Oil and USD tumble as US pauses strikes on Iran; Equity futures, Fixed and FX peers benefit - Newsquawk EU Market Open

• US equity futures gapped higher following the pause in US strikes on Iran since Friday night; Risk sentiment underpinned by a decline in oil prices and yields.
• US CENTCOM commander Cooper advised the Pentagon and the White House that the next possible step is to return to a large-scale military operation.
• Iranian media reported that an oil tanker exploded in the Strait of Hormuz after hitting a naval mine when it deviated from a navigation route designated by Iran.
• Yemen’s Houthis said they carried out operations against Aramco facilities in Saudi’s Jizan and Yanbu.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.8% after the cash market closed with gains of 1.1% on Friday.
• Looking ahead, highlights include German Ifo (Jul), US Durable Goods Orders (Jun), Atlanta Fed GDP (Q2). Supply from the US. Earnings from LVMH & AstraZeneca.

SNAPSHOT

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IRAN CONFLICT

• US paused strikes against Iran over the weekend.
• US President Trump posted several generated images, including the US striking Kharg Island, the US striking Iran, an explosion of an Iranian vessel with the caption “No More Engines”, and an image of Trump holding a US flag on an Iranian vessel with the caption “It’s Our Oil Tanker Now!”.
• US President Trump denied that the US faces an ammunition shortage and said that US stockpiles exceed any other country and surpass actual operational demand.
• US VP Vance raised concerns to President Trump on Friday regarding the escalating war.
• US CENTCOM commander Cooper advised the Pentagon and the White House that the next possible step is to return to a large-scale military operation to destroy the approximately 20% of targets that the US military marked but did not attack during Operation Epic Fury. However, he stressed that if the decision is not to escalate the fighting and not return to a large-scale operation, there is no point in continuing the bombing campaign that has been underway for the past two weeks, according to the sources cited by Axios’s Ravid. Furthermore, Cooper stressed that the two weeks of strikes in the Strait of Hormuz area had significantly degraded Iran's ability to attack ships.
• Iran’s Supreme Leader reiterated Iran’s strategic support for Hezbollah and demanded a full end to Israeli operations in Lebanon.
• Iran’s Foreign Ministry said it will never allow the US to pursue hegemony in the waters of the Arabian Gulf and the Strait of Hormuz.
• Iranian Foreign Ministry spokesperson Baghaei said information exchanges between Iran and the US, as well as mediators’ activities, are continuing. Iran's Foreign Ministry spokesperson also said that diplomacy remains open, but added that their priority is defending the nation.
• Iran's Foreign Minister Araghchi warned that Iran would respond to a deadly attack by Ukraine on an Iranian ship in the Caspian Sea, after Ukrainian President Zelensky announced that Kyiv conducted long-range strikes in the Caspian Sea on vessels transporting military cargo involving Iran.
• Qatar’s PM and Foreign Minister held a call with Oman’s Foreign Minister and stressed that parties must pursue dialogue and diplomacy, as well as implement the consensus reached under the US-Iran MoU, including ensuring freedom of navigation in the Strait of Hormuz to safeguard regional security and preserve stability.
• India’s embassy in Tehran said it is in close contact with authorities after an LPG tanker carrying 28 Indian crew members was attacked in Iranian territorial waters on Friday.
• Yemen’s Houthis said they carried out operations against Aramco facilities in Saudi’s Jizan and Yanbu, while the Houthis said on Sunday that they attacked three Saudi oil tankers in the past 48 hours, and are enforcing maritime blockade measures against vessels linked to Saudi Arabia.
• Yemen Navy official said that a Navy patrol boat was attacked and destroyed on Sunday in the Red Sea, which left three crew members missing, while the official blamed Houthi militants firing from several small boats.
• Fewer than 10 ships transited the Strait of Hormuz daily over the weekend, according to shipping data. It was separately reported that shipping traffic through Bab el-Mandeb fell on Sunday after Yemeni Houthis attacked Saudi oil installations along the Red Sea coast.
• An oil tanker exploded in the Strait of Hormuz after hitting a naval mine when it deviated from a navigation route designated by Iran, Mehr News reported.

