Europe primed for quiet open ahead of light calendar - Newsquawk EU Market Open

• US President Trump told Axios that they are only semi-negotiating with Iran but said it will work out and that it always works out.
• Iran’s Supreme National Security Council issued six demands to the US, including total force withdrawal, end to proxy warfare.
• Saudi Arabia put out a fire at its Jazan plant early on Sunday, while Yemen’s Houthis claimed responsibility for the attack on the refinery.
• APAC stocks were somewhat mixed, but with most major indices in the green, US equity futures were range-bound; European equity futures indicate a flat market open.
• DXY eked mild gains, 10yr UST futures lacked direction, crude futures gapped higher at the open as an Iran-Oman deal on the Strait of Hormuz remained elusive.
• Looking ahead, highlights include Norwegian Inflation (Jul). Earnings from Berkshire Hathaway.

SNAPSHOT

As of 06:20BST/01:20EDT

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LOOKING AHEAD

• Highlights include Norwegian Inflation (Jul), Earnings from Berkshire Hathaway.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump told Axios that they are only semi-negotiating with Iran and are just watching Iran with its huge inflation, while he stressed that Iran is in very bad shape economically and has no money to pay its troops, with the US naval blockade exacerbating the Iranian regime's economic crisis. However, he said it will work out and that it always works out, and compared it to a chess game regarding the back-and-forth with Iran.
• US Vice President JD Vance said the US is in the middle of a game in the Iran conflict.
• Iranian President Pezeshkian said now is the best time for an agreement because Iran is strong, united and seen as victorious in war. Pezeshkian separately commented on Friday that they will not yield to force, but are not seeking war or aggression either, while he added there will be no reason for the tension to continue if the pressure and threats against Iran stop. Furthermore, he said there was no gap between the government and the armed forces, and noted that Iran had solved many problems with its neighbours and relations had improved significantly.
• Iranian Foreign Minister Araghchi said Iran and the US are not engaged in talks, and Tehran will not allow them to start as long as Washington breaches the interim deal signed in June.
• Iran said it is very close to a deal with Oman regarding a new maritime transit route in the Strait of Hormuz, but it renewed a list of demands for the US to agree to before the waterway could open. It was separately reported that Iran warned it will not reopen the Strait of Hormuz unless the US meets a series of conditions, including paying compensation for war damage, according to FT.
• Iran’s Supreme National Security Council issued six demands to the US, including total force withdrawal, end to proxy warfare, financial reparations, sanctions and asset relief, lifting the blockade and cessation of rhetoric.
• The wait for the Iran-Oman deal regarding the Strait of Hormuz dragged on, with Iran warning the US that any pact wouldn’t lead to an immediate reopening of the key waterway.
• Iran appointed Mohsen Rezaei as Secretary of the Supreme National Security Council, while Iran's Supreme Leader appointed Mohammad Bagher Zolghadr as political adviser.
• UKMTO reported that a vessel near Oman was struck by an unknown projectile, which caused a fire on board but has been extinguished.
• Saudi Arabia put out a fire at its Jazan plant early on Sunday, while Yemen’s Houthis claimed responsibility for the attack on the refinery. It was separately reported that Houthis resumed attacking Yemen’s Mocha port using ballistic missiles and drones, with the attacks aimed at Saudi troop concentrations and weapon depots in the region.
• Israeli PM Netanyahu said Israel does not accept a US-backed 15-point plan for Gaza, under which Hamas would disarm in exchange for a phased Israeli withdrawal from the Palestinian enclave, according to FT. It was later reported by Axios that a US official said the White House is not bothered by Israeli PM Netanyahu's statement on the Gaza plan and sees it as part of election season in Israel. The official stated, "We understand Bibi's political needs. We have no problem with it as long as he continues to do what we ask - especially regarding restraining attacks in Gaza".

