Newsquawk European Market Wrap - 27th August 2026

European bourses are set to end Thursday's trade with broad losses, with clear underperformance in the CAC 40. WTI Oct and Brent Nov futures reversed earlier losses and moved into positive territory as US-Iran rhetoric hardened. US White House mulls a new round of tariffs on chips, Politico reported citing sources. EQUITIES European bourses are set to end Thursday's trade with broad losses, with clear underperformance in the CAC 40 following disappointing earnings from Pernod Ricard and pressure in French banks ahead of a debate between Presidential candidates. Germany's DAX 40 was the only index in the green, supported by gains in Infineon and SAP following upbeat Nvidia and Salesforce earnings. Sectors held their negative bias. Tech held the top spot as the sector outperformer, with Financial Services and Energy managing to eke out mild gains. To the downside was Utilities, with Telecoms and Construction rounding out the sector laggards. Key movers included: Pernod Ricard (-7.7%), Q2 revenue missed estimates and guided FY sales growth at the lower end of its range due to soft US market; Entain (-2.6%), continued pullback after its removal from the FTSE 100; Kuehne+Nagel (-1.8%), US probes Apex Logistics over Nvidia AI chip smuggling; Novo Nordisk (-3.2%), downgraded to sell at Deutsche Bank; Computacenter (+6.5%), upgraded to buy at Peel Hunt. US cash equities opened with a broad positive bias, with the NDX the clear outperformer as Nvidia opened with gains in excess of 7% as it looks set for its biggest day since early February 2026. On the pre-market earnings front: Dollar General (+4.8%), Q2 metrics beat and guided FY EPS above estimates; Dollar Tree (-2.9%), despite Q2 SSS beating consensus. FX Muted action in G10 currencies throughout London trade today. Antipodeans and Scandis led amid the positive risk tone, while JPY, GBP and EUR were flat for most of the session. Nothing to derail the AI Capex narrative after NVIDIA earnings, in which Q2 results were strong and guidance impressed; a release which did not give too much lead to FX markets. After Schmid did not add too much new in Jackson Hole remarks, attention turns to Chair Warsh, who is set to speak on Friday at 15:00 BST. DXY set to finish London trade flat after profit taking above the 99.16 200DMA. JPY conformed to the general flat trend seen across G10s with not many surprises from BoJ Deputy Governor Himino who’s tone was consistent with pricing of September’s likely 25bps hike, noting in both of his speeches the BoJ needed to “pay more attention to upside inflation risks than before”. USD/JPY was range bound within 159.30/50 ahead of Tokyo CPI during APAC hours. EUR is set to finish flat against the Buck despite a number of EZ/French headwinds, incl. the French budget, Presidential debate and elevated TTF prices. EUR was pressured throughout the morning to a 1.1636 base as attention turned to the aforementioned French specific events ahead with the first debate featuring Marine Le Pen (far right, RN) and Jean-Luc Mélenchon (far left, LFI) set to begin at 15:45BST (see 14:20 analysis), however the single currency bounced off this level to a session peak above 1.1660, which traders cite technical factors. BoK hiked rates by 25bps to 3.00%, a move expected by around half of market participants. KRW was the initial outperformer vs. the USD but lost some steam around the YTD low of 1376, USD/KRW currently -0.2% with the meeting providing conviction for both hawks and doves. On one hand, six-month forward guidance signalled one more rate hike until Q1 2027, but expectations of growth led by exports saw KRW boosted. FIXED INCOME Fixed benchmarks were mixed. USTs (+1 tick) holds afloat, whilst Bunds (-24 ticks) and Gilts (-10 ticks) were under modest pressure. USTs were subject to thin volume. According to some traders, there were reports of a gateway fail at the CME on Wednesday, which followed through into today. A fix is said to be underway, but liquidity remains thin nonetheless. Potentially also adding to the limited action is traders flocking to risk assets, following strong Nvidia earnings. Earlier jobless claims confirmed that the labour market is in balance, falling to 203k (exp. 208k, prev. 207k) – no move was seen on the data. As for the Fed, a few policymakers have appeared today. Schmid noted that he would have