US TRADE

EQUITIES

• US stocks were mixed on Friday, with the Nasdaq 100 the underperformer as weakness in technology stocks continued following earnings, while the S&P 500 was broadly flat. Intel (INTC) reversed its initial post-earnings gains as elevated CapEx weighed on the stock and broader semiconductor space. However, underlying breadth was considerably more constructive, with the Russell 2000 and Dow gaining, while the equal-weight S&P outperformed.
• Crude prices pared some of the sharp gains seen throughout the week, with Brent briefly falling below USD 97.00/bbl after reaching USD 102/bbl on Thursday. The weakness appeared to reflect some position squaring ahead of the weekend rather than a meaningful improvement in the geopolitical backdrop. There were several reports of note, but in late trade Trump stated he has not yet made up his mind on whether or not to conduct massive strikes on Iran, noting he always prefers to settle things diplomatically, and that the US and Iran are talking, while he sees them as the most serious they have ever been.
• SPX +0.06% at 7,413, NDX -1.15% at 28,128, DJI +0.45% at 51,947, RUT -0.28% at 2,932.
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TARIFFS/TRADE

• US is pressing Mexico to mirror Washington's tariff wall against Chinese steel and aluminium by imposing Section 232-style duties on imports from outside North America.
• India said trade negotiations with the US helped it secure a lower tier of additional tariffs imposed by President Trump’s administration. India will continue engaging with the US on a trade agreement following the introduction of new tariff measures.
• Australian PM Albanese said he will appeal directly to US President Trump over new tariffs announced by Washington, describing the levies as unjustified.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive, with risk sentiment underpinned as oil prices and yields declined following a halt in US-Iran strikes over the weekend, although some of the gains are capped, with price action somewhat choppy during the session as participants also await several major central bank meetings and key earnings later in the week.
• ASX 200 was led higher by strength in tech, materials and miners, while energy and defensives lag.
• Nikkei 225 swung between gains and losses with price action choppy amid recent currency moves, intervention risks, lower yields, and softer-than-expected Services PPI data, while participants also await the BoJ later in the week.
• KOSPI saw two-way trade and ultimately declined despite reports of NVIDIA deals with South Korean firms including SK Group and Naver, with the sector cautious ahead of key tech earnings.
• Hang Seng and Shanghai Comp were positive as Hong Kong was led higher by tech stocks including CXMT stakeholders such as Xiaomi and Meituan, with energy at the other end of the spectrum following the drop in oil prices, while the attention in the mainland was on CXMT, which soared over 500% on its debut in Shanghai's STAR Market, making it mainland China's most valuable company by market cap.
• US equity futures gapped higher following the pause in US strikes on Iran since Friday night.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.8% after the cash market closed with gains of 1.1% on Friday.

FX

• DXY softened to start the week amid lower oil prices and yields following the pause in strikes between the US and Iran over the weekend, which has spurred a mostly positive risk environment. Newsflow from the US remained very quiet outside of geopolitics, while participants look ahead to this week's main events, including several major central bank policy meetings (FOMC, BoE & BoJ) and key earnings from more Mag-7 companies.
• EUR/USD climbed at the open and reclaimed the 1.1400 handle amid the softer buck, while there were recent comments from ECB’s Zigman that the impact from renewed Middle East fighting will take time to appear in economic data, with uncertainty remaining and inflation effects expected to emerge in coming months.
• GBP/USD benefited from the weaker dollar but with further upside capped and trade contained within the 1.3300 handle, while pertinent updates over the weekend included PM Burnham ruling out holding an early general election.
• USD/JPY edged lower amid pressure in the greenback, but with downside cushioned following softer-than-expected Services PPI data and with participants awaiting the central bank policy decisions later in the week, including from the BoJ.
• Antipodeans eked mild gains amid the positive risk appetite, albeit with the upside capped amid a quiet calendar to start the week, while it was reported that Australian PM Albanese said he will appeal directly to US President Trump over new tariffs, and described the levies as unjustified.

FIXED INCOME

• 10yr UST futures gained and yields declined as the drop in oil prices eased some of the inflationary pressures, although further upside is capped as participants await this week's key events, including the FOMC on Wednesday.
• Bund futures gapped higher as the pause in US-Iran strikes and subsequent impact on oil drove price action.
• 10yr JGB futures followed suit to the rebound in global peers, while participants also look ahead to the BoJ meeting later this week.

