EUROPEAN OPEN: UCG IM faces German conditions over CBK GY control; MT NA considers BRL 5bln Pecem steel mill expansion; LUND DC mulls Xeris Biopharma deal; GRG LN raises profit view; TOM2 NA expands MSFT collab

EUROPEAN OPEN: European equities have opened higher. Overnight, APAC stocks rebounded as oil prices eased and US Treasury yields steadied ahead of key inflation data. China’s stimulus measures announced on Tuesday fell flat with traders overnight, who had hoped for more substantial aid to address underlying demand weakness. The muted market reaction contrasts sharply with the 25% five-session rally that followed China’s 2024 stimulus blitz. Analysts have said that the measures should secure the lower end of China’s 4.5-5% growth target, but still does not address structural imbalances. China’s official manufacturing PMI rose to 50.1 in September (exp. 50.1), returning to expansion for the first time in three months, with the production subindex hitting a 2026 high of 51.7. The non-manufacturing PMI surprised at 50.2 (exp. 49.2). Price subindices also rose amid higher tech and energy costs. Analysts at ING said the data points to a modest September activity uptick, aided by PBoC easing measures including a 25bps pledged supplementary lending rate cut and a mortgage subsidy for first-time homebuyers. In FX, the yen strengthened, with USD/JPY falling to below 156.40 overnight, outperforming G10 peers amid government warnings on FX, and quarter-end flows also cited. Expectations of another BoJ rate hike as early as October is also supporting the currency; OIS imply about a 23% chance of an October BoJ hike, with a 25bps hike almost fully priced by December. In central bank speak, Fed’s Williams (voter) suggested the Fed could wait until December before raising rates again, saying there is “no need for urgency” following September’s policy action, though another increase “late this year” might be appropriate; the probability of an October rate hike fell to near 50% from around 70% following his remarks, according to CME data. Gold was trading around flat near USD 4,180/oz, as lower oil prices eased inflation concerns while elevated US Treasury yields remained a headwind. Bullion is on track to fall almost 6% in September. Markets are watching US inflation and payroll data, amid expectations for further Fed rate hikes. Crude futures steadied, with December Brent trading near USD 96.50/bbl after a near-2% drop on Tuesday. Middle East crude exports have rebounded to 17.5mln BPD, or 98% of pre-war levels, according to JPMorgan; product flows remain weaker at 58%, however. Goldman Sachs estimates Persian Gulf oil exports at 23.3mln BPD, in line with the 2025 average despite continued shipping risks. Elsewhere, OPEC+ is likely to keep crude production quotas unchanged for November when key members meet this weekend, according to delegates cited by Bloomberg. Saudi Arabia and Russia are expected to maintain the existing roadmap after formally unwinding 2023 cuts, while further supply restoration remains constrained by war disruptions, weaker production capacity and a separate capacity review due this week. In EU-China trade news, China warned it would retaliate if the EU adopts broad tariffs on Chinese goods, saying such measures could undermine ongoing trade talks. Beijing criticised proposals for an EU tool modelled on US Section 301, and said discriminatory restrictions would damage mutual trust, disrupt consultations and threaten China-EU trade and supply-chain stability. In France, around 206K workers, including 30K in Paris, joined public-service protests across France over wages and rising living costs. The CGT union estimated participation above 300K. The demonstrations coincided with student protests over school conditions as PM Lecornu prepares to present a cost-cutting 2027 budget. In data, UK final GDP data for Q2 printed 0.5% Q/Q, revised up from 0.4% (exp. 0.4%, prev. 0.6%); GBP rose slightly following the release. Economists still expect growth to slow to 0.2% in Q3 and Q4, as higher energy prices, borrowing costs and budget uncertainty weigh on households and businesses, Bloomberg said. French prelim HICP rose to 3.4% Y/Y in September (exp. 3.1%, prev. 2.4%); follows hotter-than-expected Spanish metrics out on Tuesday, and comes ahead of today’s German readings, and the Eurozone-wide figures due on Friday. STOCK SPECIFICS: FINANCIALS: Germany is seeking commitments from UniCredit (UCG IM) before further steps toward taking control of Commerzbank (CBK GY), Bloomberg reports; Berlin wants Commerzbank to remain listed and headquartered in Frankfurt, protect jobs, expand SME lending and retain sufficient capital and decision-making in Germany. ENERGY: Canada PM Carney confirmed that a Shell (SHEL LN)-led consortium reached a final investment decision to double LNG Canada’s production