Newsquawk European Market Wrap - 23th July 2026

European bourses ended Thursday's trade entirely in the red, driven by higher energy prices and disappointing guidance by STMicroelectronics. The ECB left the deposit rate at 2.25%, as expected. A slight dovish reaction was seen as the statement refrained from providing any forward guidance. US President Trump said he will hold Iran responsible if the Houthis attack ships again. This came after the Houthis targeted two Saudi oil tankers in the Red Sea. EQUITIES European bourses (STOXX 600 -1.4%) are to end Thursday's session entirely in the red, failing to pare back the earlier losses. The FTSE MIB (-2.7%) was hit the most, weighed on my STMicroelectronics (-18.2%), Moncler (-8.4%) and UniCredit (-4.5%) following their respective quarterly earnings. FTSE 100 (-0.7%) was the outperformer, as oil majors benefit from the rise in energy prices. Sectors held its negative bias. Energy (+1.3%) was the only sector that printed decent gains, with Real Estate (+0.3%) the only other sector in the green. Food, Beverages & Tobacco (-3.6%) was the clear laggard, given the losses in Nestle (-7.1%). Technology (-2.3%) and Consumer Products & Services (-2.5%) rounded out the sector underperformers. Other movers included: STMicroelectronics (-18.2%), Q3 revenue guidance missed estimates however its Q4 guidance beat consensus; Daimler Truck (+5.3%), raised its FY guidance; Aston Martin (+6.3%), secured GBP 550mln in new debt financing; Nokia (-1.0%), despite Q2 comparable operating profit beating estimates; BNP Paribas (-2.5%), Q2 profit beat on equities. US cash equities started trade entirely in the red, following the broader risk-off sentiment. Both Alphabet (-6.0%) and Tesla (-10.7%) opened softer; the former raised its FY capex guidance while the latter missed Q2 adj. EPS expectations. Further on the earnings front, RTX (+6.7%) slumped despite stellar Q2 metrics and a beat on FY guidance while Lockheed Martin (+9.6%) benefited from a positive Q2 report and raised its guidance. FX G10s were weaker against the Buck today as yields/energy continued higher with no sign of de-escalation in the Middle East. Energy exporters were the initial outperformers, but succumbed to USD pressure with NOK -0.4% against the Buck, albeit stronger against SEK. Loonie was the most resilient, set to handover to NY unchanged against the Greenback. USD erased earlier losses as energy lifted to session highs with the Brent Sept’26 contract breaching USD 100/bbl, the US 10yr yield hitting an 18 month high of 4.711% and general sour sentiment after tech earnings broadly disappointed. DXY rose from beneath the 21DMA @101, to mark a session peak at 101.49. EUR tracked the stronger Buck with the ECB meeting not providing any surprises as President Lagarde likely intended. The statement was largely a reiteration from the ECB, though one that sparked a modest dovish reaction after the statement stuck to the data-dependent, meeting-by-meeting and no-commitment language, despite recent energy upside. As such, a modest unwinding of hawkish bets took place. However, the move was modest in nature for two reasons. 1) any such adjustment was more likely to come via the 13:45BST press conference with President Lagarde. 2) The direction for global yields remains at the whim of energy and geopolitics. The presser also did not spark much of a reaction, Lagarde noted the decision was unanimous, and that some members questioned whether ECB should have hiked today. EUR is ultimately modestly weaker after the decision, though most likely from the aforementioned energy strength. SARB surprisingly left rates unchanged at 7.00%, where markets had expected a hike after consensus for the meeting flipped at the beginning of the week. USD/ZAR +1.7%. NZD was the worst performer against the USD. Initial losses likely a function of strong Aussie jobs data, however losses were extended throughout the session with the pair set to finish lower by 0.8% after the floodgates opened past 0.58. Aussie jobs saw headline Employment Change smash estimates at 76.3k (exp. 15k), and the Unemployment Rate remained at 4.4% despite higher participation. AUD was the initial outperformer though also saw losses vs. the USD after breaching 0.70. FIXED INCOME Bunds were under pressure following the overnight energy-driven selloff, with the benchmark down over 20 ticks at worst to a 124.15 base before paring some losses. Price action was largely driven by higher energy prices