are being passed through to prices, and saying it is "quite possible" rates rise again.

- AI build-out continues to generate its own capital-markets weather. Intel upsized its equity raise to $20B from $15B at "at least" $95/share, a 6.5% discount and multiple times oversubscribed, for net proceeds of $19.7B, with a 31.6M-share greenshoe on top; that roughly matches its raised >$20B 2026 capex plan and expands the share count 4.2% before the option, so the read is a deliberate balance-sheet reset rather than routine financing, and the shares fell 4% toward the deal price. Alongside that, Nvidia is targeting a $500B third-party capital raise for AI infrastructure platforms with Apollo, BlackRock, Blackstone, Brookfield, Goldman and KKR; Anthropic is reportedly lining up a September/early-October IPO while addressing "competition from China" in pre-IPO meetings, and struck a reported $9B/191MW compute deal with Riot Platforms (+25% after hours).

- China’s CXMT has reportedly achieved yields exceeding 90% on its 17nm DDR5 chips - approaching Samsung’s comparable-node rates of roughly 92–93% and marking clear maturation from earlier levels of ~50% then ~80% - enabling more consistent volume production that is now appearing in larger quantities on the South China spot market. This is a genuine operational breakthrough for CXMT - it is closing the gap to within 2–3 points of Samsung’s mature rates on a comparable node and turning what was once unreliable, high-cost output into consistent, volume-ready chips that finally winning selective design-ins from Acer, ASUS, and even exploratory testing from Apple. Note: CXMT still trails the Big Three by a full process generation (DUV-only, larger dies, >30% higher cost-per-bit), cannot scale high-margin HBM, and its rapidly expanding capacity is largely locked by domestic buyers, so it eases China’s internal shortage without relieving the global AI-driven DRAM crunch or cracking the Western oligopoly.

- Libya's NOC has warned it will declare force majeure and halt the 120k bpd Zawiya refiner, the country's largest if drone attacks continue, a further supply-side irritant on top of Hormuz. Iran's oil minister says 95 mcm/d of gas returns to the production cycle by end-September, materially restoring the domestic system post-conflict. Ukraine is working on a rail route through Moldova to Constanța for grain, with an estimated 4.5mt annual capacity against a 38–40mt export forecast, useful but not a substitute for Odesa.

- Norsk Hydro has cut alumina output at its Alunorte refinery in Brazil - the company’s largest alumina facility with ~6.3Mt of annual capacity and a critical feedstock source for its integrated aluminium operations - to 50% of nameplate capacity after disruptions in natural gas supply from CELBA. Management estimates the production curtailment will deliver a $75–100 million negative impact on the Bauxite & Alumina segment in the third quarter of 2026, representing a sharp reversal from the plant’s above-nameplate performance and productivity gains recorded through the first half of the year. Contingency steps already under way include spot purchases of natural gas and efforts to secure direct access to the Barcarena LNG import and regasification terminal, with full production expected to resume once gas supply normalizes.

-Asia closed mixed with Hang Seng underperforming -1.1%. EU indices -0.3% to +0.2%. US futures -0.1% to +0.1%. Gold -0.4%, DXY +0.1%; Commodity: Brent +2.4%, WTI +2.7%; Crypto: BTC -1.3%, ETH -2.0%.

Asia

- Japan markets closed for holiday.

- Reserve Bank of Australia (RBA) left Cast Rate Target unchanged at 4.35% (as expected) for its 2nd straight pause under the current tightening cycle. Statement noted that the decision to keep policy steady was unanimous. Would do what was necessary to bring CPI back to target. Board would continue to raise cash rate further if upside inflation risks materialize.

- RBA-Statement on Monetary Policy (SOMP) Staff Projections raised the Dec 2026 Trimmed Mean Inflation forecast from 2.6% to 3.3% and raised the Dec 2027 Trimmed Mean Inflation forecast from 2.5% to 2.6%. Projections cut Dec 2026 GDP growth from 2.1% to 1.4% and cut Jun 2027 GDP growth from 1.8% to 1.5%.

- Australia July NAB Business Confidence: -6 v -5 prior.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 75.0 v 74.7 prior.

- Singapore Q2 Final GDP Q/Q: 1.4% v 1.1% prelim; Y/Y: 5.9% v 5.7% prelim.

- Singapore Central Bank (MAS) noted that its monetary policy stance remained appropriate and maintained its 2026 CPI forecast.

- South Korea Aug Exports 10 Days Y/Y: 45.3% v 53.9% prior; Imports 10 Days Y/Y: 23.1% v 17.4% prior.

- BOJ said to be in ‘delicate’ position to raise rates; cited factors including rising political pressure to support the bond market. (**Note: Report previously circulated that BOJ might consider an additional interest rate increase at its next policy meeting Sept. following a hike in June, in response to rising risks of higher inflation.

