EUROPEAN OPEN: BHP AT rises as copper drives profit beat; UK may delay North Sea project decisions; HEN3 GY deal blocked by permanent FTC injunction; RHM GY could face China trade action; COLOB DC backs FY guidance after Q3 growth

EUROPEAN OPEN: European equities have opened to the downside, taking its cue from a soft overnight lead, amid geopolitical uncertainty and rising bond yields. The UK’s FTSE 100 fares somewhat better given the heavy weighting of energy companies in the index, and as oil prices rise. APAC stocks mostly declined following a weak performance on Wall Street, where all major indices were down amid higher oil prices and rising yields, amid ongoing geopolitical uncertainty following the expiry of the US-Iran MoU. Crude prices rose as prospects for a near-term end to the US-Iran conflict faded, and another vessel was attacked in the Strait of Hormuz. President Trump said he was in no hurry to resolve the conflict, and threatened Oman if it obstructed US efforts. Brent trades above USD 91/bbl, and WTI is above USD 84/bbl. Bonds are in focus as long-term sovereign yields surge globally amid inflation concerns, heavy government and corporate issuance, shifting investor demand. US 30yr yields topped 5.3%, the highest since 2007; French, German, UK and Japanese borrowing costs also climbed. For France specifically, Bloomberg notes that traders are building short positions ahead of budget negotiations and the Presidential Elections next April; French 30yr yields rose to the highest since 2008, while the 10yr spread over German bunds widened to 84bps; French PM Lecornu has warned that failure to pass the 2027 budget could push the deficit as high as 6.5% of GDP. Gold steadied near USD 4,400/oz, taking a breather amid geopolitical concerns, after recent gains were driven by reduced expectations for further Fed rate hikes, which weighed on the buck. Analysts say that a softer run of US data, debt concerns and renewed investor demand is supportive of prices. In data, the UK jobless rate was unchanged at 4.9% in June (exp. 4.8%), with 83k jobs being added (prev. 147k); average earnings ex-bonus rose to 3.5% in the three-months to June Y/Y (exp. 3.4%, prev. 3.4%), while the inc-bonuses figure eased to 4.1% (exp. 4.1%, prev. 4.4%). The more timely claimant count for July showed a decline of -11.0k (exp. +11.2k), with a -13k change in HMRC payrolls. The ONS said that the labour market landscape was little changed overall, with employment, unemployment and inactivity rates steady. Payrolled employees fell slightly in the latest quarter, while vacancies dropped to their lowest level in over five years, driven mainly by smaller businesses citing labour and operating costs. the stats agency added that regular wage growth has remained broadly stable, though private sector pay growth continued to ease, while public sector pay growth remains elevated due to NHS pay award timing. STOCK SPECIFICS: MATERIALS: BHP (BHP AT) shares rose overnight after FY profit beat expectations, and it lifted its dividend to a four-year high, driven by record copper prices and stronger copper earnings that overtook iron ore as its biggest profit contributor. CEO said copper remains BHP’s biggest growth opportunity, with production potentially rising by up to 40% by 2035; BHP expects copper demand to exceed 50mln tonnes annually by 2050 (vs about 34mln tonnes currently). On M&A, CEO said that management sees organic development as materially more attractive than acquisitions. INDUSTRIALS: Rheinmetall (RHM GY) could be among the first companies affected if China takes action as part of a trade dispute, according to Politico. ENERGY: The UK Government is reportedly expected to delay its decision on two North Sea oil and gas projects due to concerns about the “optics” of making the announcement after successive heatwaves, the Times reports. Lightning struck Explorer Pipeline’s Glenpool tank farm near Tulsa, igniting three tanks, halting facility operations and disrupting a critical 1,800-mile system, which is capable of storing 3.4mln bbls. HEALTHCARE: Bayer (BAYN GY) said Health Canada issued a Notice of Compliance expanding LYNKUET’s indication to treat moderate to severe vasomotor symptoms caused by adjuvant endocrine therapy related to breast cancer. Coloplast (COLOB DC) Q3 revenue +6% organically to DKK 7.36bln (exp. 7.26bln), EBIT margin 26%; margin pressure reflected FX headwinds and Kerecis; FY guidance was unchanged, sees organic revenue growth of 5-6%, and around 5% EBIT growth. CONSUMER CYCLICAL: Australia’s government has put in place additional measures on gambling advertising and marketing, restricting betting inducements for gamblers and commissions for staff. Tesla (TSLA) is preparing to launch its Cybercab in Austin, Texas, as soon as August, initially offering employee rides on public roads before adding vehicles to its robotaxi service days later, The Information reports. CONSUMER DEFENSIVE: A court granted the US FTC’s request for a permanent injunction blocking Henkel’s (HEN3 GY) proposed USD 725mln acquisition of Liquid Nails from American Industrial Partners. TECH: DataVita secured GBP 300mln of financing from ING Group (INGA NA), ABN AMRO (ABN NA) and Santander (SAN SM) to expand its existing Scottish data centre and build another. Fabrinet (FN) shares fell 8% in extended US trading, with reports suggesting that strong quarterly earnings and revenue were overshadowed by investor concerns around margins, heavy capex, and the pace of future growth, following a strong recent run in the shares. NOTABLE BROKER UPDATES: Segro (SGRO LN) downgraded at Berenberg; Hermes (RMS FP) downgraded at RBC; Land Securities (LAND LN) downgraded at Peel Hunt. Kingspan (KGP LN) upgraded at Jefferies; Whitbread (WTB LN) upgraded at Societe Generale. Rolls Royce (RR/ LN) reiterated with Buy rating at Goldman Sachs. DAY AHEAD: DATA: In Europe, Germany ZEW economic sentiment is expected to rise to 30 (prev. 26.3), with current conditions improving to -68.8 (prev. -77.6); Eurozone ZEW sentiment is seen up to 25.4 (prev. 23.4). In North America, US industrial production (exp. 0.3% M/M), manufacturing output (exp. 0.2% M/M), and capacity utilization (prev. 76.1%) are due. Housing starts are seen easing to 1.35mln (prev. 1.427mln) in July, and building permits are seen little changed at 1.37mln (prev. 1.374mln). July import prices are seen rising 0.1% M/M (prev. 0.3%), while export prices are seen rising 0.2% M/M (prev. -0.6%). US pending home sales are also due. After today’s data, the Atlanta Fed will update its Q3 GDPNow tracking estimate (prev. 4.3%). In Canada, housing starts data for July are due. CENTRAL BANKS: ECB chief economist Lane will participate in an EEA-ECB panel on monetary policy in a geopolitically fragmented world (no text expected). SUPPLY: UK auctions GBP 4bln of 2036 Gilts. ENERGY: After the US close, weekly API energy inventory data are due. EARNINGS: Notable corporates reporting today include: Home Depot (HD), Keysight Technologies (KEYS), Baidu (BIDU), Jack Henry (JKHY).