Newsquawk European Market Wrap - 25th August 2026

Pakistan has reported "significant progress" in high-level diplomatic talks held in Tehran, aimed at de-escalating the ongoing US-Iran war, Iran's Press TV reported. US is reportedly mulling returning diplomats to Middle Eastern embassies as soon as this week, NYT reported; "suggesting that the Trump administration does not anticipate a return to all-out hostilities". European bourses (STOXX 600 +0.3%) were broadly firmer; Wall Street opened on a positive footing; Crude was weaker. EQUITIES European bourses (STOXX 600 +0.3%) were broadly firmer, digesting the positive mood music following the recent Pakistan-Iran talks in Tehran. In brief, Pakistani officials suggested that “we had a constructive exchange of views on the issues raised”, noting “big progress”. It was reported via Saudi press that Pakistan conveyed the US’ offer to Iran – but this was pushed back on by Iranian media. It remains to be seen if the Pakistani mediation efforts yield any success. European sectors held a positive bias. Industrials took the top spot, joined closely by Travel & Leisure. The leader today has been buoyed by strength in Melrose (+9.7%) after it announced that the GKN probe has ended without criminal charges, and as it sets out a reopening timeline for the Garden Grove plant. To the downside, Autos parks itself at the foot of the pile, followed closely by Consumer Products & Services. Key Stories: NatWest (-0.2%, FT reports that the Co. plans to expand into the US), CD Projekt (-6%, delays release of The Witcher IV), Gerresheimer (-8.7%, CEO Rohrhoff to step down as interim CEO), Siemens Energy (+3.5%, working with Goldman Sachs to field offers for a majority stake in its steam turbines business), Wolters Kluwer (-4%, Google launches Gemini Enterprise for financial services). US indices are firmer this morning, attempting to pare back some of the losses seen in the prior session. At the cash open, some mild divergence was seen between the NQ (+0.9%) and RTY (+0.2%), with hefty outperformance in the former as memory names rebound from recent losses. As for stock specifics, Tesla (+0.5%, raised the price of its Cybertruck dual motor), AMD (+3%, upgraded at Raymond James to 'Strong Buy' from 'Outperform'), Apple (+0.2%, announces new Mac mini). FX DXY was bid through APAC trade, marking a peak of 99.11 in Europe, thereafter erasing some of these gains to a 98.90 trough following an optimistic readout of the Pakistan-Iran meeting via Saudi press sources, a reaction which persisted throughout the session with energy benchmarks also slipping throughout the day. As such, yields were sharply lower today with 30yr yields bottoming at 5.18%, the trough of last Wednesday’s fall. EUR did not take too much of a lead from the aforementioned action in energy markets and is set to finish the domestic session around a tenth firmer against the Buck at 1.1670. No material reaction to a strong German Ifo, despite a couple ticks lower in Bunds, which are set to finish the session sharply firmer after the source reports mentioned above pressured TTF throughout the day. Cable action was similarly quiet with focus on the upcoming week’s risk events incl. Jackson Hole and PCE tomorrow; domestic updates included PM Burnham failing to rule out tax increases in the Budget, remarks which did not give much of a lead to UK assets; Cable set to finish the day as the best performing pair, around the familiar 1.3650. Canadian Trade Official LeBlanc was on the wires, he noted it would be possible US and Canada could reach an agreement that would benefit both sides, while also confirming Canada will announce retaliatory measures today. JPMorgan unsurprisingly sees the trade updates as reducing the likelihood that the BoC will resume hiking by early next year as markets are currently priced, while Scotiabank continues to believe CAD downside will remain contained absent of any major deterioration in the trade backdrop. Despite lower energy benchmarks, USD/CAD is set to handover to New York flat after slipping below 1.3850. Barclays month-end FX: moderate USD selling against all majors. FIXED INCOME Fixed benchmarks experienced a somewhat choppy European morning, but ultimately spent much of it around the unchanged mark before Bunds revisited lows on a strong Ifo and the space then lifted firmly into the green as energy continued to wane. USTs hit a 108-11 base overnight, saw upside on energy action after sources reported that the US told Pakistan to tell Iran that it would halt the siege and lift sanctions under the MOU, if Hormuz opens and proxy attacks stop. Action that continued and was unaffected by a NYP piece around Treasury Secretary Bessent, which echoed a Gasparino post from last night. Currently, USTs approach