Crude benchmarks edge lower as hopes of US-Iran diplomacy rise; European equities set to open slightly firmer - Newsquawk EU Market Open

• US President Trump said he thinks a settlement will be reached with Iran, and noted that some US-Iran communication has taken place even today and that the relationship with Iran is developing.
• US President Trump said envoys Witkoff and Kushner met with Iran mediators and that there were lots of good thoughts. Trump later commented that he thinks Iran will do something good.
• Trump also warned that they may have to blow up Pickaxe Mountain and that they will attack if they see activity. He reiterated that he thinks the Iran war could end after the Midterms, maybe before.
• Crude futures were subdued overnight after declining yesterday amid hopes for diplomacy following US-Iran talks on the sidelines of the UN General Assembly.
• APAC stocks were ultimately mixed following the similar handover from the US; European equity futures indicate a positive cash market open.
• Looking ahead, highlights include Global S&P PMIs Flash (Sep) and the SARB Policy Announcement. UN Meetings include the Trump-Sharif meeting, Senior Iranian leaders-GCC meeting, and Iranian President’s address. Speakers include ECB's Vujcic, Cipollone & Lane, Fed's Barr. Supply from Germany and the US.

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LOOKING AHEAD

• Highlights include Global S&P PMIs Flash (Sep), SARB Policy Announcement. UN Meetings include Trump-Sharif meeting, Senior Iranian leaders-GCC meeting, Iranian President Pezeshkian address. Speakers include ECB's Vujcic, Cipollone & Lane, Fed's Barr. Supply from Germany and the US.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump said he thinks a settlement will be reached with Iran, as well as noted that some US-Iran communication has taken place even today and that the relationship with Iran is developing.
• US President Trump said US officials met with the Iranian delegation for three hours and that the meeting went very well and was very productive, with another meeting with Iran scheduled in the near future, while he suggested it is to Iran's advantage to make a deal and preferable.
• US President Trump said envoys Witkoff and Kushner met with Iran mediators and that there were lots of good thoughts. Trump later commented that he thinks Iran will do something good and there is a lot of momentum for Iran to make a deal, while he thinks Witkoff and Kushner will get this thing ended, but added there will be a time when it's too late for Iran. Furthermore, he warned that they may have to blow up Pickaxe Mountain and that they will attack if they see activity, as well as reiterated that he thinks the Iran war could end after the Midterms, maybe before.
• US Envoy Witkoff said mediators will continue their work, and he hopes talks will be constructive and promising, while he confirmed he engaged in lengthy talks with the delegation from Iran.
• US source attending the Iranian delegation meeting said the chance of a deal is limited and major disputes and obstacles remain between the US and Iranian delegations.
• A high-ranking source told Al Arabiya that the New York meeting between the American and Iranian delegations broke the deadlock in the negotiations, while a breakthrough between America and Iran is possible, but it requires multiple steps. Furthermore, a separate source said Iran's announcement of conditions for opening the Strait of Hormuz was the reason for accepting Witkoff's request for this meeting, while strict conditions were conveyed to the US representative.
• Meeting between the US and Iran was planned in advance, while the talks revolved around conditions for renewing negotiations and opening Hormuz, although no agreement was reached on most of the disputes and another meeting is to be held in the coming days, according to Israel's Hayom citing US sources.
