Newsquawk Daily European Opening News - 18th September 2026

US President Trump told Axios he is at a "critical juncture" regarding the war in Iran, weighing whether to launch massive new attacks or pursue a different path to end the conflict. BoJ hiked rates by 25bps to 1.25%, as expected, with the decision made by a 7-2 vote; USD/JPY outperformed. Crude futures were lacklustre after declining yesterday alongside de-escalatory reports. APAC stocks were mostly higher as the region took impetus from the gains on Wall Street, where markets reversed the post-FOMC moves amid a Fed credibility boost and lower oil prices. European equity futures indicate a lower cash market open, with Euro Stoxx 50 down 0.3% after the cash market closed with gains of 0.9% on Thursday. Looking ahead, highlights include Quad witching, German PPI (Aug), UK Retail Sales (Aug), US Industrial/Manufacturing Production (Aug). Speakers include BoJ Governor Ueda, ECB's Lagarde, Fed's Bowman and Schmid. Credit Rating upgrades from Morningstar DBRS on France, Scope Ratings on France, and Moody's on Germany. SNAPSHOT STOCKS Nikkei 225 +1.8% ASX 200 -0.1% Hang Seng +0.7% Shanghai Comp +1.1% Euro Stoxx 50 Sep'26 -0.3% DAX Sep'26 -0.3% ES Sep'26 +0.2% NQ Sep'26 +0.2% FX DXY U/C (100.26) EUR/USD +0.1% (1.1486) USD/JPY +0.8% (157.19) GBP/USD +0.1% (1.3369) BONDS US T-Note Dec'26 +1 tick Bund Dec'26 -5 ticks US 10yr Yield 4.94% German 10yr Yield 3.49% ENERGY & METALS WTI Oct'26 -0.9% Brent Nov'26 -1.1% Spot Gold +0.6% LME Copper -0.1% CRYPTO Bitcoin +1.5% Ethereum +1.8% As of 06:20BST/01:20EDT LOOKING AHEAD Highlights include Quad witching, German PPI (Aug), UK Retail Sales (Aug), US Industrial/Manufacturing Production (Aug). Speakers include BoJ Governor Ueda, ECB's Lagarde, Fed's Bowman and Schmid. Credit Rating upgrades from Morningstar DBRS on France, Scope Ratings on France, and Moody's on Germany. Click for the Newsquawk Week Ahead. IRAN CONFLICT US President Trump told Axios he is at a "critical juncture" regarding the war in Iran, weighing whether to launch massive new attacks or pursue a different path to end the conflict. Trump said he has a big decision coming up and pondered whether he wants to go in and annihilate them or not, while he said anything could happen with him. Trump declined to say whether he will decide on the path forward before or after the midterms, while he and Hegseth have ordered the military to maintain its level of forces in the Middle East until the end of the year to remain ready for a potential return to full-scale combat. US senior official said the US is focused on ensuring navigation in the Red Sea and allowing its partners to manage security challenges, while the official stated that the US is in constant communication with Saudi Arabia and the Yemeni government regarding regional stability, and it expects the Houthis to continue adhering to the ceasefire condition. US approves visas for top Iranian leaders to attend the UN high-level meeting. US State Department said the US will continue to bar Iranian UN mission officials, visiting officials and their dependents from purchasing wholesale club memberships or luxury goods, while it urged New York-area retailers to avoid complicity in violations. US State Department said Washington's new sanctions against the Babak Zanjani network for transferring hundreds of millions of dollars in Bitcoin to the IRGC targeted Iran's efforts to finance destabilising activities through digital currency networks. It also stated that it remains committed to blocking the Iranian government and the IRGC's access to resources they use to threaten regional stability, support "terrorism," and undermine international security. US Senator Kaine said the Senate could hold its next vote on Iran war powers early next week, adding there could be more to come before the election. US forces began dismantling and transferring air defence systems from their positions in the Kurdistan Region, according to Al Hadath. Sources stated the withdrawal of international coalition forces from Iraq continues, with more than one military convoy departing daily. It was separately reported that most of the remaining US troops in northern Iraq are expected to move to Jordan. Satellite images reportedly revealed that Iran was rebuilding a previously bombed nuclear site. UKMTO received a report of an incident 75 NM east of Yemen's Aden, with a westbound tanker reporting that a skiff pursued and attempted to intercept the vessel. UKMTO also said it received a report of a security incident in the Strait of Hormuz 16 NM Northeast of Khasab, Oman. IRGC said Togolese-flagged tanker 'Trend' was hit and stopped after a fire, while it stated the tanker violated Hormuz rules and that the US instigated the transit. South Korean President Lee said several countries are deploying military assets near the Strait of Hormuz, while he won't deploy troops to join the conflict, but noted that limited actions to safeguard South Korean economic interests and citizens are possible. Israeli airstrikes hit two towns in southern Lebanon, according to Mehr News Agency. Board of Peace will hold a briefing for representatives from dozens of countries on the sidelines of the UN General Assembly next week to update them on efforts to implement US President Donald Trump’s plan for rebuilding the