Trump threatens "blowing up" all of Iran, whilst Houthis target a Saudi oil facility; crude prices initially firmer, but have since fallen - Newsquawk EU Market Open

• US President Trump reportedly said on Sunday that he is thinking of "blowing up" all of Iran as he left the Camp David retreat a day early to return to the White House.
• Crude futures initially advanced at the open following reports over the weekend that Houthis targeted a Saudi oil facility in Yanbu and with air raid alerts issued in Riyadh.
• Crude prices then retreated throughout the session despite the lack of fresh news behind the reversal, although Trump also signalled openness to meeting Iran's President.
• German Chancellor Merz vowed to stay on despite a ‘disaster’ in regional elections, with partial results showing his CDU at just under the 5% threshold for parliamentary representation in Mecklenburg-Vorpommern.
• APAC stocks were ultimately mixed, but with cautious gains; European equity futures indicate a positive cash market open.
• Looking ahead, highlights include comments from ECB's Lagarde, Cipollone, Fed's Goolsbee and BoC's Macklem.

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LOOKING AHEAD

• Highlights include comments from ECB's Lagarde, Cipollone, Fed's Goolsbee and BoC's Macklem.
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US President Trump reportedly said on Sunday that he is thinking of "blowing up" all of Iran as he left the Camp David retreat a day early to return to the White House, while Fox News reporter Yungst said Trump told him during a phone call that "very big things are going to be happening" soon. Furthermore, Trump said his options are ‘wiping out’ the regime, letting it ‘rot economically’ under naval blockade, or striking a deal, but also signalled an openness to meeting with Iran's President.
• US President Trump said on Friday that the Iran War will end soon, adding that once the war ends, US gasoline prices will revert to prior levels and could even fall further. US President Trump confirmed on Friday the US is talking to the Houthis, saying they want a deal, while adding "we'll see" on whether to annihilate Iran.
• US CENTCOM commander Cooper said oil and LNG shipments through the Strait of Hormuz in the past two weeks reached the highest levels in six months. More US troops had reportedly died amid the Iran war than the Pentagon disclosed publicly, according to a report on Friday in the Washington Post.
• Iranian officials conveyed their conditions to mediators for re-engaging in negotiations for ending the war with the US, while the conditions include ending the war on all fronts and the naval blockade, as well as unfreezing Iranian funds and they also want an end to the war between Saudi Arabia and Yemeni Houthis.
• Iranian Parliamentary Speaker Ghalibaf said Iran will keep the Strait of Hormuz closed until its conditions are fulfilled and US commitments are carried out, according to Fars News Agency.
• Iranian Foreign Minister Araghchi has left Tehran for the UN General Assembly in New York, with a brief stop planned in Qatar, according to state media.
• Iran's Foreign Ministry released a statement that it condemns the Israeli regime's crimes against humanity against the Palestinians.
• France's Foreign Ministry said it will take appropriate measures in response after Iran closed France's language centre in Tehran, while it added that France will be the first to summon Iran's ambassador.
• Qatar's PM Al-Thani said Gulf states need to cooperate to restore regional stability and help reach a settlement between the US and Iran. It was separately reported that Qatar's Energy Minister said US Treasury Secretary Bessent is "wrong" in saying that the strategic Strait of Hormuz will be worthless in two years.
• Saudi Arabia issued rare air raid alerts for Riyadh on Saturday, which was the first in the capital since the height of the Iran conflict in March and April.
• Saudi Arabia had announced on Friday its readiness to lift the blockade on Yemen, provided Yemen agrees to a ceasefire, although it was unlikely that Yemen would accept the offer, according to SNN. Houthis said on Friday that Saudi Arabia had called for Iran's mediation with Yemen, while the group added that "The Yemeni people will not agree to any ceasefire until Saudi Arabia lifts the blockade of Yemen."
• Yemen’s Houthis launched an attack on a Saudi Aramco facility in Yanbu with drones and missiles, while the Saudis said they repelled the attack.
• Lebanon's Foreign Minister said they will restore sovereignty through negotiations and will not allow others to negotiate for Lebanon.