and the associated inflation implications for the ECB, in which the central bank held steady on policy settings, whilst Lagarde avoided committing to a particular rate path. The ECB statement sparked a marginal dovish reaction amid meeting-by-meeting and data-dependent language, unwinding some hawkish bets for later in the year. That being said, energy price action largely dictated the fixed income space. Gilts opened lower and underperformed in a typical fashion amid higher energy prices, falling around 15 ticks initially before extending losses to an 85.97 base. The move left the contract just under April’s 86.03 low, though still well clear of May’s 84.98 trough. No notable reaction was seen to UK Chancellor commentary, with direction taking a cue from energy. USTs were softer in lockstep with the steady rise in energy. The contract printed a 108-01+ low vs a 108-15 peak. The move lower followed the broader global fixed income selloff amid higher oil prices. Very little reaction was seen to the US data, including the jobless claims metrics. UK DMO sold GBP 500mln 2063 Gilt via tender; b/c 3.51x, average yield 5.722%. TREASURY/STIRS BLOCK TRADES (rolling headline). Treasury:21:43EDT/02:43BST: 8,376 5-Year T-Note Futures (ZFU6) blocked at 106-04. COMMODITIES Crude looks set to end the session firmer as Middle East geopolitics continued to dominate, with the US and Iran exchanging strikes for a 12th consecutive night while Yemeni Houthis threatened further supply disruptions (see headline feed for a full recap). The ongoing supply woes and prospect of further escalating tensions prompted a steady rise in prices throughout the European day. WTI Sep’26 traded north of the USD 91/bbl mark as it made its way to 91.61/bbl at best (vs low USD 87.32/bbl), while Brent Sep’26 printed above the USD 100/bbl and looks set to end the European session at session highs. Natural Gas waned after hitting resistance near EUR 64/MWh, dipping sub-EUR 62.50/MWh - remaining subdued throughout the European session - with LNG buyers reportedly seeking lower prices and stronger supply guarantees amid Hormuz risks. Precious Metals were softer as rising oil prices underpinned the USD. Spot gold traded within a USD 4,040–4,141/oz range, outside the prior session’s USD 4,076–4,166/oz band. Spot silver briefly dipped below USD 57.50/oz to trade towards the lower end of a USD 57.05–60.07/oz range. Base Metals were mostly lower amid the inflationary impact of higher oil prices. 3M LME copper traded towards the lower end of a USD 13,640.00–13,873.70/t range. Buyers of LNG from Qatar and the UAE are seeking lower prices and stronger supply guarantees as risks to shipments through the Strait of Hormuz increase, according to sources. QatarEnergy has extended force majeure on LNG supplies to some Asian buyers; Co. also leased some LNG tankers through mid-October, sources suggest. Kazakhstan's daily oil production fell after loading operations were suspended at the CPC export terminal on the Black Sea, sources say, output down 21% on Wednesday vs July average. EUROPEAN DATA UK CBI Industrial Trends Orders (Jul) -45 vs. Exp. -40 (Prev. -45). French Business Climate Indicator (Jul) 97 (Prev. 94). French Business Confidence (Jul) 101 vs. Exp. 100 (Prev. 100). NOTABLE HEADLINES UK Chancellor Healey said he is as concerned about the cost of business as the cost of living. Buying British, by design. Make the UK a better business environment. Work to reduce the cost of living. UK PM announces pubs, clubs and live music venues are set to receive a 20% cut to their business rates bills. Pubs, clubs and live music venues are set to receive a 20% cut to their business rates bills saving the typical pub an estimated £1,100 next year. Measures to support the backbone of local high streets, including through reviewing reliefs provided to anti-social businesses, such as vape shops (and potentially casinos, POLITICO reported). TRADE/TARIFFS Indonesia said to relax export earnings rules for Australia and Canada. Canada has urged the UK government to join its defence bank, POLITICO reported, as Canada tries to deepen its European presence. UAE Foreign Trade Minister said imports of high-end US AI chips expected soon, Bloomberg reported. Adds that the UAE’s USD 1.4tln US investment pledge is ahead of schedule. Elsewhere, expects to announce a trade agreement with Canada this week. China's MOFCOM said China and the US are working towards the tariff cut plan; to maintain close communication. Indian steel official said EU markets have become tough to get into. CENTRAL BANKS The ECB left all key rates unchanged, as expected. The statement itself was largely a repeat of June's tone. However, that sparked a modest dovish reaction. A move spurred by the statement sticking to the data-dependent, meeting-by-meeting and no-commitment language, despite recent energy upside. As such, a modest unwinding of hawkish bets took place. However, the move was broadly as expected, there was modest in nature for two reasons. 