Gaza Strip. US TRADE EQUITIES US stocks rallied and the Nasdaq outperformed, although gains were broad-based with the RSP +0.5%, while sectors were predominantly higher with advances led by Technology, Consumer Discretionary and Utilities, although Consumer Staples and Financials underperformed, closing marginally lower. The hawkish Fed reaction seen on Wednesday was broadly pared across markets on Thursday, with participants instead focusing on improved Fed credibility in its efforts to return inflation to target following the rate hike and Chair Warsh's steadfast commitment to restoring price stability, despite pressure from US President Trump for lower rates. This view helped support lower yields across the curve, resulting in a bull flattening, with the long end outperforming, with lower oil prices also supporting the move in Treasuries. SPX +1.14% at 7,638, NDX +1.73% at 29,447, DJI +0.61% at 51,783, RUT +0.55% at 2,875 Click here for a detailed summary. TARIFFS/TRADE US President Trump and Mexican President Sheinbaum spoke by phone on Wednesday as the two countries close in on a trade deal, according to Politico citing sources, while the conversation was described as “so-so” and “created a bit of noise” as “new topics” were introduced into the leaders’ discussion. New Zealand Foreign Minister spokesperson said there are no talks with the EU regarding New Zealand joining as an associate member. NOTABLE HEADLINES US Senate Republicans' attempt to quickly pass a bipartisan bill to prevent data centre-related utility cost increases failed on Thursday, amid Democratic concerns that it would rely only on voluntary commitments from states and data centre developers. US Department of Agriculture confirmed a case of New World screwworm in a horse in Grant County, New Mexico, marking the state's second case since the parasite entered from Mexico in June. APAC TRADE EQUITIES APAC stocks were mostly higher as the region took impetus from the gains on Wall Street, where markets reversed the post-FOMC moves amid a Fed credibility boost and lower oil prices. ASX 200 lagged with the index range-bound trade as gains in tech and miners were counterbalanced by weakness in defensives, telecoms, energy and financials, while there were comments from RBA Governor Bullock that lowering inflation is essential and that the key question is whether the tightening in monetary policy to date will be sufficient to bring inflation back to the target in a reasonable time. Nikkei 225 rallied following the BoJ announcement to hike rates by 25bps, as widely expected, with the decision made by a 7-2 vote as Takaichi-appointed board members Asada and Sato dissented. The language from the central bank reaffirmed a hiking bias but didn't signal any major urgency, noting it will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving the inflation target, while the latest inflation data from Japan printed softer-than-expected on all key metrics of the report. KOSPI advanced with tech stocks buoyed following the outperformance in the Nasdaq stateside, while South Korean President Lee ruled out sending troops to the Strait of Hormuz. Hang Seng and Shanghai Comp conformed to the broad positive mood, with reports noting that the US is expected to delay announcing excess manufacturing capacity tariffs till after the Trump-Xi summit, while MOFCOM said Chinese and US trade teams remain in close contact over negotiations on mutual tariff reductions covering USD 30bln. In addition, the PBoC conducted 7-day and 14-day reverse repo operations ahead of the National Day holidays in early October. US equity futures paused after clawing back post-FOMC losses yesterday and ahead of quadwitching. European equity futures indicate a lower cash market open with Euro Stoxx 50 down 0.3% after the cash market closed with gains of 0.9% on Thursday. FX DXY traded little changed after giving back some of its post-FOMC spoils as yields eased, with some citing improved Fed credibility as markets appeared to take greater confidence in Chair Warsh's commitment to return inflation to the target. Elsewhere, dollar-specific newsflow remains light despite a slew of US data, which ultimately failed to move the needle, while participants will get to digest rhetoric from Fed speakers following the end of the blackout period. EUR/USD eked slight gains and looks to retest near-term resistance ahead of the 1.1500 handle, while there were comments from ECB officials that there were currently no signs of second-round effects of inflation. GBP/USD slightly edged higher but lacked conviction after lagging yesterday post-BoE as UK yields eased from their highs after the Bank announced it would pause APF gilt sales until April 2027 and confirmed it would not sell long-dated gilts into the market, while participants look ahead to UK Retail Sales data. USD/JPY was underpinned after the BoJ delivered a widely expected rate hike but with dissent from the two Takaichi-appointed, known reflationist board members, while Japan's CPI data was also softer-than-expected. Antipodeans were somewhat varied as AUD kept afloat amid the mostly positive risk appetite and after CNH hit its strongest level in around four years, while NZD/USD was slightly pressured after trade data. PBoC set USD/CNY mid-point at 6.7521 vs Exp. 6.7065 (prev. 6.7580) FIXED INCOME 10yr