Volatility waits for fresh catalyst ahead of US-Iran 'talks'

EU mid-market update: SpaceX and AMD to report after the close; Volatility waits for fresh catalyst ahead of US-Iran 'talks'.

- Middle East and energy drives sentiment still. Markets spent the Asian session in a holding pattern ahead of promised direct US-Iran talks, with President Trump calling this Iran's "last chance" for a deal while Tehran denied any talks were underway, a contradiction that kept risk premia elevated. WTI crude crept up toward $80/bbl. Aramco's results and earnings call were the substantive story: Q2 net profit jumped to SAR121.5B on a realized crude price of $108/bbl, and management painted a structurally tight picture, Hormuz traffic still at one-tenth of pre-conflict levels, roughly 100M barrels of supply lost weekly, an estimated 18 months to refill global stocks even if the strait reopened immediately, the IEA emergency release (~2M bpd of cushion) ending this month, and disruption effects now expected to extend well into 2027. Exports to Asia via Suez are taking 20–25 days longer and Aramco is exploring new export routes, while noting it could restore full 12M bpd capacity within three weeks if requested. Goldman sees Brent holding an $80–90 range absent either a nuclear deal or escalation. BP delivered a solid beat on strong oil trading, raised its dividend and announced the intended sale of its Archaea biogas business.

- US tech earnings were emphatically strong. Palantir was the standout, describing an "otherworldly" quarte, US commercial revenue +149% y/y, government revenue +90%, guidance raised across the board, with the stock up ~15% after hours as management leaned hard into the "AI sovereignty" and operational-AI theme. Snap beat on all key financial and user metrics (revenue +19%, adj EBITDA $250M, DAUs 493M) and rose over 14%. onsemi beat and guided Q3 above consensus, saying AI data center revenue should more than double in 2026. Attention now turns to AMD and SpaceX's closely watched public-market earnings debut on Wednesday after the close (which also triggers the first insider lock-up expiry), with SanDisk to follow, SanDisk and SK Hynix separately published the first HBF technical specification.

- European earnings were heavy and mixed. On the positive side: Bayer beat on core EPS and cut its net debt guidance; Evonik beat and raised FY26 EBITDA guidance; Continental beat on margins as it enters the final phase of its pure-play tire realignment; Hugo Boss affirmed its outlook despite soft EMEA demand; Zalando narrowed guidance toward the middle of its range; and HSBC beat across the board with a buyback of up to $1B. On the negative side: Lufthansa missed on adjusted EBIT and trimmed FY26 guidance, citing exceptionally high fuel costs, shortened booking cycles and geopolitical uncertainty; Smith & Nephew cut its underlying revenue growth outlook to around 4%.

- During its earnings call, Aramco’s CEO stated that “100Mbbls [are] lost every week due to Hormuz shut,” with Hormuz traffic still only one-tenth of pre-conflict levels, while alternative routes currently support roughly 5 Mbpd of exports (via SUMED, Suez and other contingencies) and management is actively developing further pipeline and Red Sea flexibility even as Asia-bound cargoes take 20–25 days longer. Once the strait reopens, “it will take 18 months to refill global stocks,” as inventory rebuilding alone could add ~2.1 Mbpd of crude demand for that period, commercial inventories have already fallen an estimated 600 million barrels, the IEA emergency release ends in August, and the disruption’s effects are now expected to extend well into 2027. Aramco can restore pre-conflict output within days and reach its full 12 Mbpd maximum sustainable capacity in three weeks if requested, while expects H2 oil demand ~2 Mbpd above H1 and refining margins to remain “exceptionally strong,” and reaffirms its 2030 cash-flow growth trajectory despite the prolonged regional constraints.

- OpenAI’s Core Products Lead for Codex and ChatGPT said that recent results confirm Codex is already a strong harness of tools, memory and agent controls, yet “it will seem primitive in 2-3 months” as the field enters “another major evolution in how we use AI at the frontier” because “the next generation of models need more than your laptop.”

- Other circling themes: In the US, the stopgap funding measure cleared a Senate procedural hurdle, reducing near-term shutdown risk into a September 30 deadline, though House alignment is still needed. Rates markets continue to grapple with the post-Fed steepening of the 2s30s curve, framed by BlackRock as an inflation/supply-scarcity regime story, while the dollar firmed as intervention effects faded; the euro looks modestly overvalued near $1.15 with US payrolls due Friday. The European macro calendar was light and second tier. Eurozone bond supply is slowing seasonally.

- Asia closed higher with KOSPI outperforming +1.6%. EU indices +0.3-1.1%. US futures +0.1-0.6%. Gold -0.1%, DXY +0.1%; Commodity: Brent +2.7%, WTI +2.2%; Crypto: BTC +1.2%, ETH +0.3%.

Asia

- South Korea July CPI M/M: -0.2% v -0.1%e; y/y: 2.8% v 3.0%e.

