Newsquawk European Market Wrap - 29th July 2026

US President Trump said he is going to let Iran keep talking, "we'll be hitting Iran hard"; oil hit fresh intraday highs. European stocks were mostly lower after Trump's remarks despite earlier earnings-driven price action. The Fed is expected to keep rates unchanged, although a hawkish risk remains given the recent geopolitical developments. EQUITIES European bourses were lower pretty much across the board, though to varying degrees, with the packed morning of earnings dictating. Euro Stoxx 50 -0.3%. On the macro front, the main updates were the overnight return to conflict between the US and Iran, and POTUS saying they will be “hitting Iran hard”. Amidst the initial return to conflict (i.e. pre-Trump Truth), the APAC session and much of the European morning were dictated by SK Hynix closing lower by 9% post-earnings, as record profits missed lofty expectations, and ongoing AI-demand concerns and shareholder return concerns outweighing memory demand. Amidst this, the KOSPI closed lower by nearly 6%. In Europe, the morning was, as mentioned, characterised by a packed, but generally constructive, set of earnings. Highlights include: Kering (+15%) with LFL sales +2%, Gucci’s decline easing and jewellery increasing; Deutsche Bank (+2.1%) strong net, given IB/FIC growth, buyback; Glencore (+3.3%) strong production update, implied they could have upgraded guidance; CaixaBank (-6%) as NII underwhelmed; ASM International (-4.3%) overshadowed by SK Hynix. US indices opened with losses, with the Nasdaq 100 the relative outperformer and only seeing marginal pressure after seeing notable selling this week, so far, and underperforming peers WTD. Sectors are mixed as earnings come thick and fast, with Energy and Communication Services sitting atop the breakdown, and Industrials lagging. After-hours attention turns to earnings from MSFT, META, QCOM, LRCX, and ARM, amongst others. FX USD - DXY was relatively choppy but uneventful within a narrow band for most of the European morning ahead of the FOMC, trading within a 101.24-101.49 range, before briefly spiking to ~101.50 following Trump’s remarks on imminent strikes against Iran in response to the US base attacked in Jordan. The move faded quickly as markets refocused on the Fed, leaving the index broadly flat overall despite the geopolitical escalation. The Fed is expected to keep rates unchanged, although a hawkish risk remains given the recent geopolitical developments. (Full Newsquawk preview available) EUR - EUR/USD held a mild upward bias earlier in the session amid a subdued Dollar, but pared slightly on the USD’s brief strength post-headlines, remaining within the 1.1375-1.1404 range. Bloc-specific catalysts remained light. GBP - Initially traded with a modest upside bias around 1.3300 but trimmed slightly on the USD uptick, holding within a 1.3277-1.3309 range. UK focus turns to the BoE tomorrow, in which a hold is most likely, but eyes will be (in this order) on the vote split, statement, and then Governor Bailey’s presser at 13:00 BST (later than usual amid renovations at the bank). JPY - The Yen was modestly firmer on potential haven demand following geopolitical tensions and APAC equity weakness, though USD/JPY came off worst levels as the DXY gained, with the pair looking to end the European day around the middle of a 163.28-163.88 range. Eyes remain on the Fed, but Japan also tackles the aftermath of the major earthquake yesterday, which has the potential to reinforce market expectations the BoJ will hold at the next meeting. In fiscal news, reports suggest Japanese PM Takaichi plans to cut food sales tax to 1% for two years starting April 2027, while the government will finalise the plan in August Antipodeans - Mixed; AUD remained pressured at the bottom of the 0.6935-0.6979 range after softer inflation data and Westpac’s shift to an RBA hold through 2026 (vs prior expectations of an August hike), while NZD was relatively cushioned via AUD/NZD downside but remained soft overall, trading within a 0.5769-0.5794 range. FIXED INCOME