COMMODITIES

• Crude futures slumped at the open and dipped beneath USD 90/bbl after the US halted strikes on Iran over the weekend, although prices are off their worst levels amid ongoing supply risks, with ship traffic through the Bab el-Mandeb declining after Yemeni Houthis attacked Saudi Aramco facilities and oil tankers.
• Iraq will sign an agreement with Syria covering the construction of oil pipelines.
• Kuwait Petroleum Corporation’s unit entered a USD 16bln partnership to establish a joint venture for a network pipeline lease.
• Russia extended restrictions on gasoline exports through year-end, while Deputy PM Novak said diesel export curbs could be removed once the market stabilises.
• Spot gold climbed and briefly returned above USD 4,100/oz as the dollar weakened and yields declined alongside lower oil prices.
• Copper futures failed to sustain the initial upside amid the mostly positive, but somewhat choppy risk appetite.

CRYPTO

• Bitcoin marginally declined and tested the USD 65,000 level to the downside but is off today's worst levels.

NOTABLE ASIA-PAC HEADLINES

• PBoC conducted CNY 500bln through its 1-year Medium-term Lending Facility.
• Japanese PM Takaichi said the government is ready to take further timely action as needed to cushion the economic blow from the Middle East conflict, while she added FX rates move on various factors and it is hard to identify impacts of any specific factor. Furthermore, Takaichi said raising Japan's growth potential and its competitive advantage will boost market trust in the yen, and she is scheduled to address measures including a consumption tax reduction in her press conference later today.
• Monetary Authority Singapore slightly raised the rate of appreciation of the SGD NEER policy band, while it makes no change to the width and level it is centred, effectively tightening FX-based policy (exp. no changes). MAS said inflation could pick up more strongly than anticipated if energy price spikes anew, while it added that MAS core inflation is projected to step up from July and remain elevated, but should moderate discernibly from around mid-2027.
• Indonesia Central Bank Governor Perry Warjiyo stepped down due to personal reasons, while Deputy Governor Destry Damayanti will act as interim Governor.
• NVIDIA (NVDA) announced a USD 500bln-plus AI infrastructure and memory partnership with SK Group, which includes a 2GW AI factory planned in Korea for 2027, while NVIDIA will invest USD 1bln in Naver (035420 KS).
• SK Group Chairman said AI developer Anthropic has asked SK Hynix (000660 KS) for supplies to help produce its own semiconductors.
• Samsung Electronics (005930 KS) won a USD 200bln order to supply chips to Broadcom (AVGO).

DATA RECAP

• Chinese Industrial Profits YY (Jun) 15.1% (Prev. 21.1%)
• Chinese Industrial Profits YTD YY (Jun) 18.7% (Prev. 18.8%)

GEOPOLITICS

MIDDLE EAST

• Syria’s President said the country is seeking a security agreement with Israel and seeks multilateral participation.

RUSSIA-UKRAINE

• US President Trump will meet with Ukrainian President Zelensky at the White House on Tuesday.
• Ukrainian President Zelensky said Russia plans to bring 30,000 North Korean troops into the conflict.
• Ukraine said it struck a Russian oil refinery and facilities involved in defence component production, while a Ukrainian drone struck an oil refinery site in Russia’s Tyumen region, according to the regional governor.
• Romania shot down a third Russian drone, while its president described the airspace breaches as intolerable.

OTHER

• US, Japan and Philippines carried out joint defence drills in the South China Sea.
• North Korea said its nuclear capability will be updated steadily and that its nuclear deterrence is the ultimate shield for sovereignty.

GLOBAL

• Brazil blocked visas for two senior US State Department officials over alleged election interference.

EU/UK

NOTABLE HEADLINES

• UK PM Burnham ruled out holding an early general election, according to an interview with the BBC.
• UK PM Burnham’s cabinet members are more vulnerable to the Reform Party than those of former PM Starmer, according to a More in Common poll.
• UK AI Minister Narayan said chips and drones are to be at the front and centre of PM Burnham’s push to ‘reindustrialise’, according to FT.
• ECB’s Zigman said the impact from renewed Middle East fighting will take time to appear in economic data, with uncertainty remaining and inflation effects expected to emerge in coming months.
• More than 300,000 people were forced to leave their homes as France and Spain battled wildfires.
• German police shot and killed an Islamist suspect following a van ramming incident during Berlin Pride.