NQ outperforms into CPI after strong SMCI, CRWV results - Newsquawk US Market Open

Pakistan's Foreign Ministry said it continues to activate direct and indirect diplomatic channels between the US and Iran and that they are working to bring both sides to the negotiating table in Islamabad.
US equity futures gain, with outperformance in NQ futures following stellar SMCI and CRWV earnings.
DXY muted; low-yielding funders modestly weaker as JPY shorts are relocated.
Fixed income benchmarks slightly firmer on light volume ahead of the key US CPI report.
Crude choppy amid a lack of tangible US-Iran updates.
Looking ahead, highlights include US CPI (Jul), OPEC MOMR, and supply from the US.

As of 10:50BST / 05:50EDT

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EUROPEAN TRADE

EQUITIES

European bourses initially opened entirely in the green but has since pared back the earlier gains, now trading with slight losses. Similar price action was seen in Asia, with equities ending mixed. KOSPI was the clear outperformer, driven by gains in SK Hynix and Samsung Electronics (+5.5% and +6.7% respectively) after Asia Business Daily reported that Singapore's Temasek is planning to invest directly into the two Cos through its internal investment team. Newsflow has been light, with focus on the US CPI report at 13:30BST. Markets are expecting core CPI to tick lower to 2.5%, its lowest level since early 2021.
After the close in Taiwan and Hong Kong, Foxconn and Tencent reported earnings. For Foxconn, its Q2 net income, revenue and operating profit beat consensus and guided Q3 revenue to rise strongly. For the latter, Tencent's revenue and capex topped forecasts however operating profit missed.
Sectors point to a mixed picture. Basic Resources outperforms, followed by Construction and Telecoms. To the downside is Health Care, given the broker downgrade for Novo Nordisk (-2.8%), with Consumer Products & Services and Optimised Personal Care rounding out the sector laggards.
US equity futures are higher across the board, with clear outperformance in the NQ given stellar Supermicro and CoreWeave earnings. The latter gains over 17% pre-market after the Co. raised its FY26 outlook given the accelerating AI infrastructure demand. The former trades 9.2% higher pre-market after FY revenue exceeded expectations.
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FX

G10s are mostly flat against the Buck, low-yielders CHF and SEK underperform despite a lack of specific catalysts.
DXY is flat heading into the US CPI print. More weight on the CPI print today after those FT sources suggested Warsh was more attentive to the inflation side of the mandate, in the weeks ahead at least. Despite the recent USD action, the market is primed for a soft 0.2% M/M core print; a figure which could see some reduction of tightening bets. As it stands, the market sees September as a coin-flip between hold and hike. In terms of levels into CPI, the DXY's NFP low was 99.40 to the downside, 99.18 is the 200DMA. To the upside is 100.00, thereafter the 21/50DMAs are around 100.50, which could come into play on a hot print.
No EUR move to unrevised Italian and German CPI; EUR likely to trade at the whim of the Buck on US CPI; the single currency currently flat at 1.1540 with catalysts absent, also flat against CEE, where focus remains on the implications of the European heatwave for energy supply.
The same story for GBP, which is flat, but more resilient than others to the modest USD strength. For the moment eyes are on UK data with GDP scheduled tomorrow following yesterday's BRC report, which showed sales growth below expectations. Cable is within a c. 30 pip range.
SEK and CHF are among the worst performers vs the USD. Despite headline specific newsflow being light, action is potentially a function of carry funding amid the recent unwinding of JPY shorts.