Fixed income under modest pressure across the day, with USTs lower by a handful of ticks, Bunds by around 15 and Gilts somewhere between. The macro focus has been firmly on geopolitics as the IRGC targeted US forces and the US retaliated, in addition to the busy session of earnings. Since the main mover was US President Trump posting that they will be “hitting Iran hard” overnight, in response to the strikes on US targets in Jordan. This pushed USTs to a 108-16+ low, within reach of 108-15+ and 108-12+ respectively from the last two days. Ahead, the main update is the Fed, where a hold is expected, but the risks are hawkish in nature given recent energy action; currently markets imply around a 30-35% chance of a hike. Full Newsquawk preview is available. EGBs also hit a new low on the Trump comment, at 124.80 for Bunds. But it is set to end the day around five ticks off that, but lower by some 30 ticks. Prior to this, there was fleeting upside on a notable Y/Y pullback in German June import prices, no reaction to another poor 10yr tap, or the latest ECB wage tracker. Germany sold EUR 4.5bln (exp. 6bln) 3.00% 2036 Bund: b/c 1.1x (prev. 1.03x), average yield 3.13% (prev. 3.09%) & retention 25.05% (prev. 35%). COMMODITIES Crude- Futures gapped higher overnight as geopolitical tensions escalated after Iran launched missiles at a US base in Jordan, although CENTCOM said all missiles were intercepted. This was followed by US-Saudi strikes on Iranian-backed militia in Iraq, while Saudi air defences intercepted drones targeting energy infrastructure. Iran’s IRGC confirmed missile strikes on US assets in Jordan and said three tankers were hit and seized in the Strait of Hormuz, warning US interference would not go unanswered. Prices then spiked higher in the European afternoon after Trump signalled imminent strikes, with Brent Oct'26 jumping from ~USD 85.90/bbl to north of USD 87/bbl within minutes (daily range between USD 83.95-87.22/bbl), Natural Gas – Dutch TTF initially found resistance at EUR 59.50/MWh, and support at EUR 58/MWh, although the contract has been grinding higher throughout the session, whilst the Trump comments took the contract to north of EUR 61/MWh. Precious Metals – Mixed overall. Spot gold was initially supported by haven demand despite a largely stable Dollar, although the Trump comments sparked some brief USD strength and weighed on the precious metal, though price action is contained ahead of the FOMC. Spot gold looks to end the European day towards the bottom of a USD 4,009-4,047/oz parameter Base Metals - Mixed to subdued as geopolitical tensions weigh on the growth outlook. 3M LME copper traded within a narrow USD 13,568.00-13,690.90/t range, while iron ore prices waned overnight amid weak steel demand concerns. Russia is preparing to extend its diesel export ban by one month, although the restriction could be lifted in mid-August if the domestic supply situation ‌improves, according to Reuters citing sources. Egypt aims to drill 160 new oil and gas wells with investments of USD 7.2bln, according to Al Arabiya. Discounts on Russian Urals crude drop to USD 1-2/bbl vs Brent in India, according to sources. UAE State Oil Company reportedly sold crude to Asian refiners at higher prices in its latest tender, according to sources. EUROPEAN DATA UK Mortgage Approvals (Jun) 58.20K vs. Exp. 56K (Prev. 56.21K). UK Net Lending to Individuals MoM (Jun) M/M 9.5B vs. Exp. 5.5B (Prev. 4.6B). UK Mortgage Lending (Jun) 7.73B vs. Exp. 3.95B (Prev. 2.89B). UK M4 Money Supply MoM (Jun) M/M 0.8% vs. Exp. 0.2% (Prev. 0.1%). UK BoE Consumer Credit (Jun) 1.807B vs. Exp. 1.7B (Prev. 1.662B). Italian Industrial Sales MoM (May) M/M 0.60% (Prev. 0.3%). Italian Industrial Sales YoY (May) Y/Y 5.3% (Prev. 3.2%). Swedish GDP Growth Rate YoY Flash (Q2) Y/Y 2.8% (Prev. 2%). Swedish GDP MoM (Jun) M/M -0.2% (Prev. 0.9%). Swedish GDP Growth Rate QoQ Flash (Q2) Q/Q 1.4% vs. Exp. 0.7% (Prev. -0.2%). German Import Prices MoM (Jun) M/M -0.7% vs. Exp. -0.8% (Prev. 0.7%). German Import Prices YoY (Jun) Y/Y 6.1% vs. Exp. 6.0% (Prev. 6.8%). Norwegian Retail