Newsquawk European Market Wrap - 28th August 2026

European bourses were broadly firmer, with outperformance in the CAC 40 (+1%); US equity futures are mixed. DXY treads water into Fed Chair Warsh; G10s also uneventful. Two regional sources told Axios that in recent days Iran has shown renewed interest in negotiations. EQUITIES European bourses are set to end the final trading day of the week entirely in the green, with France's CAC 40 maintaining the top spot as French stocks reverse Thursday's losses. All in all, this week's price action has been rangebound and in low volumes, but with the Summer season nearing an end, volumes could step back in the coming weeks. Sectors held their positive bias. Autos finished as the outperformer, with Chemicals and Consumer Products & Services rounding out the top 3 sectors. The sector laggard was Health Care, with Real Estate and Retail completing the sector laggards. Key movers include: Flughafen Zurich (-7.6%), highlighted a slower-than-expected ramp-up in its Noida International Airport; EssilorLuxottica (+2.4%), announced share buybacks of up to 5mln shares; Strabag (+16%), H1 revenue beat and raised its FY26 guidance; Siemens (+1.3%), upgraded to buy at Erste. US cash equities opened mixed. The biggest movers were PayPal (-14%) and Marvell (-9%), with the former slipping after the consortium led by Advent and Stripe abandoned its pursuit of PayPal, while the latter fell after modestly beating expectations and guiding gross margin at the low end of the consensus range. FX G10 currencies lacked a bias into the highly anticipated Warsh Jackson Hole address. Most G10s were flat against the Buck; Aussie was the marginal leader, EUR, GBP and JPY lagged. In EMFX, KRW was a clear outperformer, and BRL underperformed. DXY headed into Warsh's speech and Payroll revisions with modest gains after surpassing the 200DMA of 99.16, currently 99.21 into the speech; questions are on whether the Fed Chair will touch on short term policy direction. Some see Warsh delivering thoughts on the potential use of stablecoins for financial system plumbing given the title of the panel; others see it as an opportunity to give some guidance as previous Fed chairs have done. The market will likely welcome forward guidance given the lack of remarks on this matter since taking the Fed helm. MUFG says the closest historical comparisons to today’s speech are “probably 2008 or 2016” given the level of uncertainty, which both garnered a 0.7% move in EUR/USD - FX options price a 46-pip move in EUR/USD today, lower than the historicals that MUFG refers to. While OATs saw some weakness at the open, EUR was steady in the wake of the French Presidential debate. Focus now shifts to Fitch’s rating on France this evening, seen unchanged, and the Socialist party which are set to unveil demands for France’s 2027 budget over the weekend. EUR/USD likely at the whim of the Buck into the highly anticipated Warsh speech, 200DMA c. 10 pips below will likely support the pair for the moment. GBP/USD is set to finish flat but off worst levels after finding support at 1.3580. A couple updates were out on the domestic political front. The FT reported UK Chancellor Healey will shelve defence spending targets when presenting the October budget, a move which could save as much as GBP 10bln/year, based on OBR forecasts. It was separately reported that there could be potential modifications to council taxes, though no GBP move was seen on this reporting. GBP/USD was either side of 1.3580. Ahead, BoE's Bailey and is set to speak. Japan spent JPY 15.4tln on intervention between July 30 and August 26. FIXED Fixed income benchmarks were under very mild pressure this morning, but with price action ultimately muted ahead of the day’s key risk events. USTs (-2 ticks) traded within a narrow 108-13+ to 108-20 range, whilst Bunds (-17 ticks) and Gilts (-20 ticks) are hampered by elevated gas prices. USTs traded in an exceptionally thin range this morning as attention remains on two key risk events. Firstly, Fed Chair Warsh is set to speak at 15:00 BST (10:00 EDT). Whether he touches on monetary policy remains to be seen, but even if he doesn’t, there is a risk markets will begin to price in credibility woes once again. At the same time as Warsh, the BLS will release the annual NFP benchmark revision; consensus sees a revision of +200k. Over in Europe, EGBs and Gilts have been subject to a few days in the red, as gas prices remain elevated. A lot of that pressure is attributed to fears surrounding low gas storage, and recent punchy rhetoric out of Russia has also not helped the mood. However, into the afternoon, gas prices dipped off best levels, which allowed yields to ease off highs. For France specifically, OATs have had the first Presidential debate to digest. Ultimately, there was no clear victor, but the confab made evident the stark contrast in views held between parties. This can be evidenced in the 10yr OAT/Bund spread, which remains near recent highs at 85bps, but ultimately fairly stable today. OATs fared a touch better vs peers, potentially as the leading candidate Le Pen provided further colour on how she would solve France’s debt problem. She noted that spending needed to be cut, arguing that France should not commit more than EUR 5bln to the EU (vs ~EUR 29bln in 2026). She said she would present a EUR 125bln cost-cutting plan before the next budget debate, which will only happen once PM Lecornu submits the 2027 budget bill (end-Sept). Italy sold EUR 6.5bln vs exp. EUR 5.75-6.5bln 3.15% 2031, 4.00% 2036 BTP and EUR 2bln vs. EUR 1.5-2bln 1.773% 2034, 1.645% 2035 CCTeu. 