Europe set for a modestly weaker open despite losses stateside, ahead of Bessent announcement - Newsquawk EU Market Open

• US Treasury Secretary Bessent wrote in the FT that economic D-Day is coming for Iran, and countries that calculate appeasement of the regime to be a safer choice should reconsider.
• Iran warned, "If the economic war continues, not a single drop of oil will be exported٫ neither through the Strait of Hormuz nor from anywhere in the Persian Gulf.”
• Trade discussions between the US and Canada collapsed on Friday; Canadian PM Carney vowed to retaliate by matching tariffs dollar-for-dollar on US goods from September 8th.
• Crude futures pulled back after last week's advances, and with the absence of any major geopolitical developments over the weekend.
• APAC stocks traded mixed, albeit with a mostly negative bias; European equity futures indicate a slightly lower cash market open.
• Looking ahead, highlights include Mexican Inflation (Aug), US Chicago Fed National Activity Index (Jul), and comments from US Treasury Secretary Bessent. Earnings from Xpeng & PDD.

As of 06:20 BST/01:20 EDT

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LOOKING AHEAD

• Highlights include Mexican Inflation (Aug), US Chicago Fed National Activity Index (Jul), Comments from US Treasury Secretary Bessent. Earnings from Xpeng & PDD.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump said on Friday that Washington was observing what happens in the conflict with Iran, and he reiterated a warning against any country that provides a lifeline to Iran, while he said Iran would love to make a deal but isn’t ready to make the right deal in his opinion.
• US Treasury Secretary Bessent wrote in FT that economic D-Day is coming for Iran, and countries that calculate appeasement of the regime to be a safer choice should reconsider.
• Iranian Foreign Ministry Spokesperson Baghaei criticised a looming US announcement of sanctions on Iran, which he said was an assertion of extraterritorial sovereignty over independent member states of the UN and that such secondary sanctions have no foundation in international law.
• Iran's Foreign Ministry Spokesperson said Oman's Foreign Minister will visit Tehran on Tuesday as part of consultations on maritime security and freedom of navigation in the Strait of Hormuz.
• Iran's Supreme National Security Council Secretary Rezaee warned, "If the economic war continues, not a single drop of oil will be exported٫ neither through the Strait of Hormuz nor from anywhere in the Persian Gulf. Iran will regard any country’s participation in or support for America’s economic war against the Iranian people as an act of war."
• Iranian Parliamentary Speaker Ghalibaf said they have received messages from neighbours about forming new security arrangements and economic cooperation, while he also stated that the US has put its allies at such risk through bullying and pure disregard of their interests for the sake of Israel that they briefly saw their entire existence on the line.
• Iran's Persian Gulf Strait Authority issued new rules for ships transiting through the Strait of Hormuz and warned vessels that violate Iranian protocols could face restrictions on subsequent voyages, including fines, detention or seizure. Furthermore, cargo owners are being told to check Iran's non-compliant vessels list before chartering ships, while any vessel conducting ship-to-ship transfers or other transactions with a blacklisted vessel will itself be added to the list.
• Israel warned Hamas it will intensify military strikes against targets in Gaza if they do not immediately halt the launching of drones, balloons and kites from the Gaza Strip into Israel.
• China said it continues to support Iran talks and it is closely monitoring the Middle East situation.
• Iran-linked hackers were behind a cyber-attack that shut down a UK power plant last month.

US TRADE

EQUITIES

• US stocks closed in the green on Friday, with gains broad-based and the advances led by outperformance in the Dow and Russell 2000, while the Nasdaq slightly lagged. Breadth was strong, with the equal-weight S&P 500 rising around 0.6%, and sectors were also predominantly firmer. Materials, Health Care and Consumer Discretionary were the biggest gainers, and Utilities was the clear laggard, with notable pressure in sector heavyweights NEE, SO, DUK and AEP, likely weighed on by the continued rise in Treasury yields despite the Treasury's recent announcement of increased long-end buybacks.
• SPX +0.43% at 7,674, NDX +0.33% at 29,309, DJI +0.98% at 53,282, RUT +0.85% at 3,018.
• Click here for a detailed summary.