FIXED INCOME

USTs are slightly firmer heading into US CPI for July. Currently, in a 108-13+ to 108-22 band. Today’s data is of note after the particularly weak NFP report last week, which saw a pullback in near-term tightening expectations leaving September essentially a coin-flip, as it stands. However, before the September Fed we get PPI, PCE, Jackson Hole, August NFP and then the August CPI series.
Currently, CME pricing has September evenly split between a hold and hike; a 37% chance of a hold in October, 50% to a 25bps hike and just over 12% implied probability for a 50bps move. By end-2026 (i.e. December’s meeting) there is a 21% chance of the Target Rate still being at 3.50-3.75%, 45% probability of one 25bps hike, 28% chance to two and around a 5% likelihood of 75bps worth of tightening.
EGBs devoid of specific catalysts in conditions more typical of summer markets. Bunds in a narrow 124.63-95 band, and unchanged in that. Gilts started with a little more pressure, opened lower by 24 ticks at 87.00 before paring around half of that and now trading in-line with EGBs.
Aside from CPI, the docket also features US supply. As a reminder, Tuesday’s 3yr auction was strong, though not as well received as the last outing.
Germany sells EUR 1.95bln vs exp. EUR 2.5bln 2038 and 2053 Bund.
The UK sells GBP 1.5bln 1.125% 2035 I/L Gilt: b/c 3.37x (prev. 3.35x), real yield 1.725% (prev. 1.515%).
Japan sells JPY 250bln 10-year I/L JGBs: b/c 3.27x (prev. 3.40x), Yield at the Lowest Accepted Price 0.860% (prev. 0.578%), Lowest Accepted Price 97.70 (prev. 100.20).
Australia sells AUD 1bln 4.25% March 2036 bonds, b/c 4.73, avg. yield 4.9923%.

COMMODITIES

There has been little in terms of notable geopolitical updates throughout the European morning. The main recent development is that Iran’s Secretary of the Supreme National Security Council said the Strait of Hormuz would not open until the US accepts Iran's conditions, conditions that prove unfavourable for Washington. Elsewhere, Pakistan said it continues to activate direct and indirect diplomatic channels between the US and Iran and are working to bring both sides to the negotiating table in Islamabad, whilst Pakistan remains optimistic as a mediator.
WTI Sept and Brent Oct futures initially held onto mild gains amid a lack of constructive updates to resume oil flows. This morning, the IEA OMR forecasted an oil market deficit of some 1.8mln BPD in Q3, more than double the prior month’s forecast of 800k BPD. IEA also noted that although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting. Note, OPEC will be releasing its oil market report at 13:00 BST, albeit the report is backwards looking. The space gradually dipped into flat territory throughout the morning. WTI resides the bottom end of a 82.57-84.35/bbl range (vs yesterday’s USD 84.61 high), while Brent trades in a USD 88.27-90.07/bbl range (vs yesterday’s USD 90.03/bbl peak).
Precious metals are firmer despite a lack of newsflow in the runup to the US CPI report. The data will be key in shaping expectations for the September FOMC meeting; the weak July NFP report prompted participants to pare rate hike expectations, although the subsequent rebound in crude prices has helped push September pricing back towards a coin flip (full preview on the headline feed). Spot gold trades in a USD 4,363-4,424/oz range, within yesterday’s 4,356-4,435/oz range.
Base metals are also firmer across the board but gains capped ahead of US CPI, whilst ongoing hopes of Chinese stimulus keep the complex underpinned. 3M LME copper resides in a USD 14,134.03-14,237.97/t range.
IEA OMR: Oil Market in a 1.8mln bpd deficit in Q3 (prev. forecast 800k bpd), Sees World Oil Supply 1.27mln bpd lower than demand in 2026 (prev. 860k bpd), 2026 world oil supply to fall by 4.3mln BPD (prev. 3.7mln fall). Says that although the market is projected to return to surplus towards the end of this year, risks remain substantial and the urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting.
US Private Inventory Data: Crude Oil Stock Change (Aug/07)(bbls) +9.1mln vs. Exp. -0.5mln (Prev. +2.7mln), Gasoline -1.5mln (exp. -1.6mln), Distillate -0.6mln (exp. -1.6mln), Cushing +1.6mln
Kuwait set September export crude to Asia at a USD 3.75/bbl discount.
ADNOC sets the September Murban crude OSP to USD 79.07/bbl.

TRADE/TARIFFS

Indian government officials said India will advance preferential trade agreements with Mexico, Brazil and Mercosur.

