UK changes leaders while nothing changes in Iran

EU mid-market update: UK changes leaders while nothing changes in Iran; Cautious sentiment representing the directionless nature of geopolitics and China's recent advancements in AI.

Notes/observations

- European indices opened mixed with a cautious tone as US strikes on Iran ramped up over the weekend. Brent returned temporarily to $90, lifting yields across the board and reigniting inflation concerns into Thursday's ECB. Risk appetite was soft in Asia. Korea's exchange activated the Kospi sidecar. Compounding it, renewed scrutiny of the AI trade after the SOX's worst week since April 2025. Traders will be eagerly watching Google and IBM results and Capex outlook later this week.

- Burnham becomes UK PM today having taken the leadership unopposed, so the platform is untested and dispersion around outcomes is wide. The chancellor pick is the event: FT has Shabana Mahmood "nailed down," with Miliband blocked on City-credibility grounds. Mahmood reads as continuity-orthodoxy braking a more interventionist No.10; a left pick moves gilts. Already banked: digital ID scrapped (£1.8B redirected to cost-of-living), possible Thames Water special administration, regional devolution. Biggest headline risk is energy, the distinction between banning new North Sea licenses and expanded drilling in existing fields (Jackdaw, Rosebank) is the key watch. Markets now price 42bp of BoE hikes in 2026.

- US CENTCOM completed a ninth consecutive night of strikes, accelerating after US casualties in Jordan; Tabriz and Urmia hit. Iran retaliated across the Gulf - Kuwaiti army and desalination facilities, Al Salem Air Base, Aqaba, sirens in Bahrain. The IRGC claims two tankers destroyed on the southern Hormuz route and declares the strait unsafe for oil and gas transit while US operations continue. Kazakh CPC loadings (~1% of global supply) suspended again after a third tanker incident this month. Diplomacy persists - both Tehran and Rubio confirm mediator channels open.

- After $SMH entered bear market on Friday, SemiAnalysis Kimi K3’s massive scale (over 2.8 trillion parameters) is ultimately positive for NVIDIA, as its enormous model weights demand a large scale-up domain where the NVL72 platform excels. While Kimi’s Delta Attention reduces KV-cache networking needs by up to 10×, the huge weights still drive high bandwidth demand through optimizations like WideEP to spread parameters across GPUs. With weights consuming over 1.5 TB of HBM, even modest user concurrency forces KV cache offloading to CPU DDR5 and NVMe, further highlighting the value of NVIDIA’s high-performance, high-memory systems for frontier inference workloads.

- Farnborough International Airshow (FIA) runs 20-24th July. Order flow already happened outside the show - 1,210 combined H1 orders versus a 995 average, backlog of 16,000–17,000 aircraft. Treat a big tally as slot-locking, not demand recovery. Airbus defends from strength (best H1 since 2019, internal target above 900 versus ~870 guidance) with the risk in Pratt & Whitney engine delays. Boeing's focus is production, not announcements; the real catalyst is certification — MAX 7 approval possibly before end-July, 777-9 roughly halfway. Rate stabilizing at 47/month. The CEO pushed next-gen aircraft to the late 2030s.

- TTN Preview for AMD Advancing AI 2026 (July 22-23): AMD reportedly set to showcase major next-generation AI and data center products at its Advancing AI 2026 conference, headlined by Lisa Su's keynote. The company said to highlight the EPYC Venice (Zen 6-based server CPU on TSMC 2nm process, scaling up to 256 cores with PCIe 6.0, high-bandwidth DDR5, and AI optimizations) alongside the Instinct MI450 series accelerators — particularly the MI455X (and MI455) for large-scale AI training/inference and MI430X variants for HPC/sovereign AI workloads. These MI450/MI455 accelerators, already sampling with key customers and backed by massive deals (e.g., Meta and OpenAI 6GW-scale deployments), feature HBM4 memory (up to 432GB per GPU), strong FP4/FP8 performance, and are core to the liquid-cooled Helios rack-scale platform (up to 2.9 exaflops per rack). They are positioned to compete directly with NVIDIA’s Rubin (and Rubin Ultra) platforms.

- Elon Musk revealed that the new 2-trillion-parameter Grok 4.6 AI model, which he claims outperforms the previous 1.5-trillion-parameter Grok 4.5 in every metric, is on track to finish its initial training phase next week. He expressed optimism that this upgraded model could surpass competitors like Kimi in capabilities, while maintaining the strong speed and token efficiency already demonstrated by Grok 4.5. In parallel SpaceX news, the company is aiming to re-launch Starship on its 13th test flight as early as July 23rd, following the dramatic abort on July 16th just moments before liftoff due to issues with certain engines, after which Musk indicated an early-next-week window as the most probable timeline for the next attempt.