• Al Jazeera reached out to Iranian sources regarding the potential for further diplomatic engagement between the US and Iran, while they heard from almost all of the sources that Iran has not changed its positions, and a security source said if the US fulfils its commitments based on Iranian demands – and if there are sufficient practical assurances – there would be an opportunity for engagement.
• Iranian President Pezeshkian arrived in New York to take part in the UN General Assembly.
• Iran's Foreign Ministry stated that Foreign Minister Araghchi met with his Austrian counterpart and the two sides discussed and exchanged views on the most important international and regional developments, as well as bilateral issues of concern to both countries. Araghchi also met with his Iraqi counterpart and reviewed the progress of cooperation between the two countries in various fields, including economic, trade, consular, and security, and emphasised the continuation of efforts to develop relations in all areas of interest to the two countries.
• EU's Kallas held talks with Iranian Foreign Minister Araghchi and discussed reopening the Strait of Hormuz and ending the US-Iran war, according to Al Jazeera.
• Iranian Parliament's National Security and Foreign Policy Commission approved new penalties for vessels violating transit regulations in the Strait of Hormuz, according to IRNA. In relevant news, Iran plans to detain ships until a 20% Hormuz fine is paid, according to Fars.
• Iran's armed forces said US President Trump's statements regarding Iran at the UNGA are tools of domestic propaganda.
• IRGC spokesman said Iran had "toughened" conditions for ending the war after the collapse of the US deal, while he stated the US broke the agreement and has "no choice" but to accept Iran's conditions.
• Iranian security source said Iran will only consider talks with the US if Washington fulfils commitments relating to Iranian conditions and provides practical guarantees, according to Al Jazeera. The source said the claim that the Strait of Hormuz would be reopened in return for a reduction in tensions is incorrect, and the strait will not be reopened until the stated conditions are met, while the source noted that Tehran had previously taken positive steps that were not met with a similar US response. Furthermore, Iran's conditions for resuming talks include an end to the war on all fronts, negotiations on a timeline for Israel's full withdrawal from southern Lebanon, release of frozen funds, lifting of the naval blockade, removal of newly imposed sanctions, an end to military threats and an oil waiver.
• Explosions were heard near Iran's Qeshm Island, which seemed to have originated from the sea, and there was no impact inside the territory of Qeshm Island, according to IRNA.
• Qatar's Emir said the Gulf crisis can be resolved through diplomacy, reopening the Strait of Hormuz and returning to negotiations.
• French President Macron said France is ready to participate in an international operation of a defensive nature to protect navigation in the Strait of Hormuz, according to ABC News.
• 3 commodity vessels transited the Strait of Hormuz on Tuesday vs a 10-day moving average of about 15, according to shipping data.
• Yemeni government forces said they thwarted an attack launched by the Houthis group on the Kahbub front overlooking the Bab al-Mandab.
• Saudi missile strikes reported on northern Yemen's Saada.
• Arab sources reportedly announced a suspension of operations at Riyadh Airport in Saudi Arabia. It was separately reported that loud explosions were heard in Saudi Arabia's capital of Riyadh.
• IDF reportedly conducted attacks on southern Lebanon, according to Israel Hayom.