NOTABLE EUROPEAN DATA RECAP

German HICP Final (Jul YY) 2.8% vs. Exp. 2.8% (Prev. 2.4%).
German HICP Final (Jul MM) 0.9% vs. Exp. 0.9% (Prev. -0.2%).
Italian HICP Final (Jul YY) 2.9% vs. Exp. 2.9% (Prev. 3%).
Italian HICP Final (Jul MM) -1.0% vs. Exp. -1% (Prev. 0.0%).

CENTRAL BANKS

Fed's Collins (2028 voter) told the FT that poor Americans are struggling to make ends meet, and warned that the central bank may need to raise rates to cool inflation. She added that she would be open to backing an increase as soon as September if the data dictated it.

NOTABLE US HEADLINES

US President Trump is reportedly considering calling for capital gains tax cuts as a Midterm boost, according to Bloomberg.

GEOPOLITICS

MIDDLE EAST

US President Trump said they totally control the Strait of Hormuz, while he said regarding the flight change during the return trip from Turkey in early July that he was following what the Secret Service said and the plane he flew on was at greater risk. Furthermore, Trump said that he doesn't trust Iran.
Pakistan's Foreign Ministry said it continues to activate direct and indirect diplomatic channels between the US and Iran and that they are working to bring both sides to the negotiating table in Islamabad. The Ministry added that they remain optimistic and not discouraged by escalations. Furthermore, the Ministry added that with the 60-day MoU deadline approaching, the deadline can be extended.
Pakistani Interior Minister is said to have given an important message to Iran.
Iranian Army official said Iran intends to maintain control and oversight of the Strait of Hormuz as a key source of its geopolitical power, Mehr News reported.
Iran's IRGC said that if a threat against Iran occurs again, "hundreds of thousands of miles of energy transmission lines, thousands of power plants, all US and non-US systems, and even global infrastructure connected to the Internet are at risk," Sepah reported.
Japanese PM Takaichi held a phone call with the Iranian President, on de-escalation of tensions in the Middle East and the security of maritime transit, Kyodo reported, citing sources.
Yemeni Deputy Foreign Minister said there has been no direct or indirect negotiations with the Houthis, Al ArabyTV reported.
Israel conducted airstrikes in southern Lebanon, according to IRIB.

RUSSIA-UKRAINE

White House official told Al Jazeera that President Trump remains optimistic about the possibility of reaching a peace agreement between Russia and Ukraine.
Ukraine Air Force said guided bombs were fired at southern Dnipropetrovsk and drones are heading to Sumy from the North.
Russia said they targeted a Ukrainian forces fuel depot in Odessa.
Russia's Novorossiysk grain terminal has halted operations after being hit by an attack and damaged, according to sources.
Russia's Orsk refinery suspended processing on August 11th following a drone attack, according to sources

OTHER

North Korea fired an unidentified projectile. In response, the South Korean Presidential Office held a meeting regarding North Korea's missile launch and will call for a stop to provocations.

CRYPTO

Bitcoin remains below USD 64k but within Tuesday's range and the broader USD 62k-66k range.

APAC TRADE

APAC stocks traded mixed amid geopolitical uncertainty, earnings releases and as participants await US CPI data.
ASX 200 retreated as attention turned to earnings and with the top-weighted financial sector in the red after CBA posted full-year results, which mildly beat estimates and showed a 7% increase in cash profit, although its CEO warned that economic growth is slowing.
Nikkei 225 was choppy on return from the holiday closure and amid a lack of tier-1 data, while participants continued to reflect on recent currency moves and increased BoJ rate hike expectations.
KOSPI rallied on tech momentum and futures triggered a sidecar, with firm gains seen in both Samsung Electronics and SK Hynix propelling the index higher.
Hang Seng and Shanghai Comp were mixed, with the Hong Kong benchmark pressured as markets await earnings results, including Tencent kicking off Chinese tech earnings, while sentiment was also contained after the PBoC skipped its 7-day Reverse Repo operations for a second consecutive day.

NOTABLE ASIA-PAC HEADLINES

Japanese PM Takaichi may reshuffle the cabinet during mid-September at the earliest, according to Japan Times.