Sales MoM (Jun) M/M 1.8% (Prev. -2.1%). NOTABLE HEADLINES A German government spokesperson said Berlin is open to a windfall tax on oil companies, but the measure faces significant legal hurdles.TRADE/TARIFFS US tariffs are sending some firms back to China, NYT writes. UK Foreign Secretary Miliband will play a “greater role” in the UK's Brexit reset talks than previous foreign secretaries, the FCDO told POLITICO. CENTRAL BANKS ECB's Patsalides said as inflation risks rise, the balance shifts towards pre-emptive action, EconoStream reported. No evidence favoured July hike; second-round effects are not evident and expectations are anchored. If higher oil prices persist, inflation risks will rise. Hikes in projections do not obligate us, policy can not depend on today's yield curve. Scenarios could be changed or updated after September data. Higher prices may be filtering into parts of the economy which are not easily observed. ECB Wage Tracker - Annual, 2026: 2.301% (prev. 2.281%). Quarterly, Q1-2027: 2.664% (1st estimate). Quarterly. Q1 2026: 1.833% (prev. 1.834%). Q2 2026: 2.140% (prev. 2.129%). Q3 2026: 2.590% (prev. 2.558%). Q4 2026: 2.641% (prev. 2.604%). Q1 2027: 2.664% 1st estimate. Annual2026: 2.301% (prev. 2.281%). GEOPOLITICSMIDDLE EAST US President Trump said he is going to let Iran keep talking, "we'll be hitting Iran hard", via Fox Interview; strikes will take place in response to attacks on US targets in Jordan. Saudi and US strikes were co-ordinated with the Iraqi government. There will be a response to attacks on Jordan. Enemy projectile hits uninhabited area in West Azerbaijan, a province located in Northwestern Iran, reported Fars News. Iranian Navy said Iran's armed forces fully control the eastern Strait of Hormuz, the Gulf of Oman and the northern Indian Ocean, adding that no movement takes place in the strait without their authorisation, Tasnim reported. Yemen Houthis reportedly mull imposing fees on commercial ships sailing through the Southern Red Sea, according to sources; Chinese vessels would potentially be exempt. An Israeli military source said Defence Minister Katz disclosed operational details about the takeoff of US fighter jets from Israel to carry out strikes on Iran, Al Hadath reported. Iranian military source said Iran was not responsible for any attacks on Saudi territory, Al Mayadeen reported. Three Japanese-linked vessels have exited the Strait of Hormuz via Iran's designated route, Kyodo reported. Chinese Foreign Ministry denies reported that Iran will received Chinese-made man-portable air defence systems in the coming weeks. US War Secretary Hegseth to meet Israeli PM Netanyahu today, reported Axios. Senior American official said "There was no attack", reported Barak Ravid from N12 News. Iraq's Harakat Hezbollah Al Nujaba said it will not allow US or Saudi forces to "desecrate Iraqi soil without paying a heavy price". Israeli military said incident constitutes blatant violation of ceasefire agreement in Lebanon by Hezbollah. The Iraqi Hashd al-Shaabi announced that this morning, the organization's official bases in several provinces were targeted by a joint US-Saudi attack, reported Irib. Several loud explosions are being reported in Jordan, according to Nour News. Iraq PM's planned visit to Saudi Arabia tomorrow has been cancelled, Iraqi government source tells Al-Araby. A senior Iranian official said Tehran has rejected Oman's proposal for regional joint management of the Strait of Hormuz as unworkable, reported suggest. IDF demands massive response after Hezbollah's breach, Israeli officials say the goal would be to damage significant capabilities that Hezbollah would find painful to lose, reported N12 News. RUSSIA-UKRAINE Ukrainian President Zelensky said forces struck Russian oil refinery in the Perm region, export terminal and military plant in Rostov region. Russian forces hit two vessels carrying weapons to Ukrainian ports near Odesa, according to Russia's defence ministry. NORTH AMERICAN DATA US MBA 30-Year Mortgage Rate (Jul/24) 6.76%. US MBA Mortgage Applications (Jul/24) -6.4%.