US TRADE

EQUITIES

• US stocks closed mixed on Tuesday, with NDX outperforming amid gains in semiconductors and memory names, although materials was the best-performing sector, followed by staples and healthcare, while financials and energy lagged, which weighed on the SPX's performance. Energy declined amid downward pressure in crude prices as market optimism builds on a diplomatic solution between the US and Iran, which would bring increased energy supply with it. Trump noted that US officials met with the Iranian delegation, in what was a "very productive" meeting, with his preference for a deal. However, he also threatened Pickaxe Mountain with strikes if the US sees activity taking place there. In response, Al Jazeera reported that Iran's position has not changed, while Iranian sources refuted recent reports from Kyodo and Reuters that Iran was willing to reopen the Strait of Hormuz if the US lifted its blockade.
• SPX +0.00% at 7,765, NDX +0.82% at 30,732, DJI -0.36% at 51,869, RUT +0.51% at 2,890.
• Click here for a detailed summary.

TARIFFS/TRADE

• UK PM Burnham said he pushed US President Trump on tariffs and that Trump understands the UK position on the Falklands.
• India’s PM Modi expected to visit Canada in December to sign trade deal, according to The Globe and Mail.

NOTABLE HEADLINES

• Fed's Barkin (2027 voter) said the Fed raised rates last week because risks to inflation outweigh risks to maximum employment, and the rate hike will help restore price stability, while he added "we'll see" if more hikes are needed. Barkin noted that while it is tempting to blame high inflation on a handful of categories exposed to energy costs or tariffs, much of the personal consumption expenditures index is climbing by more than 3%. Furthermore, he stated the labour market is not overheated or even particularly tight and that he does not see much evidence of stretched consumer balance sheets.
• NY Fed's Perli said Fed's Reserve Management purchases are not on a pre-set course and that the central clearing of Fed repo operations would have benefits, while Perli added that the monetary policy toolkit has been working well and the Fed's reserve forecasting process is robust.
• US Treasury Secretary Bessent is reportedly eyed for Trump's AI czar, according to Semafor.

APAC TRADE

EQUITIES

• APAC stocks were ultimately mixed following the similar handover from the US, despite the recent decline in oil prices and optimism regarding diplomacy after US President Trump announced that envoys had a 'very productive' meeting with the Iranian delegation on the sidelines of the UN General Assembly. However, he also threatened that they may have to blow up Pickaxe Mountain and will attack if they see activity, as well as commented that he has a big decision to make between allowing Iran to rebuild or to "annihilate" Iran.
• ASX 200 was rangebound with demand contained amid rate hike expectations and following weaker Flash PMI data from Australia, in which headline Manufacturing PMI slipped into contraction territory.
• KOSPI gained after the tech-related momentum in the US, where the NDX printed an all-time high.
• Hang Seng and Shanghai Comp were subdued following today's PBoC liquidity drain and as reports that Chinese President Xi is unlikely to bring Chinese CEOs to his summit with US President Trump temper expectations for major business deals.
• US equity futures traded sideways for most of the session amid the mixed global risk appetite.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.4% after the cash market closed with gains of 0.1% on Tuesday.

FX

• DXY remained firmer and continued the strength from the start of the week as rate hike expectations held, despite the downward pressure in oil prices, while Fed's Barkin and Collins expressed support for last week's rate hike and an openness for further increases. Nonetheless, the focus was on the UN General Assembly in New York where US President Trump held talks with several leaders, while he announced that US officials met with the Iranian delegation, adding that the meeting went well and was very productive.
• EUR/USD softened after its recent choppy performance and with little fresh drivers from the bloc, while there were comments from ECB's Nagel that rates are still in neutral territory and that they cannot exclude needing to go into mildly restrictive territory.
• GBP/USD was subdued and breached through the prior day's trough, while little reaction was seen from UK PM Burnham's meeting with US President Trump, where he was said to have pushed Trump on tariffs.
• USD/JPY extended on yesterday's intraday rebound amid a firmer dollar and the continued absence of Japanese participants, who will be returning from the holiday closures tomorrow.
• Antipodeans trickled lower amid the mixed risk appetite and weaker flash PMI data from Australia.
• PBoC set USD/CNY mid-point at 6.7468 vs Exp. 6.6971 (prev. 6.7459).

FIXED INCOME

• 10yr UST futures edged higher following the recent decline in oil prices, but with further upside capped as overnight cash treasuries trading was shut again due to the Tokyo closure, while participants await a 5yr auction and the next buyback announcement.
• Bund futures benefited following the decline in crude prices and despite looming Bund issuances, while comments from several ECB speakers and Buba's Mauderer are also scheduled later.

COMMODITIES

• Crude futures were subdued after declining yesterday amid hopes for diplomacy following US-Iran talks on the sidelines of the UN General Assembly, with President Trump noting that the meeting between US envoys and the Iranian delegation went very well and was very productive, while he stated that another meeting with Iran is scheduled in the near future. However, the downside in crude was stemmed as Trump also threatened that they may have to blow up Pickaxe Mountain and that they will attack if they see activity, while there were also reports of loud explosions heard in Saudi Arabia's capital of Riyadh.
• US Weekly Private Inventory Data (bbls): Crude +1.8mln (exp. -0.6mln), Gasoline -2.2mln (exp. +0.2mln), Distillate -2.2mln (exp. -0.5mln), Cushing +2.1mln.
• US President Trump said he has called for a ban on diesel exports and is currently examining it, while Treasury Secretary Bessent said the administration is also examining the measure.
• US is discussing a USD 10bln joint investment fund with Arab states to repair energy and other infrastructure damaged during the Iran war, according to the FT.
• Iraqi Oil Minister said oil export volumes reached 70mln bbls in August and they are currently exporting more than 3mln bpd.
• Spot gold trickled lower after the prior day's choppy mood and with mild gains in the dollar as Fed officials continued to voice support for last week's rate hike and suggested an openness to further increases.
• Copper futures stalled overnight alongside the mixed risk appetite and after the recent rally in prices.
• Chile Escondida union leaders rejected a final wage offer and urged members to vote to strike.