- TTN Reminder: On July 24, 2026, at 12:01 a.m. EDT, US’s Section 122 10% ad valorem import surcharge will automatically expire after its 150-day statutory limit, with CBP immediately stopping collection on new entries without needing further action. Duties already paid on earlier shipments will not be automatically refunded and depend on ongoing litigation, while baseline tariffs and other measures remain in place, resulting in only partial relief for importers. The expiration serves as a strategic pivot rather than a true rollback, as the administration is replacing the broad surcharge with more targeted Section 301 duties (around 10–12.5%) on issues like forced labor and excess capacity, ensuring continuity of the high-tariff environment.

- Asia closed lower with KOSPI underperforming -4.5%. EU indices -0.4% to +0.3%. US futures +0.1-0.3%. Gold 0.0%, DXY 0.0%; Commodity: Brent +0.3%, WTI -0.2%; Crypto: BTC -0.8%, ETH -0.4%.

Asia

- Japanese markets closed in observance of Marine Day; Kospi returns from extended weekend and played catch-up on the recent tech selloff.

- New Zealand Jun Trade Balance (NZD): 0.0B v 0.8B prior.

- China PBOC Monthly Loan Prime Rate (LPR) Setting: left 1-year and 5-year LPR rates unchanged at 3.00% and 3.50% respectively.

- Japan cabinet expected to approve the govt’s “Honebuto”("big-boned" national economic framework, which is also expected to have tax decision timing included.

Global conflict/tensions

- US launched a ninth consecutive wave of strikes against Iran. Iranian attacks continued on Jordan, Bahrain & Kuwait.

- Three American service members were killed (17 overall in war).

- Iran’s Revolutionary Guards targeted US aircraft at Jordan’s Aqaba airport with ballistic missiles and stated two oil tankers exploded hitting mines as they were attempting to navigate the southern Strait of Hormuz.

- Iran's Deputy Foreign Min Gharibabadi said Tehran had suspended its commitments under the recent memorandum of understanding. MOU was based on commitment for commitment, Iran to adhere to our commitments as long as the US did.

- Israel Defense Min noted that If Iran attacked us, we would strike their missile platforms; if Iran attacked Israel would respond and attack independently.

Europe

– UK July Rightmove House Prices M/M: -1.0% v -0.6% prior; Y/Y: -0.4% v -0.5% prior.

- Andy Burnham is set to become the new UK PM on Monday after securing 379 nominations last week. Market focus now on the upcoming Chancellor appointment.

- German Chancellor Merz said the departure of Health Min Jens Spahn creates an opportunity for a broader cabinet reshuffle (**Note: Spahn resigned his post on Sat, July 18th amid uproar over his use of a surrogate to have a baby).

Americas

-US Sec of State Rubio confirmed he anticipated China President Xi would visit the US in Sept, with China is sending teams to the US to prepare for the visit.

-US earnings kick into high gear this week, headlined by Alphabet/Google, Tesla, Intel, American Express, 3M and Novartis among others.

Energy

- US average gasoline price hits $4.00/gallon again.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE -0.40% at 10,557.74, DAX +0.22% at 24,881.99, CAC-40 +0.15% at 8,351.27, IBEX-35 +0.11% at 19,237.70, FTSE MIB +0.09% at 51,931.00, SMI -0.27% at 14,304.80, S&P Futures +0.22%].

Market Focal Points/Key Themes: European shares opened modestly lower on Monday, reflecting lingering fallout from last week's sharp global tech rout as investors braced for a packed calendar featuring U.S. megacap earnings, the ECB's policy decision, and fresh UK data and political shifts. The STOXX 600 slipped 0.2%, with the FTSE 100 down 0.4% and similar mild declines in Germany's DAX and Spain's IBEX, underscoring a cautious mood amid stretched AI valuations. Geopolitical risks intensified as the U.S.-Iran conflict entered its ninth day, driving Brent crude up over 2% and reviving fears of renewed inflationary pressures that could complicate the ECB's expected decision to hold rates steady at 2.25% this week. While European indices aren't as tech-heavy as Wall Street, the region's semiconductor and industrial firms remain highly sensitive to guidance from upcoming reports by Alphabet, Tesla, IBM and Intel, given their deep ties to American tech spending. Energy giants like Shell, BP, and TotalEnergies outperformed on the oil rally, while Ryanair fell after earnings and Segro dropped after rejecting a sweetened takeover bid from Prologis.

Equities

- Consumer discretionary: Ryanair [RYA.IE] -5.0% (earnings; outlook), Thule Group [THULE.SE] -4.5% (earnings), Big Yellow [BUG.UK] -1.0% (trading update).

- Financials: Segro [SGRO.UK] -0.5% (rejected third Prologis proposal).

- Industrials: Quadient [QDT.FR] +4.0% (strategic review of unit), Nokian Renkaat [TYRES.FI] -9.5% (analyst downgrade), Belimo [BEAN.CH] -4.5% (earnings).

Speakers

- Poland Central Bank (NBP) Member Maslowska noted that MPC might cut rates this year; Next move might be a rate cut.

- China Securities Regulator (CSRC) Chief Wu: Called on regulating development of quantitative trading; Discussed boosting listed firms’ dividend payouts. Met with firms to seek ideas for market growth.

