Newsquawk European Market Wrap - 11th August 2026

European bourses initially started on a softer footing but reversed to show a more constructive tone. Pakistani Defence Minister told Bloomberg News that "things are shaping up in favour of a [US-Iran] peace agreement or a deal". WTI Sep and Brent Oct futures were initially on a firmer footing on shipping strikes before turning lower on constructive commentary. EQUITIES European bourses initially started on a softer footing but reversed to show a more constructive tone after the Pakistani Defence Minister told Bloomberg News that "things are shaping up in favour of a peace agreement or a deal". This prompted a broader risk-on move, with energy reversing the earlier gains while equities and fixed income lifted. Sectors ended mixed. Energy topped the sector pile, followed by Tech and Telecoms. Insurance was the sector laggard, with Food, Beverages & Tobacco and Chemicals rounding out the underperformers. Key movers included: Spirax (-5.9%), kept guidance unchanged despite strong H1 earnings; Adidas (-2.8%), read across following poor On earnings (see more below); Legal & General (-4.1%), downgraded to sell at UBS and Goldman Sachs; Alcon (+5.4%), raised its FY26 guidance. US cash equities opened entirely in the green, albeit with modest gains. In terms of key movers: On Holding (-22%), Q2 sales and FY guidance missed estimates; Hims & Hers (-2.0%), highlighted margin pressure from its shift towards branded weight-loss drugs; Cardinal Health (+8.0%), EPS beat and raised its share buyback by USD 5bln. After-hours, markets will be focused on Supermicro and CoreWeave earnings, ahead of the inflation report on Wednesday. FX G10s were unchanged against the Buck throughout the day. Aussie was choppy, but ultimately firmer post-RBA, action elsewhere was quiet. DXY was choppy throughout the day, dictated by headline-driven oil prices after a number of contrasting updates which pushed Brent Oct’26 into the red after it initially posted gains of c. 3%. Focus this week is overwhelmingly on the CPI print tomorrow, especially since FT sources before NFP suggested Warsh was focused on the inflation side of the mandate heading into the September meeting. Data scheduled today saw a weaker ADP weekly release, while the Fed speaker slate ahead was light. The Buck lost some buyers towards the 100 mark, but found support at the 100DMA of 99.75, set to complete the session in the middle of this range. AUD set to complete the session modestly firmer against the Buck after the RBA left rates unchanged, in line with analyst/market expectations. Some immediate AUD weakness on the statement as it tweaked language around inflation vigilance ("prepared to increase the cash rate if required" -> "...if upside risks materialise"), added the description of policy as "somewhat restrictive", and revised inflation forecasts lower, points which reinforce the view the bank is comfortable and set to remain on hold until mid-2027 as markets expect. However, the hawkish presser, "Possible we need to hike again" saw a reversal of that kneejerk lower, a remark which supported Aussie throughout the European day, with several banks cautioning there are hawkish risks to the outlook. AUD/USD set to finish +0.2% with the next mark to watch 0.7075. Energy exporters initially outperformed but gains waned as Energy prices came off highs. CAD and NOK were the initial outperformers, each set to finish the session among the underperformers vs. the Buck. Action elsewhere was quiet, Cable was supported by 1.35, EUR/USD was flat around 1.1550, and flat against most CEE, while JPY was lacklustre with participants on holiday. FIXED INCOME Fixed was relatively contained overnight, before then coming underpressure as the session progressed amid energy upside from a number of maritime incidents across the morning. At most, USTs were down to a 108-04 base, lower by just under 10 ticks. Bunds similar, lower by c. 30 ticks while Gilts, as usual, underperformed, with downside of near 70 ticks at most. Since, the complex has recovered back into and is set to end the session in the green, by a handful of ticks for UST and roughly 20 across EGBs and Gilts. Upside a function of energy pressure after Pakistani officials suggested that the US and Iran were moving closer to some form of agreement; though, details were and remain sparse. Ahead, the docket is light, looking now to US CPI on Wednesday, for insight ahead of Jackson Hole, PCE, August CPI and then the September FOMC. Intercontinental Exchange (ICE) files for five-part senior notes offering; size not disclosed. Germany sold EUR 4.627bln vs Exp. 6bln 2.90% 3031 Bobl: b/c 1.48x (prev. 1.48x), average yield 2.93% (prev. 2.89%), retention 22.9% (prev. 24.1%). COMMODITIES WTI Sep and Brent Oct futures were initially on a firmer footing, with upside seen after reports that a Saudi ship was targeted near Bab al-Mandab. Thereafter, optimism from Pakistan and Qatar weighed on prices: Qatar's Foreign Ministry Spokesperson said negotiations between Oman and Iran are in an advanced stage, whilst the Pakistani Defence Minister reportedly signaled that the US and Iran are close to some agreement, and added that the situation is moving towards peace. As such WTI and Brent gave up earlier gains and moved towards session lows heading into the US open. Brent traded at the bottom of a USD 86.60-90.03/bbl range after briefly topping yesterday’s USD 87.93/bbl high, while WTI traded towards the top end of a USD 81.48-84.61/bbl range, moving back under yesterday’s USD 82.38/bbl peak. Precious Metals were weaker as energy prices continued to edge higher in early trade, adding to inflationary and growth concerns. Prices then waned off worst levels and crude fell into the red. Spot gold resided around its 100 DMA (USD 4,389/oz) within a USD 4,356-4,435/oz range, vs yesterday’s USD 4,395/oz peak, with the 200 DMA at USD 4,497/oz. Spot silver was subdued but off lows towards the bottom of a USD 64.23-66.48/oz range. Base Metals were mixed/flat, with pressure from elevated energy prices cushioned by ongoing hopes of Chinese stimulus. 