US TRADE

EQUITIES

• US stocks were mixed on quad-witching Friday, with the Nasdaq outperforming, while the S&P 500 was flat, and the Dow and Russell closed lower. Breadth was negative, with the RSP sliding, while most sectors were lower. Industrials, Technology and Consumer Discretionary outperformed, while Utilities, Materials and Real Estate lagged. Crude was choppy, initially pressured by reports of further regional diplomatic efforts before rallying after Bloomberg reported that Saudi Arabia told European refiners they would receive no crude in October, extending the disruption from September. However, oil ultimately pared the move to settle in the red.
• SPX +0.16% at 7,650, NDX +0.67% at 29,644, DJI -0.19% at 51,687, RUT -0.50% at 2,860.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said on Friday regarding Chinese President Xi's visit that they get along very well and that it is a great honour he is visiting, while he added that they will have a lot of different deals and that some say China is spying on the US, while the US is spying on China too.
• US and China were reported on Friday to be discussing cutting tariffs on US LNG ahead of Xi's visit, with potential USD 30bln reciprocal tariff cuts, while the visit could bring broader energy and agricultural deals.
• US and Chinese officials started talks in New York to prepare for the Trump-Xi summit, as both sides seek to preserve and potentially extend a fragile trade truce.
• US Treasury Secretary Bessent said they had a very successful engagement with the Chinese on trade and AI, while they agreed to hold another meeting on AI dialogue and the US suggested a notification system between the two countries. Bessent separately commented that he is likely to meet the Chinese delegation in two months and they discussed extending the trade truce, although no pact was reached, according to FT citing an interview following Bessent's meeting with Vice Premier He Lifeng.
• USTR Greer said they implemented a board of trade, with the US and Chinese teams to continue working on a board of trade agreement, while the board of trade from the Chinese side is likely to include consumer goods and low-tech items.
• China's top trade negotiator Li said trade talks are ‘not bad’ and that talks will continue on Monday among the working group, while he confirmed that both sides discussed AI along with trade and investment.
• Chinese state media noted that China and the US conducted frank, in-depth and constructive exchanges on important economic and trade issues of mutual concern, while they held dialogue on issues related to AI.
• US tariffs reportedly threaten Great Lakes shipping tied to Canadian trade, according to Bloomberg.
• European Council President Costa said the EU wants to “do more” and “act as much as possible with Canada” as the bloc seeks to define its ties with Ottawa, according to POLITICO.
• French President Macron arrived in the French territory of Saint Pierre and Miquelon on Sunday for discussions with Canadian PM Carney.

NOTABLE HEADLINES

• Fed's Kashkari (2026 voter) said inflation remains too high and that price pressures have expanded beyond the oil-price shock from the Iran war and are affecting the broader economy.
• Fed's Schmid (2028 voter) said on Friday he supported the rate hike and that recent data suggests inflation is trending above 3%, while he added that the rate hike was a step towards returning to the 2% target. Schmid also stated the current inflation problem is "not just about energy", with price growth hot across a broad set of goods and services, while the economy was performing well outside of inflation.
• US President Trump said he is forming an AI force, much like the Space Force, and will appoint an AI czar in the near future, while the White House will hold a UN event on AI this upcoming week.
• US federal court in California filed a suit alleging that Anthropic, OpenAI, SpaceXAI (SPCX) and Google (GOOG) violated antitrust laws by making an illegal deal to slow the pace of AI development.
• Google said its Gemini AI model hacked into three company systems in May during cybersecurity testing.
• DBRS affirmed the US at AAA, with a Stable Trend.

APAC TRADE

EQUITIES

• APAC stocks were ultimately mixed, but with cautious gains seen for most of the region ahead of this week's key meetings in the US, including the UN General Assembly and the Trump-Xi summit, while there are also thinned conditions with the closure of Japanese markets through to Wednesday.
• ASX 200 was uneventful amid mixed M&A related headlines and further RBA rate hike calls, with CBA bringing forward its rate hike call to September from November, while ANZ expects hikes in both September and November.
• KOSPI outperformed as tech stocks took impetus from the advances in the Nasdaq last Friday.
• Hang Seng and Shanghai Comp were mildly higher ahead of the Trump-Xi summit this week and after US and Chinese officials held talks in New York ahead of the leaders' meeting, with China's top trade negotiator describing the discussions as 'not bad', while state media noted the sides had frank, in-depth and constructive exchanges on important economic and trade issues of mutual concern, as well as holding dialogue on AI-related issues.
• US equity futures traded higher in a continuation of their rebounds from last Friday's trough.
• European equity futures indicate a positive cash market open with Euro Stoxx 50 futures up 0.5% after the cash market closed with losses of 1.4% on Friday.