- Iran FARS: Two US strikes hit Bushehr.

- Iran Foreign Ministry Spokersperson Baghaei: Negotiations with U.S could be pursued based on national interests. Intermediaries had shared messages with Tehran over recent days. Reiterated MoU was only worthwhile if all parties were committed to it. To spare no effort in diplomacy to stop U.S crimes.

- Iran IRGC said to have warned US against any infiltration into Iran territory. Sovereign rights over Strait of Hormuz are non-negotiable.

Currencies

- Despite the recent increase of intensity of attacks between US and Iran an Iranian Foreign Ministry spokesperson noted that it had received proposals from mediators in the war with US. Oil prices moved off their highest level of the session to trade around 1.5% higher.

- EUR/USD at 1.1450 area with ECB meeting on Thursday. Markets have a 90% chance that ECB will keep its powder dry and wait until Sept to decide whether to hike its key rates again.

- GBP/USD at 1.3460 as Labour Leader Burnham poised to become PM later today. Focus will be on his Cabinet picks.

- USD/JPY staying above the 162 level as the thin market conditions during the recent Japanese holiday did not fan any FX intervention scare.

- Bonds: 10-year German Bund yield last at 3.13%, France 10-year Oat at 3.93% and 10-year Gilt yield at 4.97% 10-year Treasury yield: 4.56%; 10-year JGB: 2.68%.

Economic data

- (DE) Germany Jun PPI M/M: -0.3% v -0.3%e; Y/Y: 1.8% v 1.8%e.

- (ES) Spain May Total Mortgage Lending Y/Y: 13.5% v 22.7% prior; Mortgage Approvals Y/Y: -0.1% v +2.3% prior.

- (TR) Turkey Central Bank (TCMB) July Inflation Expectation Survey: 12-month inflation outlook: 24.0% v 23.8% prior.

- (PL) Poland Jun Sold Industrial Output M/M: 2.0% v 2.7%e; Y/Y: 7.6% v 7.4%e; Construction Output Y/Y: 5.2% v 5.1%e.

- (PL) Poland Jun Employment M/M: 0.0% v 0.0%e; Y/Y: -0.9% v -0.9%e.

- (PL) Poland Jun Average Gross Wages M/M: 2.5% v 2.3%e; Y/Y: 5.9% v 5.6%e.

- (PL) Poland Jun PPI M/M: -0.2% v -0.3%e; Y/Y: 1.7% v 1.6%e.

- (CH) Swiss Weekly Total Sight Deposits (CHF):469.4 B v 471.3B prior; Domestic Sight Deposits: 443.0B v 444.8B prior.

- (EU) Euro Zone May Construction Output M/M: 0.4% v 0.1% prior; Y/Y: 1.2% v 0.2% prior.

Fixed income issuance

- None seen.

Looking ahead

- (IL) Israel July 12-month CPI Forecast: No est v 1.8% prior.

- (IL) Israel Central Bank (BOI) July Minutes.

- (UK) Labour Leader Burnham to become Prime Minister.

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

- 05:30 (DE) Germany to sell combined €4.0B in 6-month and 12-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

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

- 06:00 (IL) Israel Jun Unemployment Rate: No est v 2.8% prior; Broad Unemployment Rate: No est v 3.9% prior.

- 06:00 (PT) Portugal Jun PPI M/M: No est v 1.0% prior; Y/Y: No est v 5.1% prior.

- 07:00 (IL) Israel to sell bonds.

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

- 07:30 (IN) India Jun Eight (Key) Infrastructure Industries: No est v 0.5% prior.

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

- 08:30 (CA) Canada Jun CPI M/M: -0.2%e v +1.0% prior; Y/Y: 3.0%e v 3.2% prior; CPI (ex-food/energy) Y/Y: 1.7%e v 1.6% prior; CPI Core-Median Y/Y: 2.1%e v 2.1% prior; CPI Core-Trim Y/Y: 2.0%e v 2.0% prior; Consumer Price Index: 169.3e v 169.6 prior.

- 09:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 09:00 (FR) France Debt Agency (AFT) to sell €6.0-7.6B in 3-month, 6-month and 12-month bills.

- 10:00 (US) Jun Leading Index: -0.1%e v +0.1% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 15:00 (AR) Argentina May Wages M/M.

- 15:00 (AR) Argentina Jun Trade Balance: No est v $3.5B prior.

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

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 75.3 prior.

- 18:45 (NZ) New Zealand Q2 CPI Q/Q: 1.4%e v 0.9% prior; Y/Y: 4.0%e v 3.1% prior.

- 18:45 (NZ) New Zealand Q2 CPI Tradeable Q/Q: 2.6%e v 0.7% prior; CPI Non-Tradeable Q/Q: 0.6%e v 1.1% prior.

- 20:00 (KR) South Korea July Exports 20 Days Y/Y: No est v 60.4% prior; Imports 20 Days Y/Y: No est v 23.2% prior.