Newsquawk European Market Wrap - 26th August 2026

European bourses opened with very modest gains, but gradually moved higher as the session progressed. G10 FX is lower across the board, with the exception of the Aussie; DXY ticked higher after US data. Crude futures were softer heading into the European close, with desks citing ongoing optimism surrounding Iran and the US. EQUITIES European bourses opened with very modest gains, but gradually moved higher as the session progressed. European sectors held a positive bias; Consumer Products topped the pile, whilst Tech lagged. The latter was subject to pressure on three fronts: 1) SAP (-3.6%) received a downgrade at UBS. 2) Broader European software names drifted, continuing the action seen on Tuesday after Google announced Gemini Enterprise for financial services. 3) Poor Intuit results. Key stories: Banco BPM (+1%, acknowledges the unsolicited offer from MPS), SoftwareOne (+9.8%, H1 rev. beat), Ambu (-16%, decent headline metrics, but guidance downgraded). FTSE 100: Indicative FTSE 100 quarterly review changes show easyJet and Ithaca Energy are set to join, with Entain and Persimmon to be removed. US indices are in the red, with mild underperformance in the NQ. The tech-heavy index has been weighed on by post-earning losses in Intuit (11%), where it reported decent headline metrics though its outlook disappointed. Elsewhere, Meta (+4%) jumped on news that the Co. agreed to settle claims that its platforms harmed children. The tech giant agreed to pay a maximum of USD 16.68bln. Focus for the remainder of the day is on Nvidia (U/C) earnings, where attention will be on forward guidance, the updated Vera Rubin roadmap and Chinese demand. Today saw the release of US PCE. Core metrics printed in-line with expectations, whilst headline M/M topped expectations—albeit mildly. Ultimately, the data won’t shift the dial so much for Fed policymakers heading into the September meeting, where money markets assign a c. 69% chance of a hold. Next up is the Jackson Hole Symposium, with Chairman Warsh scheduled to speak on Friday. It remains to be seen whether he will maintain his tight-lipped approach to guidance. FX USD gains a function of the hotter-than-expected PCE series, with the DXY lifting to a 99.14 season high thereafter. However, the index remains someway shy of last week’s 99.69 peak; before that, the 200-DMA is at 99.16. As such, G10 FX is lower across the board, with the exception of the Aussie. AUD benefits from the overnight inflation data printing above the RBA’s 2-3% target band at 3.5% Y/Y (exp. 3.3%) for July. Given this, AUD/USD at a 0.7189 peak, the firmest since early June. Note, while overlooked, construction work was softer-than-expected and will factor into the GDP series next week. JPY is the next best, though USD/JPY is near-enough flat just above the 159.00 handle and in familiar territory. Much of the overnight JPY strength after hot Services PPI from Japan has faded, with USD/JPY moving to highs and remaining there after the US PCE series. For Japan, the main non-data update has been BoJ’s Ueda announcing he will not attend Jackson Hole this week. EUR and GBP make up the middle of the pack. Both find themselves under modest pressure, with Cable down to the 1.36 handle and now looking to support from 1.3594 from last Thursday before that week’s 1.3519 weekly base. EUR/USD holding around 1.1650, but as with GBP within familiar levels and markedly clear of last week’s 1.1564 base. Finally, NZD is the worst performer today. Hit by ongoing US global trade concerns, as the action against Canada, with CAD faring near-enough as well as GBP and EUR vs the USD today, potential China action and the AUD/NZD read across all weighing. As such, NZD/USD has gone below 0.5950, with support found at last Friday’s 0.5930 base, for now. FIXED INCOME A firmer initial start for fixed income has given way to modest pressure, downside that has emerged as a function of a marginally hawkish PCE series, though not one that has changed the narrative into the September FOMC. As a reminder, on Friday we get the preliminary BLS benchmark revision, and the Jackson Hole appearance by Chair Warsh. USTs got to a 108-31+ peak overnight, before gradually fading across the APAC session and into the early European morning, before some respite was found vs an initial 108-25 low. Post-PCE, the trough is 108-22+ and the benchmark is in proximity into an evening headlined by US supply and the Nvidia metrics. For the Fed, the data saw the odds of a September hold trim from around 64% to just below 60%. Bunds and Gilts also started firmer, the latter seeing marginal outperformance and was in proximity to the peak from Tuesday at the start of the day. Specifics for the space a little light, no move to ECB’s Schnabel who was familiarly hawkish or well-received German supply. Bunds set to end the European day lower by around 10 ticks, having hit a 124.18 base following the above US move. Similarly, Gilts post downside of just over 10 ticks, at an 86.66 post-PCE low, and now well off the opening 87.13 mark and by extension Tuesday’s 87.15 peak. Germany sold EUR 1.88bln vs exp. EUR 2bln 2.60% 2041 and 1.25% 2048 Bund. 2.60% 2041: b/c 2.05x (prev. 1.8x), average yield 3.50% (prev. 3.46%) & retention 9.8% (prev. 19.4%). 