supported a rate hike in July, adding that inflation remains stubborn and sticky. Goolsbee said he is trying to figure out if inflation shocks are persistent, but highlighted that the economy is broadly in balance. Bunds and Gilts were subject to mild pressure, potentially as Dutch TTF remained elevated. Also adding to this risk is some hawkish rhetoric from Russian officials today, and sources report that Iran could blacklist vessels/flags for violating the transit path in the Strait. There is mild underperformance in French debt today; OATs (-24 ticks). This is attributed to concerns over political instability ahead of the first French presidential debate (begins at 15:45 BST), alongside the Socialist party set to unveil 2027 budget demands this weekend. A full piece can be found on the headline feed at 14:20 BST. COMMODITIES WTI Oct and Brent Nov futures reversed earlier losses and moved into positive territory as US-Iran rhetoric hardened. The White House said no negotiations are currently taking place, all options remain on the table, and the naval blockade remains in effect. Iran, meanwhile, warned that vessels breaching its new Hormuz transit rules could face blacklisting, while a senior Iranian security official threatened proportionate retaliation against US-linked shipping, energy, insurance and financial interests if Washington seizes Iranian oil cargoes. WTI rebounded from a USD 80.65/bbl low to USD 82.81/bbl, while Brent recovered from USD 85.32/bbl to USD 87.70/bbl. Dutch TTF surged from earlier lows amid the renewed US-Iran tensions and associated risks to regional energy flows. TTF rallied from EUR 65.02/MWh to a EUR 67.78/MWh high, currently around highs and up over 3% on the session. Precious Metals remained mixed as the resilient Dollar continued to cap the complex. Spot gold extended lower from a USD 4,643/oz high to USD 4,564/oz before recovering modestly to around USD 4,575/oz. Spot silver fared better, rebounding from a USD 67.63/oz low to around USD 67.94/oz, having earlier printed a USD 69.63/oz high and trading on either side of its 100 DMA (USD 68.24/oz) Base Metals remained subdued despite ongoing hopes of Chinese stimulus, with the resilient Dollar and renewed energy-price upside providing headwinds. COMEX copper fell from a USD 6.63/lb high to USD 6.53/lb before recovering modestly to around USD 6.57/lb, while 3M LME copper earlier traded within a USD 14,207-14,323/t range. Thai gold dealers said that the Ministry of Finance currently have no near-term plans to impose a gold tax. Kuwait and Qatar have reportedly increased crude shipments through the Strait of Hormuz to around 1.4mmln BPD, some 70% of pre-conflict levels, according to reported. EUROPEAN DATA French Unemployment Benefit Claims (Jul) 21.5K (Prev. 5.9K). French Jobseekers Total (Jul) 3143K (Prev. 3121.5K). French PPI (Jul YY) 3.40% (Prev. 2.80%). French PPI (Jul MM) 1.1% (Prev. -0.4%). European Loans to Households (Jul YY) 3.1% vs. Exp. 2.9% (Prev. 3%). European Loans to Companies (Jul YY) 4.4% (Prev. 4.0%). European M3 Money Supply (Jul YY) 3.4% vs. Exp. 3.4% (Prev. 3.3%). Norwegian GDP Growth Rate (Q2 YY) 2.0% (Prev. 1.7%). Norwegian GDP Growth Mainland (Q2 QQ) 0.3% vs. Exp. 0.4% (Prev. 0.2%). Norwegian GDP Growth Rate (Q2 QQ) 0.7% (Prev. 0.4%). German GfK Consumer Confidence (Sep) -26.6 vs. Exp. -29.6 (Prev. -29.4). TRADE/TARIFFS US Senator Moreno (R) reportedly sent a letter to USTR Greer to open a Section 301 investigation on South Korea over its treatment of Coupang, Semafor reported. US White House mulls a new round of tariffs on chips, Politico reported citing sources. One approach under consideration would increase the number of tech products subject to levies. This means that duties would hit chips, and potentially items such as laptops, gaming consoles and servers that fill data centres. Commerce Secretary Lutnick reportedly favours a structure which would link foreign companies' relief from the tariffs to investments into US chip manufacturing. On this note, Lutnick would allow a set volume of chips enter the country duty-free, with the amount tied to how much a company pledges to produce in the US. Also under consideration is a phase-in period for new tariffs. But this is still subject to potential revisions in the coming weeks and months. The source suggests that recent talks with tech industry representatives have moved in a negative direction. No precise rate has been settled on yet. China's Commerce Ministry said it reserves the right to take all necessary measures re. US overcapacity tariffs. China's Foreign Ministry said that they are maintaining interaction on this year's US President Trump and Chinese President Xi meeting. CENTRAL BANKS Fed's Goolsbee (2027 voter, neutral) said he is trying to figure out if inflation shocks are persistent. Tariff and war related price increases are a challenge for the Fed. Political pressure on Fed puts him on the edge. Political interference on central banks generally leads to inflation. 