FX

• DXY traded little changed amid a lack of fresh major macro drivers over the weekend and despite recent comments from Fed officials, including Kashkari (2026 voter), who noted that inflation remains too high and that price pressures have expanded beyond the oil-price shock from the Iran war and are affecting the broader economy. Furthermore, markets seemed cautious ahead of this week's key meetings stateside, such as the UN General Assembly and the Trump-Xi summit.
• EUR/USD was range-bound ahead of a couple of ECB speakers and with the single currency unaffected by the 'disaster' for German Chancellor Merz's CDU in the regional election in Mecklenburg-Vorpommern, where it crashed out of the state parliament with preliminary results showing it failed to achieve the 5% threshold.
• GBP/USD marginally pulled back from Friday's peak with price action not helped by mixed UK Rightmove House Prices data, which showed the first monthly increase in prices since May, while it was also reported that Labour MPs warned against a move to lower the planned “mansion tax” threshold to GBP 1.5mln, with one claiming it would amount to “electoral suicide”.
• USD/JPY struggled for direction amid the absence of Japanese participants who are essentially on a five-day weekend due to holiday closures, while there were some fluctuations late last week in the aftermath of the BoJ's rate hike, lack of hawkish urgency, and a report that it conducted a "rate check" with market participants late on Friday, signalling potential preparation for currency intervention.
• Antipodeans were range-bound amid the somewhat mixed sentiment in the region.
• PBoC set USD/CNY mid-point at 6.7487 vs Exp. 6.6951 (prev. 6.7521).

FIXED INCOME

• 10yr UST futures edged higher as oil prices reversed the early upside, but with the gains capped as cash Treasury trading remained shut overnight owing to the Tokyo holiday closure.
• Bund futures benefited as the retreat in energy prices eased inflationary pressures, and with the attention in Germany on politics, with German Chancellor Merz vowing to stay in office following a 'disaster' for his CDU party in the state elections in the north-eastern state of Mecklenburg-Vorpommern, where the party failed to achieve the 5% threshold for representation in the regional parliament.

COMMODITIES

• Crude futures initially advanced at the open following reports over the weekend that Houthis targeted a Saudi oil facility in Yanbu and with air raid alerts issued in Riyadh, while President Trump was said to be thinking of "blowing up" all of Iran as he left the Camp David retreat a day early. Nonetheless, prices then retreated throughout the session despite the lack of fresh news behind the reversal, although Trump also signalled openness to meeting Iran's President, while Iranian officials are headed to New York this week for the UN General Assembly, and there were prior reports that Iranian officials conveyed their conditions to mediators for re-engaging in negotiations.
• US President Trump posted "Gas prices were much higher under Biden than under “TRUMP.” So were almost all other prices".
• Venezuela and TotalEnergies (TTE FP) signed a memorandum of understanding on Saturday to pave the way for the French company to return to operations in Venezuela.
• Spot gold traded indecisively amid an uneventful dollar and despite comments from Fed's Kashkari that inflation remains too high and price pressures have expanded beyond the oil-price shock from the Iran war.
• Copper futures gradually extended last week's advances amid the somewhat cautious, but mostly positive sentiment in Asia.

CRYPTO

• Bitcoin was rangebound and eked out mild gains after testing the USD 81,000 level to the downside.