an evening headlined by 2yr supply with gains of 10 ticks, just off a 108-26+ peak. Bunds came under pressure this morning early doors, before recovering until the low was revisited by a stronger-than-expected Ifo series; however, the above action meant this proved fleeting. Specifically, hit a 123.74 base, but set to end the day at a 124.28 peak, firmer by around 40 ticks. No real follow through from Schatz supply. Instead, the upside is a function of energy downside, and particularly as Dutch TTF unwinds some of Monday’s marked upside. Gilts directionally in-fitting with the above. But, as is often the case amid energy-driven moves, the benchmark currently outperforms and is firmer by over 50 ticks, just off an 86.85 peak. Additionally, the strength may be partially a function of the strong 2033 Gilt tap this morning. Treasury Block Trades [Rolling headline, August 25th 2026]. Spread. 07:51EDT/12:51BST: Bought 24.7k 5-Year T-Note Futures (ZFZ6) for 106-095 & sold 6.0k Ultra U.S. Treasury Bond Futures (UBZ6) at 111-020. US Treasury Secretary Bessent has reportedly formulated a plan that could escalate if the vigilantes continue to push up interest rates, NY Post reported citing sources; looking to put the "fear of God" into bond vigilantes. Bessent is said to be particularly worried that institutional investors will continue to sell long-dated UST bonds, leading to the US 10yr yield hitting 5%. Plan could include temporarily halting the issuance of certain long-dated debt, such as the 20yr. Germany sold EUR 3.83bln vs exp. EUR 5bln 2.70% 2028 Schatz; b/c 1.49x (prev. 1.37x), average yield 2.85% (prev. 2.78%) & retention 23.4% (prev. 24.1%). UK sold GBP 4bln 4.125% 2033 Treasury Gilt: b/c 3.4x (prev. 3.16x), average yield 4.761% (prev. 4.519%) & tail 0.2bps (prev. 0.2bps). TenneT Germany to sell EUR-denominated hybrid 30-year noted; yield guidance seen at 4.875%. UK DMO plans an I/L syndication in November. COMMODITIES Crude - WTI Oct and Brent Nov futures extended their downside as diplomatic developments remained constructive following Bessent’s underwhelming Iran sanctions announcement. Pakistan reported “significant progress” in talks held in Tehran, while Al Arabiya/Al Hadath sources said Pakistani Army Chief Munir conveyed a US offer to halt the siege and lift sanctions under the MoU in exchange for reopening the Strait of Hormuz and stopping proxy attacks, although sources poured some cold water on reports. The US was also reportedly considering returning diplomats to Middle Eastern embassies as soon as this week, with reports suggesting Washington does not anticipate a return to all-out hostilities. WTI fell to a USD 81.81/bbl low from a USD 85.84/bbl high, while Brent declined to USD 87.30/bbl from USD 91.29/bbl. Natural Gas – Dutch TTF reversed its earlier gains and moved sharply lower despite continued concerns around European storage levels ahead of the heating season, but possibly amid the more sanguine commentary surrounding US-Iran. TTF fell to around EUR 65.78/MWh from a EUR 69.38/MWh high, having earlier traded as low as EUR 65.64/MWh. Precious Metals – Precious metals extended their downside amid a resilient Dollar, with spot gold falling to a USD 4,609/oz low from a USD 4,697/oz high. Spot silver similarly declined to USD 67.51/oz from a USD 69.94/oz high, falling under its 100 DMA (USD 68.36/oz) in the process. Base Metals - Base metals marginally fared better, with copper somewhat flat despite the broader metals weakness as continued hopes of Chinese stimulus provided some support. COMEX copper recovered from a USD 6.58/lb low to around USD 6.62/lb, within a USD 6.58-6.67/lb range. 3M LME copper looks to end toward the middle of a USD 14,197.25-14,339.13/t range. Iran oil production is in a favourable condition, reported IRNA citing national oil co. chair. Russia could extend diesel export through September, according to sources; Govt. reportedly also considering a further extension of the ban until year-end. Italy is reportedly mulling a temporary tax break on diesel. Japanese Government is set to launch state support for construction of oil pipelines which bypass the Strait of Hormuz, Nikkei reported. PM Takaichi reportedly will announce this at the Green Transformation meeting on the 26th August. Mosaic (MOS) predicts a phosphate shortage in Brazil starting in September, citing waning domestic stockpiles, CNN Brasil reported citing an executive. Kazakhstan's Kondensat refinery will process Russian crude and send 30% of refined products to Russia, IFX reported. Kazakh Energy Ministry said repairs at Karachaganak are scheduled for mid-September, with oil production losses expected to reach up to 450k tons, Interfax reported. EUROPEAN DATA Irish Average Weekly Earnings (Q2 YY) 3.9% (Prev. 