- South Korea to announce home supply measures as soon as August 2026; these measures are expected to focus on 3 areas, including accelerating the pace of approvals and permits.

- Taiwan Exchange eases disposition stock rules.

- Bank of Korea (BOK): August inflation expected to be higher, due to base effects.

- Korea Exchange activates sidecar on Kosdaq following Kosdaq 150 FUTs rising +6%, programme trading halted for five-minutes.

- BOJ notes long term interest rates being driven by markets more freely compared to the past as bond tapering occurs.

Europe

- Czech Central Bank (CNB) released stress test results: Confirms high resilience of banks.

- Italy Jun Retail Sales M/M: -0.1% v +0.2% prior; Y/Y: 3.1% v 2.2% prior.

Americas

- US stopgap funding measure clears Senate procedural hurdle.

- Sandisk with SK Hynix releases first HBF technical specification through Open Compute Project.

- OpenAI Codex exec: Current Codex will seem primitive in 2-3 months and we're about to go through another major evolution in how we use AI at the frontier. The next generation of models need more than your laptop.

Conflict/tensions

- Iran President Pezeshkian: Iran defends its borders but does not seek an expansion of the war.

Trade/energy

- China further tightens legal policy rules to guard against exit of rare earths, battery secrets - Hong Kong press.

- Goldman Sachs expects Brent crude to remain in an $80 to $90 per barrel range until there is either confirmation of a new U.S.-Iran nuclear deal or a significant escalation in attacks.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [FTSE +0.26% at 10,886.21, DAX +0.38% at 26,134.10, CAC-40 -0.03% at 8,611.42, IBEX-35 -0.14% at 19,954.75, FTSE MIB +1.04% at 53,422.00, SMI +0.01% at 14,372.80, S&P 500 Futures +0.10%].

Market focal points/key themes: European equities trade mixed, with the STOXX 600 climbing 0.4%, as robust second-quarter results from HSBC and Bayer outweighed consumer-sector softness and residual geopolitical unease, keeping the region within striking distance of last week’s record highs. HSBC slipped modestly despite beating profit expectations on resilient net interest income and strong wealth-management performance while unveiling a fresh $1 billion buyback, whereas Bayer jumped after delivering an unexpected rise in adjusted EBITDA driven by pharmaceutical strength that offset agricultural pressures. Oil prices edged higher after Monday’s sharp decline triggered by announced U.S.-Iran diplomatic talks, though downside remained limited by reports of persistently slowed shipping through the Strait of Hormuz. Looking ahead, global desks await post-close results from AMD and SpaceX—the latter’s first earnings since its $85.7 billion IPO—while individual names showed sharp dispersion, with Travis Perkins surging on results and Lufthansa, Ferragamo and Beiersdorf declining after outlook cuts or weak reports.

Equities

- Energy: BP [BP.UK] +1.0% (earnings; dividend; plans divestment).

- Industrials: Travis Perkins [TPK.UK] +19.0% (earnings), Volvo Cars [VOLCARB.SE] -3.5% (Q2 vehicle sales).

-Financials: HSBC [HSBA.UK] -1.0% (earnings; restarts buybacks; conf call comments).

- Healthcare: Bayer [BAYN.DE] +4.0% (earnings), Smith & Nephew [SN.UK] -6.0% (earnings).

-Tech: AMS Osram [AMS.CH] +3.5% (earnings).

Speakers

- BOJ noted that long term interest rates were being driven by markets more freely compared to the past as bond tapering occurs.

- Bank of Korea (BOK) July Minutes saw one member note that the urrent rate increase alone would unlikely to be sufficient.

- Iran President Pezeshkian stated that the country sought to defend its borders but did not seek an expansion of the war.

Economic data

-(FR) France Jun YTD Budget Balance: -€106.8B v -€93.3B prior.

-(ES) Spain July Unemployment Change: +19.5K v -28.7K prior.

-(IT) Italy Jun Retail Sales M/M: -0.1% v +0.2% prior; Y/Y: 3.1% v 2.2% prior.

-(BR) Brazil July FIPE CPI (Sao Paulo) M/M: 0.0% v 0.0%e.

-(HK) Hong Kong Jun Retail Sales Value Y/Y: 4.6% v 8.5%e.

Fixed income issuance

- (ES) Spain Debt Agency (Tesoro) sold total €6.21B vs. €5.5-6.5B indicated range in 6-month and 12-month bills.

- (UK) DMO sold £4.25B in new 4.625% Mar 2032 Gilts; Avg Yield: 4.613%; bid-to-cover: 3.34x; Tail: 0.2bps.

- (AT) Austria Debt Agency (AFFA) sold €575M vs. €575M indicated in 2.85% Oct 2031 RAGB bonds.

- (SE) Sweden sold total SEK20.0B vs. SEK20.0B indicated in 3-month and 9-month Bills.

Looking ahead

- 05:30 (DE) Germany to sell €6.0B in 2.70% Sept 2028 Schatz.

