Quiet price action as focus remains on the Middle East and ever-eluding agreements

EU Mid-Market Update: Quiet price action as focus remains on Mid-East and ever-eluding agreements; Attention on US CPI later this week.

Notes/observations

- Muted trade, awaiting catalysts. Cash and futures are going nowhere in a hurry. US equity futures opened and stayed broadly flat even as crude jumped around 2% on fresh Iranian rhetoric, and European indices have opened mixed with only tech up 0.9%, media leads the laggards. Asia was the more constructive session, with the Nikkei outperforming +2% on a weaker yen and Korea, Hong Kong and the mainland all firmer.

- Macro calendar is thin, Euro Zone Sentix was the only real print and it surprised positively at +0.9 versus -0.5 expected. Market is positioning rather than trading: Wednesday's US CPI is the pivotal catalyst after Friday's weak payrolls, with September Fed hike odds sitting near 44%, while the RBA decision tomorrow is a 100%-priced hold where only the statement tone matters. Applied Materials, Cisco and CoreWeave report later in the week.

- Iran/US is a lot of noise, very little signal. The narrative on both sides is best treated as theatre until something moves on the ground. Pezeshkian spent the weekend selling the diplomatic line, "ties with neighbors have significantly improved", and that now is the best moment for a deal because Iran is "strong and united and seen as victorious in war", only for the Supreme National Security Council to issue six maximalist demands the following day: full US force withdrawal, an end to actions against Iran's regional network, reparations, sanctions and asset relief, an end to the naval blockade, and a cessation of hostile rhetoric. That is a domestic hardline pivot that comprehensively undercuts the President's own framing, and the IRGC has made clear the Strait stays restricted until Washington "corrects its behaviour", independent of the parallel Oman maritime talks. The White House has rejected the demands outright, while Trump characterises the US posture as deliberately "low-keying" and "only semi-negotiating", which in practice means keeping the financial squeeze and the Hormuz blockade in place. WSJ reported that Trump is reportedly willing to exit the Iran conflict without a nuclear deal if Tehran reopens the Strait of Hormuz; Bessent's suggestion that the Strait could become "irrelevant" as oil reroutes via pipelines belongs in the same category of managed messaging. Against that, press reports that the US would lift the blockade once an Iran-Oman deal lands, and Baghaei's line that reopening requires the US to end the blockade and pay compensation, are the same conditionality restated from opposite ends. Net: both capitals are performing strength for domestic audiences while quietly leaving room to trade.

- Apple is reportedly testing CXMT memory chips for potential use in iPhones and MacBooks after holding early talks focused on supplying components for devices sold in China. This comes as other PC makers including HP, Asus, and Acer have already begun incorporating limited volumes of CXMT chips into notebooks destined for non-U.S. markets. Separately, TrendForce projects that soaring memory prices will drive the iPhone 18 Pro’s BOM cost up nearly 40% year-over-year, forcing Apple to absorb part of the increase. The firm expects Apple to follow its recent MacBook approach by sacrificing some gross margin to moderate retail price hikes and protect shipment volumes.

- Maersk has announced that its AE19 Gemini Asia–Europe service will shift from the Cape of Good Hope to the Trans-Suez route, continuing the gradual normalization of the joint network with Hapag-Lloyd. This follows the earlier structural change for AE15 in July (which also added a Jeddah call) and aims to shorten Asia–Mediterranean/Red Sea voyages while boosting vessel productivity. Notably, the carriers are proceeding with the move even amid fresh Red Sea tensions, though Maersk stresses that all routing changes remain conditional on ongoing security stability.

- Elon Musk argues that AI and robotics will drive bandwidth demand far beyond human usage, with data-transfer needs orders of magnitude higher. Even if the overall communications market only doubles, he expects Starlink to capture at least 25% share outside China (and potentially inside it one day), generating over half a trillion dollars in annual revenue. Longer-term, he sees a realistic path for Starlink to handle more than 50% of global Internet traffic, which could exceed a trillion dollars a year. He notes that no clear obstacles currently stand in the way of that outcome.

- Asia closed mixed with Nikkei225 outperforming +2.2%. EU indices -0.4% to +0.1%. US futures -0.1% to +0.5%. Gold +0.1%, DXY +0.1%; Commodity: Brent +1.1%, WTI +1.0%; Crypto: BTC +0.5%, ETH +0.2%.

Asia

- China July CPI Y/Y: 0.5% v 0.8%e.

- BOJ Summary of Opinions: Vital to stop underlying CPI deviating above 2%; Must ensure nimbleness of policy decisions and be open to rate hike sizes; Cost of delaying rate hike cannot be said to be small.