US TRADE

EQUITIES

• US stocks closed higher on Friday, with the Nasdaq leading gains, although the advance was broad-based, with the equal-weight S&P 500 (RSP) also firmer, highlighting positive underlying breadth. Sectors were predominantly higher, led by Materials, Consumer Discretionary and Technology, while Energy was the clear laggard. Financials and Communication Services also finished modestly lower. The US Nonfarm Payrolls report was the primary driver of market action, with the surprisingly soft release prompting participants to pare Fed rate hike expectations. The dovish repricing supported equities, Treasuries and precious metals, while weighing on the Dollar. The Treasury curve bull steepened following the report, which showed the US economy unexpectedly shed 23k jobs in July, versus expectations for a 91k increase. Prior readings were also revised sharply lower, with June cut by 37k and May by 66k, leaving the two-month net revision at -103k. However, the unemployment rate unexpectedly fell to 4.1% from 4.2%, moving further below the Fed's 4.3% year-end projection, although the decline was accompanied by a lower participation rate.
• SPX +0.62% at 7,758, NDX +1.19% at 29,722, DJI +0.28% at 54,042, RUT +1.10% at 3,034.
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NOTABLE HEADLINES

• Fed’s Bowman (voter) said policy is well positioned to bring inflation back to 2% and that she supported keeping the Fed funds rate steady at the July meeting. Bowman also noted that improved inflation data in June and a labour market that has not been a source of inflationary pressure reinforce her case for maintaining current rates and support her view that policy is well-positioned for inflation to return to the target.

APAC TRADE

EQUITIES

• APAC stocks were somewhat mixed, but with most major indices in the green, following last Friday's gains on Wall Street, where weak jobs data unwound Fed rate hike bets, while oil prices gained in the absence of a formal Strait of Hormuz deal, and participants also digested soft Chinese inflation data.
• ASX 200 was lower amid declines in the top-weighted financial sector following earnings from Westpac, while participants also look ahead to tomorrow's RBA rate decision, with the central bank widely expected to keep rates on hold, but continue to echo a hawkish tone.
• Nikkei 225 rallied as participants digested the recent slew of earnings, with the top gainers in the index driven by their quarterly earnings results.
• KOSPI traded higher but with upside capped amid the somewhat choppy price action in tech heavyweights and as participants also reflect on earnings releases.
• Hang Seng and Shanghai Comp were in the green, albeit with gains in the mainland contained following softer-than-expected CPI and PPI data over the weekend. Nonetheless, the data is seen to keep prospects of a rate cut in H2 on the table, while the PBoC said on Sunday that it will continue to implement a moderately loose monetary policy in H2, strengthen counter-cyclical adjustment, and take solid steps to promote sustained and improved economic development.
• US equity futures were range-bound following the recent NFP data and unwinding of Fed rate hike bets, while markets continue to await a formalised Oman-Iran deal on the Strait of Hormuz.
• European equity futures indicate a flat market open with Euro Stoxx 50 futures U/C after the cash market closed with gains of 0.3% on Friday.

FX

• DXY eked mild gains amid upside in oil prices and in an attempt to nurse some of Friday's losses after suffering from the disappointing US Non-farm Payrolls report, which showed an unexpected decline of 23k jobs for July and downward revisions to the prior month. Conversely, the Unemployment Rate was encouraging with a surprise decline to 4.1% (exp. 4.3%, prev. 4.2%), but was accompanied by a lower Participation Rate, while the data resulted in an unwinding of Fed rate hike bets with CME FedWatch Tool now showing a greater likelihood for the Fed to keep rates unchanged at the September meeting.
• EUR/USD took a breather after rallying in the aftermath of the US jobs data, with the single currency remaining at the 1.1500 handle owing to a lack of fresh catalysts from the bloc.
• GBP/USD traded sideways amid quiet pertinent newsflow and recent failure to sustain the 1.3500 status.
• USD/JPY clawed back nearly all of the NFP-triggered losses and returned to the 158.00 territory in a continuation of the gradual rebound from post-intervention lows, while the latest tier-2 data releases and hawkish BoJ Summary of Opinions did little to shift the dial.
• Antipodeans marginally pared some of last Friday's spoils, but with the reversal limited amid the mostly positive risk appetite and ahead of the conclusion of the RBA's meeting tomorrow, where the central bank is widely expected to keep rates unchanged but maintain its hawkish language.
• PBoC set USD/CNY mid-point at 6.7884 vs exp. 6.7379 (prev. 6.7904)