4.4%). German Ifo Expectations (Aug) 89.1 vs. Exp. 87.5 (Prev. 86.7). German Ifo Current Conditions (Aug) 88.5 vs. Exp. 87 (Prev. 86.5). German Ifo Business Climate (Aug) 88.8 vs. Exp. 87.2 (Prev. 86.6). German GDP Growth Rate Final (Q2 QQ) 0.3% vs. Exp. 0.2% (Prev. 0.4%). German GDP Growth Rate Final (Q2 YY) 1.0% vs. Exp. 0.9% (Prev. 0.7%). Polish Unemployment Rate (Jul) 5.8% vs. Exp. 5.8% (Prev. 5.8%). Spanish PPI (Jul YY) 9.2% (Prev. 7.0%). French Consumer Confidence (Aug) 86 vs. Exp. 87 (Prev. 86). Danish Retail Sales (Jul MM) 1.3% (Prev. 0.2%). Danish Retail Sales (Jul YY) 6.7% (Prev. 4.6%). Norwegian Unemployment Rate (Jul) 4.2% (Prev. 4.5%). NOTABLE HEADLINES Canadian Trade Official LeBlanc said USTR Greer has acted in good faith, via CNBC; said Canada will likely announce retaliatory tariff measures today. There were problems around the French language in negotiations. Still believe a deal that benefits both nations is possible. US President Trump said he would never interfere with Canadians speaking French... This lie was made up by a weak and ineffective Prime Minister in an attempt to gain political support. Full Post:. "I would never interfere with Canadians speaking French! In fact, I have never even thought of doing such a stupid thing. This lie was made up by a weak and ineffective Prime Minister in an attempt to gain political support, which he has totally lost, from the people of Quebec. I love French Canadians! President DONALD J. TRUMP". UK PM Burnham is expected to meet with US President Trump, along with other officials, at the September UN General Assembly, FT reported. UK is reportedly also expected to look into a meeting with Trump at the White House. German real wages projected at 0.7% in 2026, Handelsblatt reported citing the WSI Archive. EU Commission is being urged by the EPP and RE groups to withhold EUR 770mln of funding from Romania, due to concerns around rule of law, Politico reported citing a letter. TRADE/TARIFFS US and China reportedly agree to boost collaboration in AI trade, Xinhua reported. USTR Greer has been invited to Ireland for EU talks, Politico reported. US President Trump said Canada has been ripping off the US for decades; Canada is easily the most difficult and unreasonable country to deal with. CENTRAL BANKS NBH said the central bank is committed to achieve and maintain price stability; the Council will decide on the future path of the base rate based on the September Inflation Report. Hungarian Interest Rate Decision 5.50% vs. Exp. 5.5% (Prev. 5.75%). Riksbank Minutes: Seim said still concerned that inflation might become too high. Seim. I am concerned that inflation might become too high. There are a further number of international factors that risk increasing inflationary pressures going forward, for instance, the extreme weather in parts of Europe and Russia’s war of aggression in Ukraine. Jansson. Overall, my assessment given this is that the inflation picture now is somewhat poorer than in June. But it deserves to be emphasised that the shifts are small. Currently have more of an impact on how we communicate future inflation risks than a direct quantitative effect on our monetary policy plan, in line with the text in the draft Update. Have scope to wait before adjusting our monetary policy, even if there are some risks of elevated inflation going forward. Thedeen. I am becoming increasingly convinced that the upturn in economic activity is now on firmer ground. My conclusion is that the level of vigilance with regard to rising inflation must be high. I assess that our next change in the policy rate needs to be a raise. Hjelm. It is appropriate to begin thinking about monetary policy in a scenario where the conflict becomes long-lasting and low intensive and where consideration for possible future escalation is no longer reasonable. It is appropriate that the policy rate remains slightly expansionary, which I assess the level of 1.75 per cent to be. I consider that the risk of an escalation of the war, resulting in substantial price increases, justifies a probability of rate increases over the year. Bunge. Overall, I think that it is reasonable to wait before adjusting the policy rate and to communicate today that the probability of a rate increase still stands since June. GEOPOLITICS RUSSIA-UKRAINE Russia could extend diesel export through September, according to sources; Govt. reportedly also considering a further extension of the ban until year-end. Russian Pacific Fleet reportedly conducts anti-submarine drills in Sea of Japan and adjacent waters. Russia's defence ministry said forces have struck a cargo vessel and a tanker in the Black Sea, reported Tass. The Russian Armed Forces used Geranium missiles to strike a tanker and a dry cargo ship to reduce their ability