1.25% 2048: b/c 3.6x (prev. 1.7x), average yield 3.68% (prev. 3.55%) & retention 2% (prev. 15.8%). Italy sold EUR 3.0bln vs exp. EUR 2.5-3.0bln 3.00% 2028 BTP: b/c 1.58x & average yield 3.02%. COMMODITIES Crude - WTI Oct and Brent Nov futures were softer (but off worst levels) by some 2% apiece heading into the European close, with desks citing ongoing optimism surrounding Iran and the US. This follows reports yesterday via Russian Press RIA citing Pakistani and Iranian sources suggesting “A ceasefire between the US and Iran has been agreed upon; it includes free navigation in the Strait of Hormuz and will be announced in the coming days”, albeit with no further details. That being said, prices ticked higher and came off worse levels today following a senior Iranian official saying that an agreement with Oman on the Strait of Hormuz has not yet been finalised. Brent traded within a USD 84.56-86.07/bbl (vs yesterday’s USD 85.00-91.29/bbl range) range and WTI in a USD 79.63-81.31/bbl (vs yesterday’s USD 80.23-85.84/bbl range). Natural Gas – . Dutch TTF also pulled back amidst this optimism, clocking losses of over 3% intraday at the time of writing, with the front month contract back under EUR 64/MWh vs ~EUR 69/MWh earlier this week, and with prices finding support at EUR 62/MWh. Precious Metals - Precious metals were softer as the DXY remained resilient to the lower oil prices and with a couple upticks in the USD seen after the US data. Spot gold briefly dipped under USD 4,600/oz traded in a USD 4,598-4,673/oz range, within yesterday’s USD 4,605-4,697/oz parameter. Spot silver resided in a narrow USD 67.89-69.73/oz range, briefly dipping under its 100 DMA (USD 68.32/oz) and within yesterday’s USD 67.45-69.95/oz range. Base Metals - Eventually tilted lower amid the aforementioned resilient Dollar, with 3M LME copper in a USD 14,256.68-14,437.40/t range at the time of writing. US President Trump said will look at regulations for beef processing plants; beef prices are starting to come down. CPC mixed crude exports are expected to be around 1.5mln bpd in September (prev. 1.5-1.6mln bpd M/M). Shipping data shows Tankers loaded 4mln barrels of Saudi Crude in ship-to-ship transfer off Oman; cargoes heading for China. Japan's Cabinet office confirms plans to diversify oil procurement; aims to provide support with extra shipping costs. Russia's Novorossiysk grain terminal restoration may take between 1-4 months following suspension in August, according to reported. EUROPEAN DATA UK CBI Distributive Trades (Aug) -48 vs. Exp. -24 (Prev. -26). UK Ofgem energy price cap to increase by 4% from October 1st (exp. 4%), driven primarily by the Middle East. Swedish PPI (Jul MM) 0.1% (Prev. 0.1%). Swedish PPI (Jul YY) 6.4% (Prev. 7.4%). NOTABLE HEADLINES UK PM Burnham said that he will not tax wealth creators out of the UK, pledging to "take pressure off" businesses, FT reported; he added that he wants to "add percentage points" to the UK's growth rate. He did not comment on whether business taxes would rise in the October Budget. TRADE/TARIFFS US President Trump on Canada, said they don't have anything that we have to have; "we can get by" without Canada. CENTRAL BANKS WSJ's Timiraos writes "Fed Chairman is heading to Jackson Hole without a clear stance on inflation". ECB's Schnabel said rates must increase further on inflation risks and ECB must prevent second round effects early on, Bloomberg reported. said:. Market seems to understand ECB reaction function well, and the extent of tightening is to depend on incoming data. Natural gas situation particularly concerning. Economy looks to be gaining further momentum. Inflation likely to top 2% for extended period. GEOPOLITICS MIDDLE EAST US President Trump said he does not think Iran's Ayatollah is dead; thinks he is seriously wounded. Reiterates that the Hormuz blockade is working. Suggests that 22 ships passed through the Strait of Hormuz last night. US President Trump said he is "not in a hurry" over talks with Iran and there is no time schedule, Al Jazeera reported; he added that economic & military action "are effective". IRGC said Iran