- New Zealand PM Luxon said to be calling a caucus meeting to resolve the rumblings about his leadership (**Note: next election schedule in Nov).

Global conflict/tensions

- Concrete deal on Iran remains elusive; Pres. Trump toughens stance and demands Iran pay compensation for people killed by Iran and proxies over the last 5 decades.

Europe

- UK July BRC Sales Like-For-Like Y/Y: 1.0% v 1.5%e.

Americas

- Fed's Hammack (voter, hawkish dissenter) stated that probably needed some number of rate hikes. Did not want to prejudge the number of hikes or where we end; Now was the time for us to start acting.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.26% at 10,834.22, DAX -0.34% at 26,265.49, CAC-40 -0.28% at 8,701.98, IBEX-35 +0.22% at 20,227.34, FTSE MIB -0.04% at 53,641.00, SMI -0.32% at 14,587.10, S&P 500 Futures -0.03%].

Market focal points/key themes: European equities held steady just below record highs as a sharp rebound in crude oil and the latest collapse in Gulf diplomacy extinguished broader risk appetite, forcing desks to manage a choppy earnings season that is now directly probing stretched technology and AI valuations. The Stoxx Europe 600 barely budged while energy names led on Brent’s climb toward multi-week highs, driven by Trump’s abrupt demand that Iran pay compensation for regional deaths before any new Hormuz transit deal with Oman can proceed—effectively freezing mediation efforts by Muscat and Qatar. Aggregate European results remain solid in healthcare, power infrastructure and defense, yet semiconductor supply chains are swinging wildly on mixed hardware reports and investors are likely increasingly refusing to underwrite heavy AI capital expenditure without near-term revenue proof. On the corporate front, Alcon jumped 3.5% after lifting its full-year forecast, PATRIZIA gained 2.5% on a 46.6% H1 EBITDA surge, and RTL advanced 2% after raising 2026 revenue guidance post-Sky Deutschland consolidation, while Equinor, Aker BP, Eni and peers rose 1.5–2.5% and Kongsberg Gruppen climbed 3% alongside Saab and Rheinmetall on the geopolitical premium. With energy-driven inflation risks colliding against slowing global growth and markets awaiting Wednesday’s U.S. CPI for confirmation that central banks can stay on hold, European benchmarks are remaining trapped in a narrow, headline-driven range until both the inflation path and Strait of Hormuz security become clearer.

Equities

- Consumer discretionary: International Workplace Group [IWG.UK] –4.5% (H1 update and reiterated 2026/medium-term outlook receive negative reaction), InterContinental Hotels [IHG.UK] –2.5% (Q2 RevPAR growth slowed and Middle East RevPAR remained weak; +1.0% premarket gain fully reversed).

- Energy: Equinor [EQNR.NO] +2.5%, Aker BP [AKRBP.NO] +2.0%, Eni [ENI.IT] +2.0%, Galp Energia [GALP.PT] +1.5%, BP [BP.UK] +1.5%, Repsol [REP.ES] +1.5%, TotalEnergies [TTE.FR] +1.5% (oil producers rise as crude gains on renewed Middle East/Hormuz concerns), Uniper [UN0.DE] +0.5% (positive H1/guidance reaction remains, but +1.0% premarket gain has faded).

- Financials: Legal & General [LGEN.UK] –3.0% (Citi Sell downgrade on valuation continues to weigh following H1 results).

- Healthcare: Alcon [ALC.CH] +3.5% (raised FY earnings forecast; initial +5.7% spike has partly faded).

- Industrials: Renk Group [R3NK.DE] +1.0%, Rheinmetall [RHM.DE] +1.0%, Saab [SAAB-B.SE] +2.5%, Kongsberg Gruppen [KOG.NO] +3.0% (European defense stocks rise on renewed geopolitical risk and positive sector/broker commentary).

- Telecom: RTL Group [RRTL.DE] +2.0% (raised 2026 revenue guidance following Sky Deutschland consolidation).

Speakers

- Sweden's NIER Think Tank updated its Economic Forecasts which raised 2026 GDP growth from 2.2% to 2.4% while maintaining 2027 GDP growth at 2.8%. Forecasts maintained the 2026 CPIF inflation forecast at 1.3% and cut 2027 CPIF inflation forecast from 2.2% to 2.1%.

- RBA Gov Bullock post rate decision press conference noted that the Board remained concerned over inflation upside risks and would raise rates further if needed.

- Bank of Korea (BOK) Sen Dep Gov Ryoo Sangdai stated that there would be additional rate hikes.

- Fitch affirmed India sovereign rating at 'BBB-'; Outlook stable.

- Iran Oil Min Paknejad: 95M cbm of gas to return to production cycle by end of Sept.