CRYPTO

• Bitcoin climbed higher in a choppy fashion and reapproached the USD 87,000 level.

NOTABLE ASIA-PAC HEADLINES

• US President Trump said Japanese PM Takaichi has done a great job and that Japan is doing well, while he added that he will discuss China-Japan relations with Takaichi.
• Differences between the US and China regarding potential US investments stalled plans for Chinese business leaders to join Chinese President Xi's visit to the US, according to SCMP.
• Chinese authorities are examining the use of Broadcom’s (AVGO) hardware in state-backed data centres amid efforts to boost domestic producers and cut reliance on foreign AI infrastructure, according to FT.

DATA RECAP

• Australian S&P Global Manufacturing PMI Flash (Sep) 49.3 (Prev. 52.0)
• Australian S&P Global Services PMI Flash (Sep) 51.4 (Prev. 53.2)
• Australian S&P Global Composite PMI Flash (Sep) 50.8 (Prev. 52.7)

GEOPOLITICS

RUSSIA-UKRAINE

• US President Trump said he wants to settle the Russia-Ukraine war and that Russian President Putin should end the conflict. Trump said he has a good relationship with Ukrainian President Zelensky and they are working on a solution to end the war, while he added the US relationship with Ukraine and Europe is very strong, while he thinks Ukraine will make a deal and that Putin is willing to meet to end the war.
• US President Trump's envoys Witkoff and Kushner were reported to meet with the Ukrainian negotiations team and the national security advisers of the UK, France and Germany on Tuesday night to discuss Ukrainian proposals for a de-escalation deal with Russia, according to Axios.
• Ukrainian President Zelensky warned Russia is preparing a massive attack against Ukraine.
• Ukrainian President Zelensky said he hopes US President Trump will help Ukraine end the war before winter. Zelensky also said Ukraine is ready for any format of an energy ceasefire and he asked Trump to raise the Russia issue with Chinese President Xi.
• Ukraine is ready to sign a landmark drone defence deal with the United States on the sidelines of the UN General Assembly this week, although it may be at a later date when the US is ready to sign, according to CBS News citing sources.

OTHER

• US President Trump said they will have a much more secure relationship after the Greenland deal, while Trump signed the security agreement with Denmark and Greenland.
• US Secretary of State Rubio said Greenland is critical to US national security and that the US cannot risk China or Russia establishing bases there.
• North Korea's Vice Foreign Minister will participate in the UNGA, according to KCNA.

EU/UK

NOTABLE HEADLINES

• US President Trump said he spoke with UK PM Burnham about Rolls-Royce (RR LN) and energy, adding that the US can do business with Burnham and that trade with the UK is now going well. PM Burnham said the two discussed the Falklands and told Trump the UK is ready to play its part in the Middle East, while he stated UK trade is doing well and relations between the UK and US are improving.
• UK's Downing Street said PM Burnham spoke to European Commission President von der Leyen this afternoon at the UN General Assembly and discussed initiatives underway to address AI safety.
• UK Labour MPs are urging the government to close stamp duty loopholes, according to FT.
• Global banking executives warned against a UK windfall tax and that they will divert investment away from the UK if taxes on the sector are raised, according to FT
• ECB's Nagel said oil prices are not the only indicator, but have become more relevant over the past four years, while he is not so concerned by labour market developments and said monetary policy is being conducted between structural ambiguity and forward guidance. Furthermore, he does not see much uncertainty in markets about what drives the ECB's policymaking decisions, as well as noted that rates are still in neutral territory and cannot exclude needing to go into mildly restrictive territory.