capacity to 28mln tonnes a year, in a project estimated to cost between USD 21-23bln; expansion would make LNG Canada the second-largest facility of its kind globally. MATERIALS: ArcelorMittal (MT NA) is considering a BRL 5bln expansion of its Pecem steel mill in Brazil, with a final investment decision targeted by year-end; the project would add 1.5mln tonnes of annual hot-rolled coil capacity. Glencore (GLEN LN) and Yancoal Australia received approval to extend their jointly owned Hunter Valley coal operations to 2045; the project allows extraction of a further 430mln tonnes of coal. CONSUMER CYCLICAL: Of note for UK automakers, companies are reportedly urging the EU to implement post-Brexit rules that would impose tariffs on most UK-EU electric car trade; the introduction of the rules had previously been delayed by three years. US Republican Senator Moreno said talks are ongoing to revise a proposed Chinese vehicle ban to avoid restricting Mercedes-Benz (MBG GY); the bill would bar companies with more than 15% Chinese ownership from selling vehicles in the US, and Mercedes has nearly 20% Chinese ownership. Greggs (GRG LN) Q3 total sales growth +7.7%, LFL sales growth +3.4%; it raised its annual profit outlook, stating that improved trading reflected menu innovation and more settled weather. HEALTHCARE: Lundbeck (LUND DC) has reportedly expressed interest in acquiring Xeris Biopharma, and is working with advisers on a potential takeover, Bloomberg reports. Xeris is valued at around USD 1.8bln, and has said it is not for sale. FDA accepted Roche’s (ROP SW) NDA for fenebrutinib under priority review for RMS and PPMS. Eli Lilly (LLY) said Phase III TRIUMPH-2 showed retatrutide delivered substantial weight loss and A1C reductions at 80 weeks in adults with type 2 diabetes and obesity or overweight. TECH: TomTom (TOM2 NA) expanded its collaboration with Microsoft (MSFT), bringing TomTom location intelligence to AI agents built on Microsoft Fabric and Microsoft Foundry. Of note for AI companies, President Trump endorsed voluntary independent AI safety audits under a non-binding accord with major technology executives; the agreement recommends internal safety controls, oversight teams and board-level monitoring, while suggesting some measures could eventually be codified into law or regulation. Counterpoint Research estimates that Apple (AAPL) will sell about 6mln iPhone Duo units in 2026; Counterpoint also said iPhone 18 Pro sales in China started strongly, rising 12% vs the iPhone 17 Pro launch, helping Apple to reach a 33% smartphone market share. DeepSeek released open-source software developed with Huawei for programming Ascend AI chips, including TileLang, a platform positioned as an alternative to Nvidia (NVDA) CUDA. NOTABLE BROKER UPDATES: Rio Tinto (RIO LN) upgraded at Macquarie; Julius Baer (BAER SW) upgraded at Morgan Stanley. Generali (G IM) downgraded at Jefferies. DAY AHEAD: DATA: In Europe, Germany September prelim CPI are expected to see the headline rise to 3.1% Y/Y from 2.9%; HICP is seen rising to 3.1% Y/Y from prev. 2.9%; regional state readings will be released through the European morning. In North America, US August PCE is the main release, with the headline expected to rise by 0.4% M/M (prev. 0.2%), and the annual rate is seen ticking up to 3.8% Y/Y (prev. 3.7%); core PCE is expected to rise by 0.3% M/M (prev. 0.2%), with the annual rate of core PCE seen rising to 3.4% Y/Y (prev. 3.3%); meanwhile, personal income is seen rising 0.4% M/M (prev. 0.4%) and spending by 0.8% M/M (prev. 0.2%). Final US Q2 GDP is expected to see the headline at 1.5% Q/Q (prev. 2.1%). Ahead of Friday’s official jobs data, the monthly ADP employment change is due (prev. 38K). Elsewhere, the advance goods trade balance (prev. USD -118.8bln), and Chicago PMI (prev. 47.1) will be released. After today’s data releases, the Atlanta Fed will update its Q3 GDPNow tracking estimate (prev. 5.0%). CENTRAL BANKS: ECB’s Schnabel speaks at a Financing Seminar (text released); ECB’s Elderson speaks (text released). Fed’s Kashkari (2026 voter, hawk), Goolsbee (2027 voter, neutral), Barkin (2027 voter, neutral) and Cook (voter, neutral) are on today’s docket. The BoE will publish its September FPC record; Riksbank releases September meeting minutes; SNB publishes its Q3 quarterly bulletin. OPTION EXPIRIES: Brent November 2026 futures. SUPPLY: Germany auctions EUR 5.5bln of 2036 Bunds. ENERGY: DoE weekly energy inventory data are due; afterhours on Tuesday, the API weekly inventory figures reportedly showed headline crude stocks posting a surprise build of +1.0mln (exp. -1.1mln), Cushing stocks built by +0.2mln, gasoline saw a surprise build of +3.0mln (exp. -0.5mln), while distillate stocks saw a draw of -0.3mln (exp. +0.0mln). EARNINGS: Notable corporates reporting today include: Micron (MU), Jabil (JBL), FactSet (FDS).