TARIFFS/TRADE

• Trade discussions between the US and Canada collapsed on Friday partly due to a last-minute stand-off regarding cutting US tariffs on Canadian medium and heavy-duty vehicles, according to people familiar with the matter cited by Bloomberg. This means the 50% US tariffs on some Canadian goods have taken effect, while Canadian PM Carney vowed to retaliate by matching tariffs dollar-for-dollar on US goods from September 8th.
• US President Trump posted "Canada wants the benefits of being a State, without being one!!! They have also charged our great farmers, for many years, massive amounts of Tariffs. No more!!!"
• US Transportation Secretary Duffy said Canadian PM Carney is going to “come to the table” on trade because tariffs will be “devastating”, while he suggested Canada is foolish to think it could win a trade war with US President Trump.
• Canadian PM Carney said Canada was in a trade war with the US and that President Trump "miscalculated" by escalating his tariff attack, according to FT.
• Canada sees a long trade war with the US that could last beyond the Midterms.
• Mexico’s Economy Minister Ebrard expressed optimism that Mexico can achieve lower US tariffs on cars and steel.
• German Lower Saxony Minister-President Lies called for import tariffs on Chinese hybrid cars.
• India said it is in discussions with China regarding business visa delays.

NOTABLE HEADLINES

• Fed’s Kashkari (2026 voter, hawkish dissenter) said the Treasury market is functioning as it should and that the recent surge is unlikely to impact monetary policy deliberations.
• US President Trump said on Friday that he did not direct US Treasury Secretary Bessent to intervene in the bond market last week and that Bessent acted on his own authority.
• NVIDIA (NVDA) notified customers that prices of servers containing AI chips will increase by over 15% amid soaring memory chip costs.
• A state of emergency was called in Nevada as a brush fire expanded to over 10,500 acres.

APAC TRADE

EQUITIES

• APAC stocks traded mixed, albeit with a mostly negative bias amid a US-Canada trade war and following quiet geopolitical headlines over the weekend, while participants await this week's key events, including the US announcing the 'toughest sanctions in history' against Iran later, in what is described as economic D-Day, NVIDIA earnings due mid-week and the Jackson Hole Symposium on August 27th-29th.
• ASX 200 was higher amid strength in the mining, materials, resources and tech sectors, while participants digested another deluge of earnings releases from Australian companies.
• Nikkei 225 was choppy and traded on both sides of the 66,000 level amid strength in the heavy industries, while tech-related stocks lagged with Kioxia and SoftBank among the worst hit.
• KOSPI underperformed amid weakness in its tech giants, with Samsung Electronics and affiliates suffering heavy losses despite the recent announcement of its largest-ever shareholder return plan.
• Hang Seng and Shanghai Comp were pressured amid selling in tech, with Alibaba suffering heavily after it announced a USD 10bln Hong Kong share sale, while 'Big Short's' Michael Burry said he sold his Alibaba shares to build a large position in JD.com (9618 HK) and suggested Alibaba was overvalued.
• US equity futures were subdued amid the weakness in Asia and ahead of this week's key events, including NVIDIA earnings.
• European equity futures indicate a slightly lower cash market open with Euro Stoxx 50 futures down 0.1% after the cash market closed with gains of 0.6% on Friday.

FX

• DXY lacked direction and was ultimately flat amid the uneventful picture across most of the FX space aside from CAD, which was pressured amid a US-Canada trade war following the collapse of talks on Friday and with Trump's 50% tariffs on some Canadian goods taking effect, while Canadian PM Carney vowed a dollar-for-dollar retaliation with tariffs on US goods from Sept. 8th. Elsewhere, there were comments from Fed's Kashkari that the Treasury market is functioning as it should and that the recent surge is unlikely to impact monetary policy deliberations, although the rhetoric provided little to shift the dial, as participants await looming key events including the Jackson Hole Symposium later in the week.
• EUR/USD traded sideways after failing to sustain last week's brief reclaim of the 1.1700 handle and amid a lack of major catalysts from the bloc, although it was reported that ECB President Lagarde could become the head of the World Economic Forum at some point next year, while she was described as a putative candidate to head the WEF and was also said to be ready to serve.
• GBP/USD oscillated within a tight range around the 1.3650 level with quiet newsflow from the UK, while the government is to propose giving mayors across England new authority to take control of local planning decisions and approve large-scale developments in their area.
• USD/JPY conformed to the indecisive mood in major FX pairs amid a lack of pertinent drivers and with initial upside momentum thwarted by resistance at the 159.00 level.
• Antipodeans took a breather after Friday's gains and with trade contained amid the subdued mood.
• PBoC set USD/CNY mid-point at 6.7841 vs exp. 6.7248 (prev. 6.7817).