- Japan Jun Current Account Balance: -¥92.3B v +¥1.514Te v ¥3.968T prior; Trade Balance (BoP Basis): -¥135,2B v -¥70.2Be.

Global conflict/tensions

- Iran foreign Min Araqchi stated that there were no talks with US, only exchanging messages. Stressed that as long as US continued to violate interim deal, there won’t be negotiations.

- Iran said it is not engaged in direct negotiations with the US over reopening the Strait of Hormuz, despite recent suggestions that a deal was close.

- Iran says reopening the Strait of Hormuz would require US compensation for war-related damage, alongside other demands including an end to pressure on Tehran’s regional allies.

- Iran replaced top security official. Mohsen Rezaei appointed head of Supreme National Security Council (replaces Mohammad Bagher Zolghadr).

- President Trump said to have privately signaled to senior aides that he was willing to walk away from the conflict without a nuclear deal with Iran.

Energy

- Iran-backed Houthis claimed responsibility for a drone strike on a Saudi Aramco refinery in Jazan.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.30% at 10,868.50, DAX +0.13% at 26,388.79, CAC-40 -0.21% at 8,696.46, IBEX-35 -0.16% at 20,155.05, FTSE MIB -0.01% at 53,711.00, SMI +0.10% at 14,559.70, S&P 500 Futures +0.14%].

Market focal points/key themes: European equity markets opened the week in a consolidative, low-volatility mood after last week’s strong rally that pushed the STOXX 600, DAX and CAC 40 to record highs. Energy stocks are outperforming (~+0.5%) and technology is leading broader gains (~+0.7%), while media names lag. Trading is subdued as investors weigh ongoing geopolitical risks against a busy data calendar. Natural gas prices rebounded firmly on renewed Strait of Hormuz concerns. Dutch TTF front-month futures rose approximately 2.9–3.6% into the mid-to-high €56–57/MWh area and UK contracts advanced about 2.6%, as Tehran maintained that full reopening of the strategic waterway still depends on additional U.S. conditions. Europe’s gas storage sits at only ~56% capacity in mid-August — well below seasonal norms — with warm weather continuing to boost power-sector demand and limit injections, keeping the region reliant on competitive spot LNG cargoes. Selective movers include strong advances in Plus500 (results), Innate Pharma (partnership news), precious-metals miners and certain semiconductor names, offset by declines in Aryzta, Vistry Group and Porsche Automobil Holding. Broader sentiment is also shaped by Friday’s weak U.S. jobs data (which lowered the odds of a September Fed hike) and the upcoming U.S. CPI release later this week.

Equities

- Consumer discretionary: Diageo [DGE.UK] +3.5% (cost-savings plans momentum), Vistry Group [VTY.UK] -8.5% (media report of Allianz Trade cutting cover for suppliers), Aryzta [ARYN.CN] -13.0% (H1 results; organic growth guided to lower end of prior range).

- Financials: Plus500 [PLUS.UK] +5.5% (H1 results), Hypoport [HYQ.DE] +1.5% (H1 results: solid gross profit growth, EBIT +20%).

- Healthcare: Innate Pharma [IPH.FR] +24.0% (Sobi strategic partnership for lacutamab Phase 3).

- Technology: STMicroelectronics [STM.FR] +2.0% (AI/semiconductor sector strength), ASM International [ASM.NL] +1.5% (€150M share buyback announced).

- Materials: Fresnillo [FRES.UK] +4.5%, Endeavour Mining [EDV.UK] +4.0% (precious metals price support).

Speakers

- Iran Foreign Ministry Spokesperson Baghaei reiterated stance that reopening of Strait required US ending blockade and paying compensation. Deal with Oman includes fees for maritime services. Ghalibaf (chief negotiator) and Araghchi (Foreign Min) to visit Pakistan at appropriate time.

Currencies

USD consolidated its post-non-farm payroll losses. Markets dialed back its outlook for Fed rate hikes for both Sept and Oct period and now focus on Wed’s release of July CPI data for clues on the path of Fed policy. Markets continued to monitor the uncertainty over the reopening of the Strait of Hormuz. Iran stated over the weekend that a deal with Oman on defining new shipping lanes was in its final stages but added that the US must still meet other conditions.

- EUR/USD at 1.1560 by mid-session.

- GBP/USD edging above the 1.35 level as market were fully pricing ina 25bps BOE rate hike by year-end.

- USD/JPY at 158.65 as BOJ opinions did little to move the pair despite a more hawkish tone.

- The 10-year German Bund yield last at 3.13%, France 10-year Oat at 3.91% and 10-year Gilt yield at 4.92%; 10-year Treasury yield: 4.65%; 10-year JGB: 2.79%.