- 05:30 (BE) Belgium Debt Agency (BDA) to sell combined €3.0B in 3-month, 6-month and 12-month bills.

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

- 05:30 (ZA) South Africa to sell combined ZAR2.55B in 2038, 2040 and 2044 bonds.

- 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO).

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

- 06:00 (FI) Finland to Sell Bills.

- 06:30 (EU) ESM to sell €1.6B in 3-month Bills.

- 07:00 (UR) Ukraine Q2 Preliminary GDP Q/Q: No est v n/a; Y/Y: No est v -0.6% prior.

- 07:30 (TR) Turkey July Real Effective Exchange Rate (REER): No est v 104.9 prior.

- 08:00 (BR) Brazil Jun Industrial Production M/M: -0.9%e v -0.2% prior; Y/Y: 3.0%e v 0.2% prior.

- 08:00 (MX) Mexico Jun Leading Indicators (M/M): No est v 0.08 prior.

- 08:00 (MX) Mexico July Consumer Confidence: 43.8e v 43.8 prior.

- 08:00 (MX) Mexico July Domestic Vehicle Sales: No est v 126.8K prior.

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

- 08:30 (US) Jun Trade Balance: -$73.0Be v -$77.6B prior; Exports M/M: -1.1%e v -3.2% prior; Imports M/M: -1.9%e v 3.3% prior.

- 08:30 (CA) Canada Jun Int'l Merchandise Trade (CAD): 3.0Be v 4.2B prior.

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

- 09:30 (CA) Canada July Manufacturing PMI: No est v 53.0 prior.

- 10:00 (US) Jun JOLTS Job Openings: 7.454Me v 7.594M prior.

- 10:00 (US) Jun Factory Orders: +0.2%e v -1.3% prior; Factory Orders (ex-transportation): 0.4%e v 1.9% prior.

- 10:00 (US) Jun Final Durable Goods Orders: 0.3%e v 0.3% prelim; Durables (ex-transportation): 0.6%e v 0.6% prelim; Capital Goods Orders (non-defense/ex-aircraft): 0.9%e v 0.9% prelim; Capital Goods Shipments (non-defense/ex-aircraft): 1.9%e v 1.9% prelim.

- 11:00 (DK) Denmark July Foreign Reserves (DKK): No est v 699.3B prior.

- 11:00 (CO) Colombia Jun Exports: $4.4Be v $5.2B prior.

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

- 11:30 (US) Treasury to sell 52-Week Bills.

- 12:00 (ZA) South Africa Central Bank (SARB) Gov Kganyago.

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

- 17:00 (KR) South Korea July Foreign Reserves: No est v $427.4B prior.

- 18:45 (NZ) New Zealand Q2 Unemployment Rate: 5.4%e v 5.3% prior.

- 18:45 (NZ) New Zealand Q2 Employment Change Q/Q: 0.1%e v 0.1% prior (revised from 0.2%);Y/Y: 0.7%e v 0.4% prior; Participation Rate: 70.4%e v 70.4% prior; Private Wages Q/Q: 0.6%e v 0.4% prior; Private Wages (ex-overtime) Q/Q: 0.6%e v 0.5% prior; Average Hourly Earnings Q/Q: No est v 0.2% prior.

- 19:00 (AU) Australia July Final Services PMI: No est v 53.0 prelim; Composite PMI: No est v 52.6 prelim.

- 19:30 (JP) Japan Jun Labor Cash Earnings Y/Y: 3.4%e v 3.3% prior (revised from 3.2%); Real Cash Earnings Y/Y: 1.6%e v 1.6% prior (revised from 1.4%); Cash Earnings - Same Sample Base Y/Y: 3.1%e v 3.1% prior (revised from 2.9%); Scheduled Full-Time Pay - Same Base Y/Y: 2.7%e v 2.5% prior (revised from 2.4%).

- 19:50 (JP) BOJ Jun Minutes (2 decisions ago).

- 20:30 (JP) Japan July Final Services PMI: No est v 51.9 prelim; Composite PMI: No est v 53.1 prelim.

- 20:30 (SG) Singapore July PMI (whole economy): No est v 57.4 prior.

- 20:30 (HK) Hong Kong July PMI (whole economy): No est v 52.0 prior.

- 21:00 (NZ) New Zealand July ANZ Commodity Price M/M: No est v -1.0% prior.

- 21:00 (PH) Philippines July CPI M/M: 0.3%e v -0.3% prior; Y/Y: 6.4%e v 6.4% prior.

- 21:10 (KR) Bank of Korea to sell KRW2.0T in 3.73% 2-Year Bonds.

- 21:45 (CN) China July RatingDog Services PMI: 53.7e v 54.1 prior; Composite PMI: No est v 53.6 prior.

- 22:35 (CN) China to sell 30-Year Additional Bonds.

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

- 23:00 (TH) Thailand to sell THB7.0B in 2077 Bonds.