3-month inflation does not look terrible. A 3% rate and 2% inflation is a loose target where the Fed is headed (likely talking long-term, given 2% inflation goal and c. 3% neutral rate). Economy on balance has been stable. Current low hire and low fire job market is unusual. Biggest short run fear is that inflation is not under control. Fed's Schmid (2028 voter, hawk) said mid-terms will not affect the Fed's October meeting, does not see Fed's credibility as damaged in recent weeks; would probably have supported rate hike in July meeting. Policy. Will take time to change Fed's balance sheet. May be room to have fewer fed meetings. Unclear what Fed policy is restricting right now. Fed will have work cut out for it as next meeting looms. Fed needs more information. Inflation. Inflation is stubborn and sticky. Energy shock is leaking into the economy. Fed needs to get to 2% inflation. BoJ Deputy Governor Himino said won't comment on market expectations regarding BoJ rate hike moves, adds BOJ will look at likelihood of its scenario and risks including Middle East conflict, AI demand, FX impact, in determining pace and timing of hikes. said:. We believe we can stabilise underlying inflation at 2% with appropriate policy moves. We will debate at each meeting desirable pace and timing of rate hikes to stabilise underlying inflation around 2%. Weak GDP data is somewhat worrying, but likely due to technical factors, so not enough to change his view regarding an economic outlook. Could speed up rate hikes if financial conditions remain too loose. ECB MINUTES: it was argued that a rate increase would not address the underlying cause of the rise in inflation. All members agreed to keep the three key ECB rates unchanged, judging a pause appropriate amid high uncertainty and an incomplete inflationary impact from the energy shock. All members backed unchanged rates provided communication stressed a firm commitment to ensure inflation stabilised at 2% over the medium term. Some noted they would not have opposed a rate rise, as incoming data since June had strengthened the case for further tightening. ECB's Radev said October and December meetings are both live, Econostream reported. Waiting until second-round effects are fully visible could mean acting too late. 2.5% not a "precise dividing line" but "probably around neutral". Sept. projections to show higher short term inflation and subdued growth. Must take tighter financial conditions into account when making decision. Not enough broad-based evidence to say growth risks are "clearly to the upside". NBP Minutes (Jul): Members say prices may rise in the coming months, primarily due to higher VAT and fuel excise tax. CPI inflation should return to around 2.5% in the second half of 2027 and may be even lower in the longer term. The inflation outlook is subject to uncertainty related to commodity prices and fiscal policy. The latest wage data confirms a slowdown in wage growth. The projected economic growth rate in the coming years should not generate excessive inflationary pressure, according to July minutes. The July projection suggests a slowdown in wage growth in the Polish economy. Filipino Interest Rate Decision 5.00% vs. Exp. 5% (Prev. 4.75%). GEOPOLITICS MIDDLE EAST Iran’s oil minister said crude sales have continued despite a decline, with deliveries still reaching customers in distant markets, ISNA reported. US White House on Iran said no negotiations happening right now and all options remain on the table; naval blockade stays in effect, Fox News Live interview. Qatar’s Foreign Ministry said Qatar and Iran discussed a proposed phased framework for reopening navigation through the Strait of Hormuz, including the establishment of a temporary joint shipping corridor and a mine-clearing