3.15% 2031: b/c 1.72x (prev. 1.59x), average yield 3.44% (prv. 3.39%). 4.00% 2035: b.c 1.62x, averge yield 4.10%. 2034 CCTeu: b/c 2.00x, real yield 3.14%. 2035 CCTeu: b/c 1.99x, real yield 3.20%. COMMODITIES WTI and Brent futures remained subdued but off earlier lows as the lack of any tangible escalation kept some geopolitical premium in check, before Axios sources said Iran had shown renewed interest in negotiations in recent days, albeit no major reaction was seen on this news. Nonetheless, WTI fell from a USD 83.78/bbl high to USD 82.25/bbl before recovering to around USD 82.50/bbl, while Brent declined from USD 88.58/bbl to USD 87.26/bbl before recovering modestly to around USD 87.50/bbl. Dutch TTF extended its upside amid persistent European supply concerns, with QatarEnergy extending LNG force majeure to Edison until November 4. TTF rose above EUR 70/MWh for the first time since March, hitting EUR 70.09/MWh from a EUR 67.13/MWh low, before easing to around EUR 67.50/MWh. Precious Metals were mixed following two sessions of weakness despite a resilient Dollar. Spot gold recovered from a USD 4,572/oz low to flat around USD 4,600/oz, having earlier printed a USD 4,614/oz high. Spot silver outperformed and reclaimed USD 70/oz, rising from a USD 68.44/oz low to around USD 70.50/oz, after reaching a USD 70.95/oz high. Base Metals remained mostly firmer despite the resilient Dollar, with the complex continuing to be underpinned by expectations for near-term Chinese stimulus. COMEX copper recovered from a USD 6.57/lb trough having earlier reached a peak of USD 6.64/lb, while 3M LME copper earlier traded within a USD 14,277.65-14,385.00/t range. Oil loadings from Russia’s Black Sea port of Novorossiysk are reportedly set to fall by more than half month-on-month in August due to drone attacks, reported suggest. US President Trump said he is authorising legal documents to allow American farmers and ranchers to process their own food, aiming to reduce their dependence on the four major meat processors. Saudi Aramco reportedly sold around 4mln barrels of Arab Medium and Heavy crudes to Chinese refiners for loading in September at locations just outside Hormuz, Bloomberg reported. Ukraine's Military said it struck an oil refinery in Yaroslavl, Russia. Global Aluminium producer is seeking a premium of USD 310/t for October-December 2026 in talks with Japan (-22% Q/Q), according to source reported. Qatar Energy extends LNG force majeure to Edison (EDNR IM) until November 4. Kazakhstan has restored oil production to normal levels, which were previously reduced due to the attacks on the CPC, Interfax reported. Ukraine’s agriculture minister said the country’s winter wheat planting area is expected to decline in 2027. Chinese State Planner to raise domestic gasoline prices by CNY 375/t and diesel by CNY 360/t. EUROPEAN DATA Spanish Business Confidence (Aug) -3.9 (Prev. -2.6). Spanish Business Confidence (Aug) -3.9 (Prev. -2.6). Spanish Retail Sales (Jul MM) -0.9% (Prev. 0.3%). Spanish CPI Prel (Aug MM) 0.7% vs. Exp. 0.6% (Prev. 0.3%). Spanish HICP Preliminary (Aug MM) 0.6% vs. Exp. 0.8% (Prev. 0%). Spanish Core CPI Prel (Aug YY) 2.9% (Prev. 3%). Spanish Retail Sales (Jul YY) -0.3% (Prev. 0.5%). Spanish HICP Preliminary (Aug YY) 4.5% vs. Exp. 4.6% (Prev. 3.9%). Spanish CPI Prel (Aug YY) 4.3% vs. Exp. 4.2% (Prev. 3.6%). European Services Sentiment (Aug) 5.8 vs. Exp. 4.9 (Prev. 5.1). European Selling Price Expectations (Aug) 16.4 (Prev. 17.8). European Industrial Sentiment (Aug) -5.3 vs. Exp. -5.2 (Prev. -6.1). European Economic Sentiment (Aug) 98.4 vs. Exp. 97.5 (Prev. 97.1). European Consumer Confidence Final (Aug) -15.5 vs. Exp. -15.5 (Prev. -15.9). European Consumer Inflation Expectations (Aug) 33.0 (Prev. 30.4). German Unemployment Change (Aug) 4K vs. Exp. 5K (Prev. 6K). German Unemployed Persons (Aug) 2.996M (Prev. 2.993M). German Unemployment Rate (Aug) 6.4% vs. Exp. 6.4% (Prev. 6.4%). German Import Prices (Jul YY) 6.8% (Prev. 6.1%). German Import Prices (Jul MM) 0.2% vs. Exp. 0.2% (Prev. -0.7%). French GDP Growth Rate Final (Q2 YY) 0.5% vs. Exp. 0.7% (Prev. 0.9%). French CPI Prel (Aug MM) 0.7% vs. Exp. 0.6% (Prev. 0.6%). French CPI Prel (Aug YY) 2.4% (Prev. 2.1%). French HICP Preliminary (Aug MM) 0.8% (Prev. 0.6%). French HICP Preliminary (Aug YY) 2.7% (Prev. 2.4%). French Household Consumption (Jul MM) 0.5% vs. Exp. 0% (Prev. 0.6%). French GDP Growth Rate Final (Q2 QQ) 0.0% vs. Exp. 0.2% (Prev. -0.2%). Swedish GDP Growth Rate Final (Q2 YY) 3.3% vs. Exp. 2.5% (Prev. 2%). Swedish GDP Growth Rate Final (Q2 QQ) 1.4% vs. Exp. 1.4% (Prev. -0.2%). NOTABLE HEADLINES French Finance Minister said the first batch of economic data released after the summer heatwave were "poor"; said a downward revision to Q2 data and will have an impact on Q3. UK Chancellor Healey left the door open to council tax changes in the autumn budget, POLITICO reported. UK Chancellor Healey left the door open to council tax changes in the autumn budget, POLITICO reported. EU Commission President von der Leyen's policy of banning social media for minors is to be watered down due to legal challenges and conflicting views, Politico reported. Von der Leyen is to announce the restrictions at the State of the EU speech on September 16th. UK Chancellor Healey reiterates that fiscal discipline remains a top priority and pledges that the government will stick to fiscal rules. TRADE/TARIFFS CENTRAL BANKS Fed's Hammack (2026 voter, hawkish dissenter) said inflation will end the year around 3% and that it is currently not meeting target. Does not see restrictive financial conditions. Not a lot of restriction in the economy. Time for the Fed to act with hiking rates and that waiting will create pain. Communicating is a critical part of the job. Keeps an eye on the market to make decisions. Markets are not a substitute for the Fed. Committed on bringing inflation to its target. Credibility depends on delivering the dual mandate. Input costs are going up. Not focused on any "froth" in the market. Interest rates is the main and clearest tool for the Fed. Balance sheet reflecting many things starting from the GFC. Walks into every meeting with an open mind. BoJ Governor Ueda will attend the G20 meeting from August 30th, according to reported. ECB's Kazaks said that inflation must not be allowed to take root. PBoC to boost credit support for China's property sector. GEOPOLITICS RUSSIA-UKRAINE Oil loadings from Russia’s Black Sea port of Novorossiysk are reportedly set to fall by more than half month-on-month in August due to drone attacks, reported suggest. Russia's Kremlin spokesman Peskov said Russia will continue military operations against Ukrainian military infrastructure and that Russian forces will keep advancing. Adds that Kyiv knows Moscow’s conditions for ending the conflict but has no intention of seeking a peaceful resolution. said there are currently no new proposals to resume negotiations. Russia's Kremlin said President Putin will hold talks with Belarusian President Lukashenko on August 29th. Ukraine's Military said it struck an oil refinery in Yaroslavl, Russia. Ukraine’s agriculture minister said the country’s winter wheat planting area is expected to decline in 2027. MIDDLE EAST Two regional sources told Axios that in recent days Iran has shown renewed interest in negotiations. Iran’s Foreign Ministry said the new US economic measures against Iran amount to “state terrorism”, are illegal and reprehensible, and form part of a “ruthless” economic campaign designed to inflict pain and suffering on Iranians. Urges other countries to refrain from implementing the US sanctions. Adds that Tehran said is determined to use all its capabilities to defend the country against a “combined US-Israeli military and economic assault”. Iran's Parliament Member Kawsari said "Any agreement with Oman is subject to the lifting of the naval blockade"; US messages have reached through Qatar, Oman and Pakistan,but Iran will only enter the operational phase after implementing several paragraphs. Iranian Foreign Minister Araghchi said discussions with Qatar’s PM and foreign minister showed diplomacy could be restored, but argued that the US must abandon pressure, build trust, respect Iran’s rights, and honor its commitments. Yemeni sources reported that Saudi artillery targeted residential villages in the Al-Thabit area of Qatabar, Saada Province, Yemen, Nour News reported. NOTABLE NORTH AMERICAN NEWS US Trump Administration is reportedly working on AI rules to reduce China's remote access to chips, The Information reported citing sources. Attempts to close the loophole in existing export control policies. An example of this is Chinese AI firms gaining access to advanced chips through countries like Thailand and Singapore. Feedback could be provided as early as September. NORTH AMERICAN DATA Canadian GDP Prel (Jul MM) 0.0%. Canadian GDP (Jun MM) 0.3% vs. Exp. 0.2% (Prev. 0.3%). Canadian GDP (Q2) 3.3% vs. Exp. 3.4% (Prev. 0.3%). Canadian GDP Growth Rate (Q2 QQ) 0.8% (Prev. 0.1%). Canadian GDP Implicit Price (Q2 QQ) 2.50% (Prev. 1.20%).