1) Any such adjustment was more likely to come via the subsequent press conference with President Lagarde. 2) The direction for global yields remains at the whim of energy and geopolitics. Lagarde then was broadly balanced, but ever so slightly more hawkish than the statement on a few points. Firstly, she noted that while the decision was unanimous, some members questioned whether the ECB should have hiked. However, she made clear that they are still not seeing any second-round effects. Furthermore, she stuck to the line of not providing forward guidance, but that they are providing a "framework" of sorts. On this, she made clear that there is a significant amount of data between now and September, which will provide insight into the decision.Overall, the market remains positioned towards a September hike with Lagarde not saying anything to push back on this. But, at this stage, the ECB is retaining full optionality. Note, we may get more insight into the debate and trajectory for September from any source reports in the next day or so. CBRT holds the key rate at 37.0%, as expected; maintains Overnight Borrowing and Overnight Lending rates; reiterates highly attentive to upside risks on inflation. Reiterates that "The tight monetary policy stance, which will be maintained until price stability is achieved, will strengthen the disinflation process through demand, exchange rate, and expectation channels". Reiterates "In case of a significant and persistent deterioration in the inflation outlook, monetary policy stance will be tightened." SARB leaves interest rates unchanged at 7.00% (exp. 7.25%) in a 4-2 vote split. South Africa Central Bank Statement. Forecasts: 2026 CPI seen at 4.0% (prev. 4.4%), 2027 CPI seen at 3.8% (prev. 3.7%). 2026 GDP Growth seen at 1.4% (prev. 1.2%), 2027 GDP Growth seen at 1.7% (prev. 1.7%). 2026 Core CPI seen at 3.8% (prev. 3.7%), 2027 Core CPI seen at 3.7% (prev. 3.7%). 2026 Fuel Inflation seen at 10.5% (prev. 15.6%). Baseline forecast is that the economy will recover in H2, but the outlook is uncertain. See downside risks to growth and upside risks to inflation. NBP's Kotecki said the central bank is close to the optimal level in interest rates. CNB member Kubicek said the central bank may need to raise rates once more. GEOPOLITICSRUSSIA-UKRAINE EU foreign policy chief Kallas and UK Foreign Secretary Miliband discussed support for Ukraine, freedom of navigation, the Middle East and broader geopolitical issues, reaffirming their commitment to deepen EU-UK cooperation. Ukraine President Zelensky said Ukraine and US representatives could meet in the coming days in the US. Ukraine President Zelensky said Russia is to step up attacks on vessels in the Black Sea; he discussed with US envoys ideas on reinvigorating peace talks. Discussions with the US to continue in the near future. The new top military commander and defence minister will be tasked with improving the draft. Offered former PM Svyrydenko to become Ukraine's envoy in the US. UK Foreign Secretary Miliband said he spoke with his Chinese counterpart, discussed Ukraine and the Middle East; "relationship with China matters - for security, the economy and climate". Drones attacked two tankers overnight, approaching Russia's CPC oil terminal in Black Sea, according to source reports. Russia's Kremlin said it was not overly optimistic about the prospects for resolving the Ukraine conflict diplomatically following talks between Russian Foreign Minister Lavrov and US Secretary of State Rubio. US Secretary of State Rubio said he had a good and frank conversation with the Russian Foreign Minister; US is prepared to take a constructive role to end the war in Ukraine. EU Ambassadors have reached a political agreement on the 21st sanctions package against Russia, according to diplomats; additionally, to freeze the oil price cap for a 12 month period. Russia's Foreign Minister Lavrov confirmed that Russia is prepared to resolve the conflict in