Newsquwak European Market Wrap - 28th September 2026

European bourses started the European session on a modestly firmer footing. Crude futures pulled back from highs as mediators expected to hold separate talks with US and Iran on Monday or Tuesday. JPY remained the modest G10 outperformer after Japan’s top FX official Mimura said authorities were not satisfied or reassured by recent Yen price action. EQUITIES European bourses (STOXX 600 +0.4%) started the European session on a modestly firmer footing; some mild pressure was seen in late-morning trade, before then reverting back to the bullish bias. Action came despite strong energy prices, and elevated yields. European sectors hold a positive bias. Retail held towards the top of the pile, whilst Basic Resources and Tech lagged. The former was hit by pressure in the metals complex, whilst the Tech sector was hampered by woes surrounding Solidigm’s IPO, and its potential impact on SK Hynix. This led to pressure of c. 5% in SK Hynix shares overnight. US equity futures are broadly in the red this morning; the NQ (-0.6%) is pressured by the yield environment, with RTY (-0.6%) also falling to a similar magnitude. Some mild upticks were seen in the NQ earlier after NVIDIA (+1.7%) announced a record USD 150bln share buyback. Other key movers: SpaceX (+0.8%) gains after Mizuho and Morgan Stanley sounded bullish on the name, but pressure was seen after the Co. confirmed that Starship would not enter orbit following an engine failure. FX USD - DXY was initially little changed around the 101 mark, caught between higher oil prices, yields and Fed tightening bets on one side, and notable JPY strength on the other. The Buck subsequently ground higher through the European session, rising from earlier lows around 100.98 to above 101.15, amid the rise of oil prices (see below) Month- and quarter-end flows also came into view ahead of Wednesday. EUR - EUR/USD was subdued as the Dollar strengthened, falling below its earlier European low to around 1.1357. Bloc-specific drivers remained limited, leaving the pair largely at the whim of broader USD and GBP action, with ECB President Lagarde due for a text release at 15:00 BST. GBP - GBP remained modestly firmer against the USD despite some caution around the UK fiscal outlook. PM Burnham hinted at new taxes to fund social care reform and acknowledged challenging circumstances heading into the Budget, while also announcing a new help-to-buy scheme. The spending narrative was treated cautiously, although the potential growth impulse was taken at face value for now. GBP/USD came off its earlier 1.3275 high but remained firmer above 1.3250, while EUR/GBP remained below its 100 DMA (0.8588). JPY - JPY remained the modest G10 outperformer after Japan’s top FX official Mimura said authorities were not satisfied or reassured by recent Yen price action and were watching whether markets took their “clear message” at face value. Mimura also highlighted the BoJ’s shift towards rate hikes and subsequent narrowing of the US-Japan yield gap. USD/JPY initially extended lower towards 156.50, but subsequently pared a sizeable portion of the move to trade back around 157.05 (vs session high 157.86). Antipodeans - Antipodeans were mixed, with AUD modestly softer as gold and copper fell, while NZD was slightly firmer against the Dollar. AUD/USD traded within a 0.7006-0.7029 range ahead of Tuesday’s widely expected RBA hike, while NZD/USD traded within a 0.5649-0.5674 range. NZD was also supported by AUD/NZD falling below 1.2400 after finding resistance around Friday’s high. FIXED INCOME A bearish start to the week for fixed income. Action in the early European morning was relatively modest, before further pressure emerged across the day, despite the constructive tone out of US-Iran with mediators remaining in New York. Nonetheless, USTs hit a 104-15+ base, a tick above the contract low. Action that continued to lift yields across the curve, and the short-end is still leading with yields at/towards multi-year highs. Pressure seen across the fixed income space, with Bunds and Gilts lower by around 20 ticks at most, hitting bases of 119.22 and 83.93 respectively. For Bunds, newsflow has been very light and almost entirely focused on EU official commentary on defence/energy, and the broader macro action in the space; see Commodities for details. Gilts have been relatively resilient to the domestic press speculation at the start of the Labour Party Conference and ahead of the Budget. Hit an 83.93 base, but have generally traded in-fitting with EGBs throughout the day, showing some resilience to the tax-hike hints from Burnham and potentially welcoming the announcements which back the economy, such as the new Help to Buy scheme. Japan Bank for International Cooperation will issue EUR-denominated bonds, according to an SEC filing. Japan Finance Ministry proposes the cut to mid-term JGB liquidity auctions, given improved JGB market functions; proposes reducing 5-11 year liquidity enhancement bond supply. COMMODITIES Crude - WTI Nov and Brent Dec futures remained firmer overall after gapping higher at the open on renewed US-Iran tensions over the weekend, including Trump rejecting Iran’s latest Hormuz proposal and renewed Houthi activity against Saudi Arabia. However, crude dipped from session highs after reports that mediators are expected to hold separate talks with the US and Iran on Monday or Tuesday, focused on an amended version of Tehran’s seven-day