FIXED INCOME

• 10yr UST futures rebounded from last week's trough as oil prices mildly eased back from around 3-month highs, and with the attention this week on Fed Chair Warsh's first Jackson Hole keynote address.
• Bund futures climbed higher and look to retest the 124.00 level to the upside as the pullback in energy prices helped ease some inflationary pressures.
• 10yr JGB futures gradually recouped their initial losses with mild upside seen following a slightly stronger than previous 10-year climate transition bond auction.

COMMODITIES

• Crude futures pulled back after last week's advances, and with the absence of any major geopolitical developments over the weekend, while participants await US Treasury Secretary Bessent's announcement of the toughest sanctions against Iran, which the US claimed would be an economic D-Day for Iran.
• Iran discovered over 7.5tln cubic feet of gas reserves at a field south of the Fars province.
• Over 50 Russian regions are experiencing severe fuel shortages amid Ukrainian drone attacks.
• Spot gold extended its gains after recently climbing above the USD 4,600/oz level, with the upside in the precious metal coinciding with the pullback in oil prices and yields.
• Copper futures lack demand amid the mostly subdued risk appetite and as participants brace for this week's key events.
• Russia is planning several measures to support grain producers, including crop procurement, preferential loan extensions and sales subsidies, according to Interfax.

CRYPTO

• Bitcoin retreated in a choppy fashion and briefly dipped beneath USD 77,000 but is off intraday lows.

NOTABLE ASIA-PAC HEADLINES

• Singapore announced sweeping family support including more childcare leave, greater financial support and lower preschool fees, with every child to get nearly SGD 70,000 in direct financial help.

DATA RECAP

• New Zealand Retail Sales QQ (Q2) -0.5% vs. Exp. 0.1% (Prev. 0.9%)

GEOPOLITICS

MIDDLE EAST

• US Ambassador to Turkey Barrack issued a warning following Israel's recent strike on a Syrian base near the Turkish border.
• Syria's Foreign Minister and intelligence chiefs met an Israeli delegation in Jordan with US mediation, while discussions were focused on establishing mechanisms to halt Israeli attacks, arrest and targeting operations. Furthermore, Syria reaffirmed that the Golan Heights are occupied Syrian territory, but noted that discussion on their final status is premature.

RUSSIA-UKRAINE

• Russian President Putin said Ukraine opened 'Pandora's Box' with its attacks against economic targets, while Russia has responded with its own effective strikes on Ukraine's economic infrastructure.
• Ukrainian President Zelensky said Russian President Putin rejected an offer for a Black Sea shipping truce. Zelensky also said that Ukraine believes Russia is planning to draft an additional 300,000 troops for the war after the Russian parliamentary elections in September.
• Ukrainian media reported explosions in Kharkiv on Sunday.
• French President Macron vowed to accelerate delivery of new French equipment to Ukraine following a call with Ukrainian President Zelensky.
• South Korea said North Korea is preparing further Russia troop deployments, but noted there was no sign of an imminent move.

OTHER

• Philippines said the bilateral defence pact signed earlier this year with Japan regarding the exchange of supplies and services for joint exercises or crises is now in effect.

EU/UK

NOTABLE HEADLINES

• UK PM Burnham is set to give mayors new authority to take control of local planning decisions and approve large-scale developments in proposals to be unveiled in the week ahead.
• ECB President Lagarde could become the president of the World Economic Forum at some point next year, while she was described as a putative candidate to head the organisation and was also said to be ready to serve, according to Swiss newspaper NZZ.
• Fitch maintained Poland's sovereign credit rating at A-; Outlook Negative, while Moody‘s raised Ireland from Aa3 to Aa2; Outlook Positive.