Currencies

- USD was steady in quiet trade while the overall theme was one of fading hope of a US-Iran deal taking place anytime soon. Risk aversion sentiment was creeping in and weighing on the market’s mood. President Trump said he would seek reparations for the Iran war after Tehran made its own demands for compensation as part of its conditions for reopening the strait.

- USD/JPY at 159.20 as BOJ said to be in ‘delicate’ position to raise rates; cited factors including rising political pressure to support the bond market.

- EUR/USD steady at 1.1535 and GBP/USD at 135.00 by mid-session.

- The 10-year German Bund yield last at 3.20%, France 10-year Oat at 4.02% and 10-year Gilt yield at 5.04%; 10-year Treasury yield: 4.73%; 10-year JGB: 2.79%.

Economic data

- (NL) Netherlands July CPI M/M: +1.6% v -0.6% prior; Y/Y: 3.2% v 3.1% prelim.

- (NL) Netherlands July Final CPI EU Harmonized M/M: 1.6% v 1.5% prelim; Y/Y: 3.0% v 2.9% prelim.

- (NL) Netherlands Jun Trade Balance: €B v €6.7B prior; Exports Y/Y: 3.1% v 4.8% prior; Imports Y/Y: 1.4% v 6.3% prior.

- (CZ) Czech July Final CPI M/M: 0.6% v 0.6% prelim; Y/Y: 1.7% v 1.7% prelim.

- (CZ) Czech Jun Import Price Index Y/Y: 3.3% v 3.2% prior; Export Price Index Y/Y: 1.6% v 0.8% prior.

- (TR) Turkey Jun Retail Sales Y/Y: 11.8% v 12.8% prior.

- (IT) Italy Jun Total Trade Balance: €4.2B v €4.8B prior; EU Trade Balance: €1.6B v €0.8B prior.

- (ZA) South Africa Q2 Unemployment: 33.6%% v 32.4%e.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €2.07B vs. €1.5-2.5B indicated range in 3-month and 9-month bills.

Looking ahead

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

- 5:30 (DE) Germany to sell €6.0B in 2.90% Oct 2031 BOBL.

- 05:15 (CH) Switzerland to sell 3-month Bills.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-Month Bills.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €2.8B in 3-month and 12-month bills.

- 05:30 (ZA) South Africa to sell combined ZAR2.55B in 2033, 2039 and 2042 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO) (prior €15.862B with 59 bids recd).

- 05:40 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR).

- 06:00 (US) July NFIB Small Business Optimism: 97.4e v 97.4 prior.

- 06:00 (FI) Finland to sell €1.0-1.5B in 2036 and 2045 RFGB Bonds.

- 06:30 (TR) Turkey to sell Bonds.

- 07:00 (ZA) South Africa Jun Manufacturing Production M/M: 0.2%e v 1.1% prior; Y/Y: -3.7%e v -4.3% prior.

- 07:00 (BR) Brazil Central Bank (BCB) Aug Minutes.

- 08:00 (BR) Brazil July IBGE Inflation IPCA M/M: 0.0%e v 0.2% prior; Y/Y: 4.4%e v 4.6% prior.

- 08:00 (IS) Iceland July Unemployment Rate: No est v 4.0% prior.

- 08:00 (MX) Mexico Jun Industrial Production M/M: +0.2%e v -0.8% prior; Y/Y: +0.9%e v -0.7% prior; Manufacturing Production Y/Y: No est v -1.5% prior.

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

- 08:15 (US) ADP Preliminary Employment Change for 4-weeks ending July 25th: No est v +15.0 prior.

- 08:30 (CL) Chile Central Bank Economist Survey.

- 08:55 (US) Weekly Redbook LFL Sales data.

- 09:00 (RU) Russia Jun Trade Balance (RUB): No est v $14.2B prior; Exports: No est v $42.9B prior; Imports: No est v $28.7B prior.

- 10:00 (US) July Existing Home Sales: 4.05Me v 4.09M prior.

- 11:00 (US) Fed quarterly household debt and credit report.

- 11:30 (US) Treasury to sell 6-Week Bills.

- 13:00 (US) Treasury to sell 3-Year Notes.

- 16:30 (US) Weekly API Crude Oil Inventories.

- 19:00 (KR) South Korea July Unemployment Rate: 2.7%e v 2.7% prior.

- 19:50 (JP) Japan July M2 Money Supply Y/Y: No est v 2.2% prior; M3 Money Supply Y/Y: No est v 1.5% prior.

- 21:10 (KR) Bank of Korea to sell KRW700B in 3.37% 1-Year Bonds.

- 22:30 (HK) Hong Kong to sell HK$1.75B I 1-year, 5-year and 10-year Bonds.

- 22:35 (CN) China to sell 50-Year Additional Bonds.

- 22:35 (CN) China to sell 1-month and 3-month bills.

- 23:35 (JP) Japan to sell 10-year Inflation-Linked bonds.

- (US) Primary Elections: CT, MN, VT, WI.