NOTABLE ASIA-PAC HEADLINES

• Chinese 1-Year Loan Prime Rate (Sep) 3.00% vs. Exp. 3.00% (Prev. 3.00%)
• Chinese 5-Year Loan Prime Rate (Sep) 3.50% vs. Exp. 3.50% (Prev. 3.50%)
• China’s electricity consumption surpassed 1tln kWh in August and peak power load climbed to a record.
• Chinese state TV affiliate CCTV warned Anthropic’s privacy-policy revisions increased risk to user data by allowing information to be shared with US intelligence agencies when the company considers it necessary without legal procedures.
• Chinese DRAM chipmaker CXMT (688825 CH) said its fifth-generation technology platform entered mass production.
• CATL (300750 CH) has developed a new battery technology for American vehicles despite the Chinese group being mostly shut out by US trade barriers.
• China opened investigations into four online and travel booking platforms due to suspected practices that may undermine competition and merchants' rights.
• Hong Kong Chief Executive Chan said that they plan to expand the market for dim sum bonds.
• US President Trump will meet with Japanese PM Takaichi on the sidelines of the UN General Assembly meeting in New York this week.
• Japan's government will work with major machinery manufacturers to collect machine-learning data for physical AI applications such as autonomous robots and assigning unique IDs to factory equipment to enable cross-vendor data aggregation, according to Nikkei.
• Australian Treasurer Chalmers warned that Australia’s economy faces serious risk as the population ages and grows more slowly.
• Australia’s real estate market remained subdued with auction clearance rates declining last week amid rate hike concerns.

GEOPOLITICS

MIDDLE EAST

• US President Trump's administration is preparing broader sanctions on the International Criminal Court that would bar most transactions with the ICC and potentially restrict its use of the US dollar after a 6–7 month grace period, as the Trump admin accelerated its efforts to dismantle the institution following the ICC’s 2024 arrest warrant for Israeli PM Netanyahu, according to WSJ.

RUSSIA-UKRAINE

• US President Trump signed into law the Russian sanctions bill on Friday which grants him new powers to impose tariffs on countries that purchased Russian petroleum products.
• Ukrainian President Zelensky said he spoke with US President Trump and they agreed to meet in New York, while he added the meeting could bring important change and the diplomatic process is progressing.
• Ukrainian President Zelensky's meeting with US President Trump is expected to happen on Tuesday, according to Axios.
• UK Burnham hopes to build bridges with US President Trump at their first meeting and wants to press the case for the US to help Ukraine with air-defence systems.
• Moscow Oil Refinery was hit during a drone attack that was part of Ukraine's largest barrage this year.

OTHER

• Pakistani airstrikes in Afghanistan's Kunar province resulted in casualties, according to Al Jazeera.
• NATO chose German General Breuer to be its military chief.
• US, Denmark and Greenland reached a security agreement that expands the US’s role on the Arctic island to end the row that threatened NATO.
• North Korea launched two missiles off its eastern coast on Sunday. It was also reported that North Korea rejected an IAEA resolution on its nuclear program and vowed to keep its status as a nuclear-armed state.
• Japanese Defence Minister Koizumi and US Defence Secretary Hegseth agreed in a phone call to further strengthen security ties.

EU/UK

NOTABLE HEADLINES

• Labour MPs warned against a move to lower the planned “mansion tax” threshold to GBP 1.5mln, with one claiming it would amount to “electoral suicide” for the party in its central London strongholds.
• BoE and Fed increased scrutiny of bank exposures to large trading firms after turmoil at AI-focused hedge fund Situational Awareness caused large losses at Jane Street, according to FT.
• ECB Stournaras said the central bank must be vigilant of upside inflation risks but not rush action.
• German Chancellor Merz vowed to stay on despite a ‘disaster’ in regional elections with partial results showing his CDU at just under the 5% threshold for parliamentary representation in Mecklenburg-Vorpommern, while the centre-left SPD is projected as 35.5% of votes and the far-right AfD is expected to get 37.0% of votes, according to exit polls. Merz's conservatives are projected at 20% of votes in the Berlin state election, while the Left Party is seen at 24.5%, SPD is seen at 12%, and AfD is seen at 16% in Berlin. DBRS affirmed France at AA, outlook revised to negative, while Scope downgraded France's long-term ratings to A+; outlook revised to stable and upgraded Greece's rating to BBB+, outlook stable.

DATA RECAP

• UK Rightmove House Prices MM (Sep) 0.7% (Prev. -2.0%)
• UK Rightmove House Prices YY (Sep) -0.8% (Prev. -1.0%)