to transport weapons for the Ukrainian Armed Forces. A fire broke out on both vessels, according to the Russian Ministry of Defense. Russia's Kremlin said there is no meeting planned with the US admin at this moment; said there is no information about US military plane that landed in Moscow. Ukraine military said it struck the Afipsky refinery (180k bpd) in Russia's Krasnodar region. Oil refinery in Russia's Rostov temporarily suspended operations following Ukranian attack, TASS reported. Kazakhstan's Kondensat refinery will process Russian crude and send 30% of refined products to Russia, IFX reported. Kazakhstan Energy Ministry said oil production plans are to be tweaked due to CPC attacks, with production loss to reach 3.5mln tonnes. MIDDLE EAST Iran's positions and conditions on the Strait of Hormuz were announced transparently through Pakistan, reported Tasnim citing sources. Pakistan Army Chief Munir was seeking to open the space for negotiations and was seeking to convey Iran's conditions and positions to the American side. A source close to the Iranian negotiating team told Tasnim: Contrary to what some media outlets have said, Asim Munir, the commander of the Pakistani army, who traveled to Iran the other day, was not carrying a threatening message or a similar message from the United States, but rather was seeking to open the space for negotiations and was seeking to convey Iran's conditions and positions to the American side. This informed source noted: The return of the United States to the Islamabad Memorandum of Understanding and the implementation of its provisions, which include Article 5, i.e. Iranian arrangements on the Strait of Hormuz, are among Iran's conditions, and this issue was announced through Pakistan, and the Pakistani side is seeking to convey them to the American side. Iran oil production is in a favourable condition, reported IRNA citing national oil co. chair. US President Trump said Iran is not paying large segments of their military, while killing protestors at levels not seen before; it is a humanitarian crisis and must be stopped now. Qatar foreign ministry spokesman said US sanctions on Iran are unilateral and Qatar supports resolving the issue through mediation. Pakistani Army Chief Munir conveyed an offer to Iran, from the US, to halt the siege and lift sanctions under the MOU, in exchange for opening the Strait of Hormuz and stopping proxy attacks, Al Arabiya/Al Hadath sources report. Al Hadath reported Washington offered to halt the naval blockade and lift sanctions on Iran in exchange for opening the Strait of Hormuz and stopping proxy attacks. Pakistani Army Chief told Senior Iranian official that the agents’ attacks are ongoing despite the stopping of direct attacks. Pakistani Army Chief said that the direct attacks between Iran and America have stopped. Iran will continue the fighting in the event of a new escalation. Tehran will continue its consultations to submit its response soon. Iranian official said the visit of Pakistani Commander of the Army to Iran was highly fruitful...the results of which will soon become apparent. IRNA reported that Oman-Iran management mechanism of the Strait of Hormuz "have reached their final stages". A senior Iranian official told Al Jazeera journalist that the talks with [Iran and] Pakistani Field Marshal Munir were constructive, with useful ideas exchanged, "though no messages were passed in either direction". "The visit was aimed at reviving Pakistan’s role as a mediator between Iran and the US". Pakistan has reported "significant progress" in high-level diplomatic talks held in Tehran, aimed at de-escalating the ongoing US-Iran war, Iran's Press TV reported. Iranian Foreign Minister meets with the Omani Foreign Minister, Al Arabiya reported. US is reportedly mulling returning diplomats to Middle Eastern embassies as soon as this week, NYT reported; "suggesting that the Trump administration does not anticipate a return to all-out hostilities". NOTABLE NORTH AMERICAN NEWS US President Trump said the US is giving serious consideration to changing the name of Lake Ontario to Lake America in that we don’t expect to doing much business with Ontario any longer. NORTH AMERICAN DATA House Price Index (Jun) 442.5 (Prev. 442.4). House Price Index (Jun MM) 0.0% vs. Exp. 0.2% (Prev. 0.3%). House Price Index (Jun YY) 2.3% (Prev. 2.4%). US S&P/Case-Shiller Home Price (Jun YY) 2.1% vs. Exp. 1.7% (Prev. 1.6%). US S&P/Case-Shiller Home Price (Jun MM) 0.4% (Prev. 0.9%). US Redbook (Aug/22 YY) 9.1% (Prev. 7.6%). US ADP Employment Change Weekly 11.75K (Prev. 9.5K). US Building Permits Final (Jul) 1.433M vs. Exp. 1.443M (Prev. 1.374M). US Building Permits Final (Jul MM) 4.3% vs. Exp. 5% (Prev. -2.6%). Canadian Wholesale Sales Prel (Jul MM) -0.6% (Prev. 2.8%).