UST futures paused overnight after yesterday's bull flattening and reversal of the post-Fed move, as Fed credibility received a boost following Wednesday's rate hike. Bund futures price action was range-bound after the recent mild rebound and with a lack of major catalysts for the bloc, while rhetoric from ECB officials provided little to shift the dial. 10yr JGB futures initially climbed higher as they tracked the recovery in global peers and with upside also facilitated by softer-than-expected Japanese CPI data, although the gains were then pared after the BoJ delivered a widely expected rate hike. COMMODITIES Crude futures were lacklustre after declining yesterday alongside de-escalatory reports, including China pressing Iran to help rein in the Houthis following a Saudi appeal, while Saudi Arabia was said to have asked Oman to seek a two-week truce with the Houthis, and Pakistan's Army Chief also urged Iran to convince the Yemeni Houthis not to attack Saudi energy facilities. Three pumping stations along Saudi Arabia's East-West pipeline were damaged in an attack last week (prev. reported as two), while a repair timeline is unclear. Oil refinery in Russia's Yaroslavl region halted crude processing after a drone attack. Spot gold was choppy after spending the prior day clawing back all of its post-FOMC losses. Venezuela nears an agreement to move USD 4bln gold reserve to New York, which would allow the interim government to access funding, according to FT. Copper futures pulled back from a weekly peak after advancing alongside the improved sentiment. CRYPTO Bitcoin steadily gained throughout the session and returned to above the USD 77,000 level. NOTABLE ASIA-PAC HEADLINES BoJ hiked rates by 25bps to 1.25%, as expected, with the decision made by a 7-2 vote as board members Asada and Sato dissented and voted to hold. BoJ said it will continue to raise rates in response to economic and price developments as well as financial conditions. BoJ said inflation expectations are heightening moderately, with underlying inflation approaching 2%, and it will conduct monetary policy as appropriate from the perspective of sustainably and stably achieving the inflation target. Furthermore, it said the accommodative financial environment will be sustained after the policy rate change, thereby supporting economic activity, and it is necessary to pay attention to the impact of the Middle East situation on financial and FX markets, the economy and prices. In terms of the dissenters, who are both known reflationists appointed by PM Takaichi, BoJ's Asada considered that with the rate of increase in the core CPI below 2% recently, it could not necessarily be said that the economic situation was strong and it was desirable for the Bank to maintain the guideline for money market operations, while Sato considered current economic and price developments did not appear to have substantially accelerated compared with before, and in this context, it was not appropriate for the Bank to raise the policy interest rate at this time. RBA's Governor Bullock said various indicators continue to suggest labour market conditions remain close to, but a little tighter than full employment, while she added that monetary policy is well placed to respond to developments. Bullock said lowering inflation is essential, and the key question is whether the tightening in monetary policy to date will be sufficient to bring inflation back to the target in a reasonable time. Furthermore, she stated they are in a world of higher-for-longer oil prices and that businesses are now more inclined to pass on cost increases. China's MIIT, NDRC and eight other government ministries and agencies jointly issued the pharmaceutical industry's 15th Five-Year Plan. DATA RECAP Japanese CPI (Aug YY) 1.9% vs. Exp. 2.0% (Prev. 1.9%) Japanese Core CPI (Aug YY) 1.7% vs. Exp. 1.8% (Prev. 1.8%) Japanese CPI Ex-Food and Energy (Aug YY) 1.9% vs. Exp. 2.0% (Prev. 1.9%) GEOPOLITICS RUSSIA-UKRAINE US President Trump is expected to sign the Russia-Iran sanctions bill as early as Friday. OTHER US President Trump is making plans for the first-ever meeting with Venezuela's interim President Rodriguez as early as next week, although a meeting is not finalised, according to Axios. US Pentagon reportedly considers withdrawing nearly one-third of US forces from Europe. North Korea leader Kim's sister said there is no change to the course of strengthening nuclear war deterrence and the US-led multinational drills are the main source of worsening tensions on the peninsula. North Korea's Vice Foreign Minister Kim Son-Gyong will attend the UN General Assembly next week. EU/UK NOTABLE HEADLINES UK Chancellor Healey is to urge Brussels on Friday to include the UK in ‘Made in Europe’ policy and will indicate that London is willing to negotiate to reach a ‘reset’ deal, according to FT. French PM Lecornu said ongoing austerity measures this year mean the 2026 deficit should remain well below 5.5% of GDP. Lecornu also stated that the deficit target in the draft budget reaches 5% of GDP for 2027 and that taxes will not be raised. ECB's Zigman said market bets do not determine the ECB's next steps and noted there is a lot of optimism for growth, while he does not see any major second-round effects and warned that growth is at risk if inflation is not tackled.