proposal, with AP later reporting that indirect talks are expected to resume. There was also reports that Saudi Arabia's East-West pipeline has resumed oil exports. Iran’s Foreign Minister nonetheless said Tehran is “fully prepared” for war to resume, while Trump wants a permanent deal with full terms. WTI looks to end the European session between 92.57-96.54/bbl and Brent between 97.62-101.24, both mid-range. Natural Gas - Dutch TTF reversed its earlier gains alongside the pullback in crude as prospects for renewed US-Iran talks reduced some of the Middle East supply-risk premium. TTF fell from a EUR 74.42/MWh high to a EUR 71.46/MWh low and traded around session lows at the time of writing. Precious Metals – Precious metals extended their downside as elevated oil prices and the higher yield environment reinforced expectations for further Fed tightening. Spot gold fell through USD 4,200/oz to a USD 4,136/oz low from a USD 4,286.20/oz high. Spot silver underperformed to a greater extent, falling to a USD 60.96/oz low from a USD 64.26/oz high. Base Metals - Base metals remained softer amid the higher yield environment, broader metals selling and weaker Chinese data ahead of the holiday-shortened week, with Industrial Profits growth slowing sharply in August. COMEX copper fell to a USD 6.60/lb low from a USD 6.77/lb high, while 3M LME copper traded within a USD 14,366.93-14,612.00/t range. Ukraine Finance Minister said capable of exporting only c. 40% if its grain. US President Trump to unveil planned USD 15bln Iowa steel project, reported WSJ. US finalises new lower fuel economy standards. Kazakh President is to offer Germany a closer cooperation on raw materials and industrial sectors, Handelsblatt reported citing sources. Saudi Arabia's East-West pipeline has resumed oil exports. EU’s Kallas said Europe needs to rearm more quickly and effectively to meet its 2030 target. European Commission said it plans to propose delaying the entry into force of the EU methane regulation, with technical work underway. Ukrainian President Zelensky said they hit a Russian oil facility within the Krasnodar area. Qatar has reportedly extended its force majeure on LNG shipments to Asia and Europe by another month, Bloomberg reported. India Trade Minister Goyal said India is working with the UAE to expand strategic petroleum reserves. Libya’s NOC Chairman said the Sharara oil field is producing more than 300k BPD. Qatar to extend force majeure on LNG deliveries to Pakistan through November. NOTABLE HEADLINES UK Chancellor Healey said he hopes to win trust via fiscal discipline; these levels of debt are an affront on our values; we mill meet fiscal rules. Government has a responsibility to act to reduce welfare spending. Putting GBP 100mln into new apprenticeship scheme. Government will deploy all available resources to support robust employment. UK Defence Minister Streeting said more should be spent on defence. Reiterates the 3.5% of GDP ambition by 2035. Swedish Social Democrat leader Andersson said she will tell the parliament speaker she cannot form a government under the current circumstances. CENTRAL BANKS Fed Vice Chair of Supervision Bowman does not comment on monetary policy. BoE's Ramsden said more on second round effects will be known ahead of the next few meetings. Appear to be in a position of higher and longer-lasting headline inflation. BoE's Ramsden said his holds to Bank Rate since March have effectively delivered a tightening relative to where he thought we might otherwise have been. POLICY. "I think the risks to the inflation outlook, whether external or domestically generated, have tilted more to the upside". Whilst the policy stance continues to provide restrictiveness, were upside pressures on the inflation outlook to continue to build, there could be a case for increasing Bank Rate. Bank Rate being the ‘active’ tool doesn’t always mean it has to change. Indeed, a decision to hold can be an active response to the risks to the inflation outlook. QT. After another three years of QT progress and learnings, we are now ready to move to the next chapter. Of the GBP 488bln APF gilt stock, GBP 120bln of the longest-dated gilts will be retained to back current and future banknotes, leaving GBP 368bln to unwind for monetary-policy purposes. The remaining GBP 368bln will be unwound at an average GBP 46bln per year, including GBP 20bln of annual sales alongside maturities. The Bank is considering selling the remaining gilts to the Government rather than directly into the market, with the operational approach to be announced by April 2027. BoE's Dhingra said that she is worried that high rates would hit investment and lower supply. PBoC and seven other government bodies issue guidance to expand capacity and improve the quality of China’s service sector through financial support. Swiss Weekly Sight Deposits (w/e Sept 25) Total: 456.8bln (prev. 453.96bln); Domestic 432bln (prev. 428.03bln). GEOPOLITICS RUSSIA-UKRAINE Ukraine Finance Minister said capable of exporting only c. 40% if its grain. Ukraine does not expect a Black Sea ceasefire in the coming months. Kremlin said US-Russia arms discussions should continue, but the situation is complicated and will require extensive negotiations once recommence. Kremlin said Ukraine must face consequences for its recent actions. Ukrainian President Zelensky said they hit a Russian oil facility within the Krasnodar area. EU's Foreign Policy Chief Kallas said that intelligence