3M LME copper resided within a narrow USD 14,103.00-14,215.00/t range. Commerzbank raises its European gas price forecast to EUR 50/MWh for year-end (prev. EUR 45/MWh). Iranian Oil Minister said 95mln cubic meters of gas will return to the production cycle by the end of September. Romania said it is to shut down its second nuclear reactor in the next 48 hours amid low water levels at Danube. EUROPEAN DATA Italian Trade Balance (Jun) 4.232 vs. Exp. 4.74 (Prev. 4.793). NOTABLE HEADLINES Swedish NIER Economic Forecasts: Raises 2026 GDP growth forecast to 2.4% (prev. 2.2%), maintains 2027 GDP growth; Maintains 2026 CPIF, cuts 2027 CPIF to 2.2% (prev. 2.1%). CENTRAL BANKS RBA Governor Bullock said board hopes to slow the economy the economy, sees upside risks to inflation; will raise rates again if needed. RATES: Did not discuss a rate cut at the meeting, only raise or maintain. Board is thinking hard about when it might be appropriate to raise rates. Argument for a hike includes inflation still being high and upside risks from the Middle East. Board decided to wait for a bit more inflation, rate hike is still front of mind. Possible we need to hike again. ECONOMY: Expects period of subdued economic growth will be required to bring inflation down. RBA needs more information. Housing market is not keeping us on hold. Westpac maintains its view the RBA will remain on hold through to mid-2027. BCB Minutes: Evidence of transmission of contractionary monetary policy to economic activity has been gradually accumulating. Although policy has been playing a decisive role in disinflation, inflation is still being driven by demand. Aims to keep policy at a contractionary level to ensure inflation convergence to the target. Further deanchoring of longer-term inflation expectations and has been discussing the possible causes of this movement in expectations. CNB said July's core inflation of 3.0% Y/Y was above the 2.9% outlook, the decline in food prices is relatively across-the-board. Core inflation and global inflation pressures are still arguments for increased caution in monetary policy. GEOPOLITICS MIDDLE EAST Iran's Supreme National Security Council Secretary said diplomatic policy will follow the Supreme Leader’s guidance, prioritising stronger deterrence, resistance to enemy coercion and an immediate, decisive response to any aggression. Iran will not back down if its people's rights or interests are threatened. Pakistani Defence Minister reportedly signals the US and Iran are close to some agreement; said the situation is moving towards peace. Iran Foreign Minister said Iran proved itself to the world and showed it is a tough and invincible power; "I heard this from various officials, in the same words that you won both the war and diplomacy." UKMTO has received a report of an incident involving a container ship and military forces in the Gulf of Oman. UKMTO has been informed of an incident off the coast of Al Mokha, Yemen; a cargo vessel in the Southern Red Sea has been hit by an unknown projectile resulting in casualties. Qatar's Foreign Ministry Spokesperson said negotiations between Oman and Iran are in an advanced stage; heard positive feedback from both countries. "Clashes have renewed in Marib between Yemeni government forces and forces loyal to the Houthi group", Al Araby reported, citing local sources. Yemeni army launched a missile and drone attack on a strategic target in Marib, Yemen, according to Tasnim citing Yemeni sources. US forces reportedly fired on a Panama-flagged ship that attempted to run the American blockade of Iranian ports early Tuesday, according to WSJ citing a US official. WSJ noted: "Earlier Tuesday maritime security firm Vanguard reported that a Panama-flagged containership called Vela Nova was struck by a missile fired from a helicopter while transiting westbound through the Gulf of Oman about 71 nautical miles from the coast of Pakistan." News sources reporting a new security incident in the Red Sea; nature of the incident is still unclear. The Chinese and Indonesian navies will hold a joint drill in the sensitive waters to the east of Taiwan this month, China's defense ministry said on Tuesday, in an area where Beijing has been seeking to assert its sovereignty claims, reported Nikkei. Rocket attack hits Iranian Kurdish opposition camp Northeast of Iraq's Erbil, according to reports, citing security sources. Pakistan's Interior Minister has arrived in Tehran, according to an Iranian official. Yemeni official said they never closed the doors of dialogue and negotiation with Saudi Arabia, reported ISNA. Yemeni sources say a second missile targeted a ship while the coast guard was rescuing its crew in Bab al-Mandab, Sky News Arabia reported. Saudi ship was reportedly targeted near Bab al-Mandab, Fars reported citing Arab & Yemeni sources. Maritime incident in Bab al-Mandab, Tasnim reported citing sources; "It is said that an offending ship was targeted by the Yemeni army." RUSSIA-UKRAINE Ukraine's Military said it attacked an oil refinery in Russia's Orsk. Turkey is said to be discussing with Russia and Ukraine a mechanism to prevent attacks on ships in the Black Sea, RIA reported, citing Turkish cabinet source. Will not allow warships into the Black Sea through Turkey's straits (i.e. the Bosphorus). NOTABLE NORTH AMERICAN NEWS BofA Consumer Checkpoint: Total Card Spending (Jul) 5.0% Y/Y (prev. 6.3%); moderation appears tied to the fading of temporary boosts rather than a broad deterioration in underlying demand. NORTH AMERICAN DATA US Redbook (Aug/08 YY) 8.3% (Prev. 8.7%). US ADP Employment Change Weekly 8.25k (Prev. 15.0k). NFIB Business Optimism Index (Jul) 99.8 vs. Exp. 97.5 (Prev. 97.4). NOTABLE US EQUITY HEADLINES China's CPCA said Tesla (TSLA) exported 66,330 vehicles in July (vs 36,000 in June). Intel (INTC) confirms upsize of previously announced common stock offering; offers USD 20bln (prev. offered USD 15bln), at USD 95/shr.