and Oman agreed on share of Hormuz revenues. US interference is delaying implementation. Iran reiterates that Hormuz will remain closed unless the US accepts its terms of the MoU. Iran's Deputy FM Ghalibaf refiles a post, which said,"Based on negotiations with Oman, the southern route will be completely closed, if Iran's requirements are not met". Full Post: "Kazem Gharibabadi, Deputy Foreign Minister: Based on the negotiations with Oman, the southern route will be completely closed/ If Iran's requirements are not met even in the event of an understanding with Oman, the Strait of Hormuz will not be reopened/ Iran-Oman talks will continue with the aim of reaching a permanent route that replaces the current 58-year-old route". Israeli PM Netanyahu said it is not possible to reach a diplomatic agreement with Iran. Iranian President Pezeshkian and Russian President Putin will meet on the sidelines of the upcoming Shanghai Cooperation Organization summit in Kyrgyzstan (31st Aug-1st Sep), Iran International reported. Iranian Senior Spokesperson of the Armed Forces said that foreign media are considered military targets. Senior Iranian Official said that an agreement with Oman with the Strait of Hormuz has not yet been finalised, sources note; are still working on an agreement over the Strait of Hormuz. Iranian Energy Minister said the four power plants that had been attacked by the US and Israeli at the beginning of the war have been rebuilt, Press TV reported. "The Qatari foreign minister is expected to arrive in Tehran tomorrow in order to try to promote something in the stalled negotiations between Washington and Tehran", Israeli journalist reported. Iranian Army Spokesperson Akraminia said in a possible future war, new issues could be raised, such as regional energy infrastructure. US Ambassador to Lebanon said "there is progress in the pilot areas, but what is on paper requires time for implementation", Al Hadath reported. Iranian Army said areas east of the Strait of Hormuz, north of the Indian Ocean, the Arabian Sea, and the Oman Sea are under our operational control, Al Jazeera reported. Iranian military said ships are under our surveillance hundreds of kilometers before they reach the Strait of Hormuz and can cross if they get our permission. RUSSIA-UKRAINE US President Trump said that something may come out of the CIA Director visit to Russia. Ukraine said it struck Russia's Norsi refinery, causing fire. Russia's Kremlin said it is currently impossible to determine whether the crisis in US-Russia relations can be overcome; no current plan for any contact with senior US representative. Ukrainian President Zelensky said that they struck 16 targets inside Russia in the past day, which involves oil facilities and logistics centers. OTHERS German Chancellor Merz said it has asked the cabinet to work on proposals for EU trade with China. Expect no change to Germany's top credit rating. Have absolutely no difficulty refinancing on the capital markets, and does not see any coming either. Have a chance to see GDP growth of 1% or above in 2027. On planned pension reform, all incentives for early retirement must be avoided. Canadian PM Carney is reportedly to attend the EU's State of the Union confab, Politico reported. NORTH AMERICAN DATA US Real Personal Spending (Jul MM) 0.0% (Prev. 0.4%). US GDP Price Index 2nd Est (Q2 QQ) 6.4% vs. Exp. 6.3% (Prev. 3.6%). US PCE Prices 2nd Est (Q2 QQ) 5.3% vs. Exp. 5.1% (Prev. 4.6%). US GDP Sales 2nd Est (Q2 QQ) 2.2% vs. Exp. 2.2% (Prev. 1.9%). US Core PCE Prices 2nd Est (Q2 QQ) 3.6% vs. Exp. 3.4% (Prev. 4.4%). US Real Consumer Spending 2nd Est (Q2 QQ) 3.4% vs. Exp. 3.2% (Prev. 0.5%). US GDP Growth Rate 2nd Est (Q2 QQ) 1.5% vs. Exp. 1.5% (Prev. 2.1%). US PCE Price Index (Jul YY) 3.7% vs. Exp. 3.6% (Prev. 3.7%). US Core PCE Index (Jul YY) 3.3% vs. Exp. 3.3% (Prev. 3.3%). US Corporate Profits Prel (Q2 QQ) 8.2% (Prev. 0.5%). US Personal Spending (Jul MM) 0.2% vs. Exp. 0.1% (Prev. 0.3%). US Personal Income (Jul MM) 0.4% vs. Exp. 0.2% (Prev. 0.2%). US Core PCE Index (Jul MM) 0.2% vs. Exp. 0.2% (Prev. 0.1%). US PCE Price Index (Jul MM) 0.2% vs. Exp. 0.1% (Prev. -0.1%). US Non Defense Goods Orders Ex Air (Jul) 0.2% vs. Exp. 0.9% (Prev. 1.7%). US Durable Goods Orders ex Defense (Jul MM) 1.3% (Prev. 0.3%). US Durable Goods Orders Ex Transp (Jul MM) 0.4% vs. Exp. 0.6% (Prev. 1.1%). US Durable Goods Orders (Jul MM) 1.1% vs. Exp. 0.5% (Prev. 0.3%). US MBA Mortgage Applications (Aug/21) -1.0% (Prev. -0.4%). US MBA Mortgage Refinance Index (Aug/21) 740.8 (Prev. 755.9). US MBA Purchase Index (Aug/21) 154.4 (Prev. 154.8). US MBA 30-Year Mortgage Rate (Aug/21) 6.78% (Prev. 6.77%). US MBA Mortgage Market Index (Aug/21) 245.3 (Prev. 247.7).