reported indicate that Russia is planning further sabotage; called for focus on addressing gaps in Europe's defence capabilities. EU’s Naval Aspides Mission requires more naval assets to be operational, adding that the need is bigger than it has ever been. MIDDLE EAST Mediators likely to hold talks with Iran and the US, reported Irib News citing al Jazeera (echoes earlier reported). A source said that the mediators are expected to hold separate talks with the US and Iran today or tomorrow. The source added: The talks will focus on a revised version of the seven-day proposal that Iran has submitted. Mediators were still working with Iran and the United States on a deal to end the fighting and open the Strait of Hormuz, with the indirect talks expected to resume on Monday, reported AP. Two of the officials speaking to the AP on Monday confirmed that mediators are working with both sides on a proposal that would include reopening the strait and lifting the US. blockade, and then removing sanctions. According to the draft text being discussed, the strait would reopen in accordance with a separate deal that Iran has been discussing with Oman, on the other side of the strait, and it would include no tolls — something Tehran has pursued. That deal seeks to temporarily manage shipping traffic on what was seen as an international waterway before the war. The two officials also said that despite Trump’s public comments, the US has not officially rejected the current proposal, indicating that his remarks may have been a negotiating tactic. The third official said the U.S is seeking Iranian concessions on its nuclear program, including allowing inspectors to enter the country. One official reported positive signals coming from both sides. A second reported “slight progress” over the weekend. The third said mediators are still trying “to soften” the positions of both sides. Iran reportedly rejects 'speculations' about incident in UK's RAF Fairford. Mediators expected to hold separate talks with US and Iran on Monday or Tuesday, with Iran Foreign Minister Araghchi and Qatari mediators remaining in the US, according to sources. Talks to focus on amended version of 7-day proposal Iran presented on UNGA sidelines. US CENTCOM said Iran “has no navy” after US forces sank it and denies that Iran controls the Strait of Hormuz. Iran Brigadier General Safavi said arab states must know we have extended the hand of friendship to them and the US will not return to the region again. If the US starts another war, a new front will be opened against them. Iran Foreign Minister Araghchi told NBC News on Sunday that "Iran ‘fully prepared’ for war to resume but diplomacy not over yet". Iran’s Supreme Leader said all segments of Iranian society will firmly defend their legitimate positions, including safeguarding security in the Strait of Hormuz. The enemy wants to return our country to days filled with humiliation and subservience. Affirm that the past days our enemy wishes to return to are gone and will never be repeated. Iran has lodged a complaint with the United Nations over US sanctions against its aviation sector that have forced the cancellation of flights, AFP reported. Iran’s Supreme Leader Khamenei said “enemy forces” do not dare enter the Gulf and the Arabian Sea will soon be cleared of “enemies”. US official involved in Iran talks said Trump wants a permanent deal with full terms, Al Arabiya reported. US source involved in Iran talks said there is growing anger in Iran over the economic situation. Yemeni Houthi-linked military source said vital bridges in Saudi Arabia, particularly in Riyadh, could be added to its target list in response to Saudi strikes on Yemeni infrastructure, N12 reported citing Lebanese press. UK Defence Minister Streeting said that the Iranian regime poses a threat to the UK, but does not want to link the Iran conflict with the RAF incident. Iranian President Pezeshkian said Iran remains ready for dialogue despite being attacked during previous talks, but pressure and attacks will not force Iran to surrender. Yemeni sources say Armed Forces aircraft carried out several airstrikes on Houthi positions in Al-Rabeei, west of Taiz, Al Arabiya reported. Source said Iran is prepared to compromise on its nuclear programme but wants guarantees Israel will not attack again after a US deal, N12 reported. Saudi Civil Defence said danger has passed in Jazan and Najran. Saudi Civil Defense issues alert over potential danger in Jazan and Najran. IRGC reportedly captures a second US submarine drone, Sepah News reported. Regional governor's office noted that any sounds of explosions in southeast Tehran in the near-term are due to the destruction of unused ordinance, Mehr reported. OTHERS South Korean military said mine blast that injured three South Korean soldiers earlier this month is believed to be North Korea mines. NOTABLE NORTH AMERICAN NEWS White House official said US President Trump's 2pm announcement will be on Iowa steel project. US President Trump said “US has the BEST Employment Numbers in HISTORY.” The Fake News Media REFUSES to report this rather significant development, however!!!". Japanese FX Official Mimura said they are closely watching to see if markets take the clear message they are giving at face value. Not satisfied with or reassured by recent JPY action. BoJ's clear shift onto a rate-hiking path is gradually narrowing the Japan-US yield gap. A clear message was sent to the US on rates.