FIXED INCOME

• 10yr UST futures lacked direction after whipsawing in the wake of Friday's US jobs data, in which the NFP report hugely disappointed with an unexpected decline, and the Unemployment surprisingly fell but coincided with a lower participation rate, while the data ultimately resulted in an unwinding of Fed rate hike bets.
• Bund futures returned to beneath the 125.00 level as higher energy prices stoked inflationary pressure.
• 10yr JGB futures retreated with demand hampered amid the upside in oil and rally in Tokyo stocks, while the BoJ Summary of Opinions from the July meeting had little impact but continued to signal a hawkish bias.

COMMODITIES

• Crude futures gapped higher at the open as an Iran-Oman deal on the Strait of Hormuz remained elusive, while Iran’s Supreme National Security Council issued six demands to the US, including total force withdrawal, financial reparations and sanctions relief.
• Spot gold slightly declined and continued to pare its post-NFP move amid higher oil prices.
• UK regulators are readying a framework for tokenised gold as part of plans to encourage digitalisation of financial markets and safeguard London's dominance in global bullion trading, according to FT.
• Copper futures traded sideways amid the mostly positive risk appetite and as participants digest the recent weak US jobs report and softer Chinese inflation data.
• Unionised workers at BHP's Port Hedland iron ore operations in Western Australia began rolling 24-hour strikes.

CRYPTO

• Bitcoin eked mild gains in choppy trade on both sides of the USD 65,000 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC said it will continue to implement a moderately loose monetary policy in H2, strengthen counter-cyclical adjustment, and take solid steps to promote sustained and improved economic development.
• China issued a red alert in preparation for approaching Typhoon Dolphin, with more than 1,000 flights cancelled and some rail services suspended.
• BoJ Summary of Opinions from the July meeting stated that a member said Middle East Development, expanding AI-related demand and weak yen all work towards pushing up inflation, while a member said consumer goods inflation is expected to pick up again towards autumn. Furthermore, a member said policymakers should stay alert to upside inflation risks from a weak yen and strong AI-related demand, while there was also the opinion that inflation risks are skewed sharply upward as higher oil costs feed into consumer prices, and global AI demand and Japan's expansionary fiscal policy support demand.

DATA RECAP

• Chinese CPI MM (Jul) -0.1% vs. Exp. 0.2% (Prev. -0.3%)
• Chinese CPI YY (Jul) 0.5% vs. Exp. 0.8% (Prev. 1.0%)
• Chinese PPI YY (Jul) 3.5% vs. Exp. 3.8% (Prev. 4.1%)

GEOPOLITICS

MIDDLE EAST

• Syria reached an agreement to take control of two Russian military bases, largely ending Moscow’s military presence in the country, according to FT.

RUSSIA-UKRAINE

• Russia struck two oil refineries in Ukraine's northeastern Sumy region, according to Interfax. It was separately reported that Ukraine’s Odesa port sustained damage from a Russian attack, while Russian authorities said five were killed in a Ukrainian drone attack on Belgorod.
• US President Trump's special envoy Steve Witkoff and son-in-law Jared Kushner may visit Kyiv and Moscow within the next 7-10 days, according to TASS.
• New Zealand announced additional sanctions targeting individuals and entities supporting Russia's war against Ukraine, following the passage of a new bill in the US Senate targeting Russia's oil and gas revenues.

EU/UK

NOTABLE HEADLINES

• French Budget Minister Amiel said they must resist the temptation to delay difficult spending decisions until after next year’s presidential election, as they cannot afford to worsen the wide deficit.
• German Economy Minister Reiche warned that rising support for the far-right AfD could undermine the government’s efforts to attract foreign investors, as it seeks at least EUR 3.75tln in private capital by 2040, according to FT.