Ukraine through political and diplomatic means, according to the Russian Foreign Ministry. MIDDLE EAST "Iraqi factions bombed Arab countries under the name of targeting US bases", Al Arabiya sources report. "Iraqi factions loyal to Iran have strengthened their capabilities with advanced drones". US President Trump said he will hold Iran responsible if the Houthis attack ships again. US President Donald Trump posted that the US will approve a civil nuclear agreement with Saudi Arabia if the kingdom joins the Abraham Accord. The civil nuclear deal with Saudi Arabia only pertains to non-military use such as the ones Iran and UAE already have; the US is not opposed to civil nuclear facilities. Iran targeted the Kuwaiti "Al-Abdali" border crossing with a missile attack, reported Sky News Arabia citing an Iraqi source. Bombers (i.e. B1) were not used in the overnight US attacks against Iran, journalist Stein reported. Iranian Army Spokesperson said new scenarios for confrontation with the enemy have been predicted; adds that Iran made the utmost use of the ceasefire opportunity to upgrade combat capability, IRIB reported. Explosions heard in Konarak City, Iran, according to a Tasnim reporter. US Secretary of State Rubio said Iran was intending to double missile stockpile; looks like Iran is not ready to make a deal, they will pay the price. "Price on Iran will get higher every night until they come to their senses". Hope Houthis stop with attacks. "Iran begging to reach a deal". Any nuclear deal with Saudi Arabia will have safeguards. Pakistani PM Sharif held a call with Saudi Crown Prince MBS; the two condemned the Houthi militia’s attacks against Saudi oil tankers in the Red Sea; reaffirmed Pakistan's "complete solidarity" with Saudi Arabia. "Agreed to continue working very closely to maintain regional peace, security, stability, and the uninterrupted flow of lawful maritime commerce through the Red Sea as well as the Strait of Hormuz and the wider region.". Pakistan's Foreign Minister, on US-Iran talks, said “Can not confirm 10-15 days or anything because these are confidential communications. Have not lost hope even during the darkest days of this escalation cycle”, journalist Mallick posted. Pakistan's Foreign Ministry, on the Yemeni Houthi threat, said "if our ships are attacked, it will be treated as an attack on Pakistan and we will retaliate”, Journalist Mallick reported. Iranian Foreign Minister said there are enough mediators and there is no problem in exchanging messages with the US, reported Al Jazeera. The problem lies in Washington's illogical approach and excessive demands, and we have countered this with a firm stance. OTHERS Saudi Aramco offers more crude cargoes from Egypt's Mediterranean Sidi Kerir port as Red Sea disruptions persist, according to reported. Iranian President and Iraqi PM held bilateral talks, discussing new areas of cooperation and pledging to deepen strategic ties, IRNA reported. Explosions heard near the borders of Iraq and Kuwait, reports suggest. Air raid sirens sound in Bahrain, Al Hadath reported. Oman’s Foreign Ministry said it is working with Saudi Arabia and Yemeni parties and the UN special envoy to resume the political process aimed at achieving regional security and stability. Arab news sources report that the sound of an explosion was heard in Qatar and Jordan, Noor News reported. Pakistan and Oman emphasised the need to refrain from escalating tensions in the region, IRNA reported. Senior US Official said "negotiations continue but the decisive moment for expanding hostilities is rapidly approaching", N12 reported. NORTH AMERICAN DATA US Continuing Jobless Claims (Jul/11) 1796.0k. US Jobless Claims 4-week Average (Jul/18) 207.5K. US Initial Jobless Claims (Jul/18) 187.0k vs. Exp. 212k. US Chicago Fed National Activity Index (Jun) -0.02 vs. Exp. 0.14 (Prev. -0.10 ). Canadian Retail Sales YoY (May) Y/Y 5.9% vs. Exp. 3.5% (Prev. 3.7%). Canadian Retail Sales MoM Prel (Jun) M/M 0.4% vs. Exp. 0.4% (Prev. 1.0%). Canadian Retail Sales MoM Final (May) M/M 1.0% vs. Exp. 1% (Prev. 0.5%). Canadian Retail Sales Ex Autos MoM (May) M/M 1.2% vs. Exp. 0.4% (Prev. 0.1%). NOTABLE GLOBAL EQUITY HEADLINES China issued 197 game approvals in July. 193 domestic, four imported. SK Hynix (SKHY) set a 2.5% cap on share conversions into its US ADR, KSD said. The quota for converting Korean ordinary shares into ADRs has now been fully exhausted, preventing further conversion. China has resumed robotaxi license issuance.