Economic data

- (NL) Netherlands July Producer Confidence Index: 2.4 v 1.3% prior.

- (NL) Netherlands Jun Manufacturing Production M/M: -1.3% v +1.1% prior; Y/Y: 4.6% v 6.8% prior; Industrial Sales Y/Y: 8.5 v 8.9% prior.

- (FI) Finland Jun Industrial Production M/M: +2.1% v -1.7% prior; Y/Y: 4,5% v 0.5% prior.

- (SE) Sweden Jun Private Sector Production M/M: 0.4% v 0.5% prior; Y/Y: 1.8% v 5.1% prior.

- (SE) Sweden Jun Industrial Orders M/M: +32.3% v -3.2% prior; Y/Y: 29.9% v 1.6% prior.

- (SE) Sweden Jun Industry Production Value Y/Y: -1.5% v +7.6% prior; Service Production Value Y/Y: 3.0% v 5.0% prior.

- (NO) Norway July CPI M/M: +1.0% v -0.2% prior; Y/Y: 3.0% v 2.8%e.

- (NO) Norway July CPI Underlying M/M: +0.8% v -0.1% prior; Y/Y: 2.7% v 2.9%e.

- (NO) Norway July PPI M/M: +8.9% v -7.1% prior; Y/Y: 23.4% v 14.9% prior.

- (DK) Denmark July CPI M/M: 1.3% v 0.2% prior; Y/Y: 1.7% v 1.9% prior.

- (DK) Denmark July CPI EU Harmonized M/M: 1.5% v 0.3% prior; Y/Y: 1.6% v 1.8% prior.

- (DK) Denmark Jun Current Account Balance (DKK): 32.5B v 25.7B prior.

- (AU) Australia July Foreign Reserves (A$): 106.7B v 102.5B prior.

- (AT) Austria Jun Industrial Production M/M: +0.5% v -0.3% prior; Y/Y: 0.0% v 0.0% prior.

- (TR) Turkey Jun Industrial Production M/M: +0.1% v -3.0% prior; Y/Y: -1.4% v +0.1% prior.

- (CH) Swiss Weekly Total Sight Deposits (CHF): 462.4B v 465.2B prior; Domestic Sight Deposits: 432.6B v 435.3B prior.

- (CZ) Czech July Unemployment Rate: 5.0% v 4.9%e.

- (EU) Euro Zone Aug Sentix Investor Confidence: +0.9 v -0.5e.

- (IS) Iceland July Preliminary Trade Balance (ISK): -40.6B v -57.4B prior.

- (GR) Greece Jun Industrial Production Y/Y: 1.1% v 3.9% prior.

- (HU) Hungary July YTD Budget Balance (HUF): -2.858T v -3.382T prior.

Fixed income issuance

- None seen.

Looking ahead

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

- 05:30 (DE) Germany to sell combined €5.0B in 3-month and 9-month BuBills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (IL) Israel to sell bonds.

- 06:00 (IL) Israel July Consumer Confidence: No est v 84 prior.

- 06:00 (IE) Ireland July Live Register Monthly Change: No est v 0.4K prior; Level: No est v 172.6K prior.

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

- 07:00 (UR) Ukraine July CPI M/M: No est v -0.1% prior; Y/Y: 7.4%e v 7.2% prior.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rates unchanged at 6.50%.

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

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 09:00 (FR) France Debt Agency (AFT) to sell €5.8-7.4B in 3-month, 6-month and 12-month bills (4 tranches).

- 16:00 (US) Weekly Crop Progress Report.

- 19:00 (CO) Colombia July CPI M/M: 0.3%e v 0.4% prior; Y/Y: 6.2%e v 6.1% prior.

- 19:00 (CO) Colombia July CPI Core M/M: 0.4%e v 0.3% prior; Y/Y: 6.2%e v 6.0% prior.

- 19:01 (UK) July BRC Sales Like-For-Like Y/Y: 1.5%e v 1.7% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 74.7 prior.

- 20:00 (SG) Singapore Q2 Final GDP Q/Q: 1.2%e v 1/1% prelim; Y/Y: 5.8%e v 5.7% prelim.

- 20:00 (KR) South Korea Aug Exports 10 Days Y/Y: No est v 53.9% prior; Imports 10 Days Y/Y: No est v 17.4% prior.

- 20:01 (IE) Ireland July Construction PMI: No est v 45.4 prior.

- 21:30 (AU) Australia July NAB Business Confidence: No est v -5.0 prior; Business Conditions: No est v 3.0 prior.