project. Iranian lawmaker said Iran controls the Strait of Hormuz and vessels from the US, France, Britain or other hostile countries to enter the region. Iran has warned that vessels violating new Hormuz transit rules could face blacklisting alongside their flag, classification society and insurer; penalties could extend to other ships using blacklisted service providers, Nour News citing an official. Full Post:. "New warning in Hormuz: Choosing a flag and insurance in Hormuz is no longer costless An informed official told Noor News: "After the announcement of new arrangements for the passage through the Strait of Hormuz, a number of insurance companies, ship owners and economic activists have sent messages to the relevant Iranian institutions announcing their readiness to comply with the regulations." In the current mechanism of traffic in the strait, the nationality of the company or the place of registration of the ship is not the main criterion, and the professional behavior of the vessel and the degree of compliance with the announced arrangements will be the criterion for review. In case of violation, in addition to the vessel, the flag, the classification institute, and the related insurance company can also be blacklisted and face sanctions and countermeasures. This restriction can also be extended to other vessels, so that the conscious use of the services of a blacklisted flag, insurer or classification institution, even for a vessel without independent infringement, may result in consequences such as not being allowed to pass through Hormuz, fines, or countermeasures. Read the full text at the link below ". Pakistani Foreign Ministry spokesperson said Pakistan is not obliged to comply with unilateral sanctions imposed on Iran, while UN sanctions would constitute a different matter, journalist Mallick posted. Iranian Deputy Oil Minister said 40% of the damaged capacity of South Pars has returned to production, Fars reported. German Chancellor Merz said proposals for long-term EU budget amount to an increase of up to 60%. UK Manchester airport and other UK airports were reportedly subject to a cyber incident, Sky News reported. US Pentagon Policy Chief Colby said Poland, Germany, and the Netherlands are making extraordinary investments in defence; Europe will remain a critical interest for the US. Qatari PM and Foreign Minister met Iranian Foreign Minister in Tehran for talks amid ongoing diplomatic efforts to ease regional tensions, IRNA reported. A senior Iranian security official warned that any US' seizure of Iranian oil cargoes would trigger proportionate retaliation against US-linked shipping, energy, insurance and financial interests in the Persian Gulf, Nour News reported. OTHERS Kioxia (285A JT) and Sandisk (SNDK) said to plan USD 31bln memory fab expansion in Japan, Bloomberg reported. North Korea denounces US decision to sell weapons to South Korea and said US hostility to North Korea is clearly acknowledged, while it will respond swiftly and decisively to hostile actions, according to KCNA. RUSSIA-UKRAINE Indian PM Modi and Russia President Putin to hold bilateral meeting at the SCO, between August 31st and September 1st. Russia's Kremlin said Moscow remains open to participating in negotiations for a Ukrainian settlement, Al Arabiya reported. Russian Foreign Ministry said the UK should abandon its hostile position towards Russia, which creates risks of transferring the conflict to a fundamentally new level, IFX reported. Russian Foreign Ministry reiterates foreign troops in Ukraine which impede Russia's operation will become legitimate military targets. Russian Government Spokesperson Peskov said Russia's response to Ukrainian strikes on Russia's economic and trade infrastructure will be harsh. NORTH AMERICAN DATA Chicago Fed Labor Market Indicator (Aug) 4.10% (prev. 4.09%). US Wholesale Inventories Adv (Jul MM) 1.3% vs. Exp. 0.1% (Prev. 0.3%). US Retail Inventories Ex Autos Adv (Jul MM) 0.7% (Prev. -0.5%). US Jobless Claims 4-week Average (Aug/22) 205.5K (Prev. 204.25K). US Continuing Jobless Claims (Aug/15) 1778.0K vs. Exp. 1790K (Prev. 1796.0K). US Initial Jobless Claims (Aug/22) 203.0K vs. Exp. 208K (Prev. 207.0K). US Goods Trade Balance Advance (Jul) -118.80B vs. Exp. -99B (Prev. -101.41B). Canadian Average Weekly Earnings (Jun YY) 3.4% (Prev. 3.4%). Canadian Current Account (Q2) 8.8B vs. Exp. -2B (Prev. -8.3B).