US-Iran conduct tit-for-tat strikes, lifting crude benchmarks; DXY flat in holiday-thinned conditions - Newsquawk EU Market Open

• US launched strikes against three Iranian crude oil tankers on Saturday, which destroyed one. A move in retaliation for the IRGC targeting US Navy warships with ballistic missiles. Iran’s navy also targeted three oil tankers that were travelling through unauthorised routes in the Strait of Hormuz.
• Iran's top security official Rezaei said Iran and Oman will sign agreed Strait of Hormuz passage maps in the coming days.
• APAC stocks traded mixed; European equity futures are indicative of a slightly weaker open.
• DXY trades lacklustre in holiday-thinned conditions; G10s are steady against the USD.
• Crude benchmarks are firmer this morning following US-Iran tit-for-tat strikes. Elsewhere, major OPEC+ countries stuck with the plan to keep oil output quotas unchanged for October.
• Looking ahead, highlights include, German Industrial Production (Jul), Swedish CPI (Aug), EZ GDP (Q2), EZ Employment Change (Q2).
• Holiday: Labor Day in the US and Canada.
• Desk Schedule: Desk will be open as usual on Sunday, 6th September until 18:00BST/13:00EDT on Monday, 7th September, due to the US market closure. Thereafter, the desk will resume normal service from 22:00BST/17:00EDT.

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LOOKING AHEAD

• Data: German Industrial Production (Jul), Swedish CPI (Aug), EZ GDP (Q2), EZ Employment Change (Q2).
• Click for the Newsquawk Week Ahead.

IRAN CONFLICT

• US launched strikes against three Iranian crude oil tankers on Saturday, which destroyed one, in retaliation for the IRGC targeting US Navy warships with ballistic missiles.
• Iran’s navy said it targeted three oil tankers that were travelling through unauthorised routes in the Strait of Hormuz and three additional US vessels in other areas.
• US President Trump said on Friday that they do intermittent strikes in Iran and that the Iran issue is a military conflict, while he added that they may hit Pickaxe Mountain very soon. Trump warned that if anything goes badly with Iran, they may hit them hard and have essentially taken over Iran. He also claimed there have been no shootings for days and there are no mines in the Strait.
• US Energy Secretary Wright said a nuclear deal with Iran may not be achievable in the near term and military action may be needed to address threats from Iran, according to ABC News.
• Iran's top security official Rezaei said Iran and Oman will sign agreed Strait of Hormuz passage maps in the coming days and that Iran will commit to keeping the Strait of Hormuz open when the US neither threatens Iran nor attacks it. Rezaei also stated that they will announce in the coming days and weeks a restricted zone outside the Strait of Hormuz that starts from the US Navy's blockade line and extends through the strait into the Persian Gulf, and any ship identified entering this zone with the intention of passing through the strait will be added to the sanctions list. Furthermore, he said that Iran tested an Iranian anti-ship missile above a US warship for the first time and claimed the missile created 'hell' for the Americans 'and they fled'.
• Iranian Parliamentary Speaker Ghalibaf warned that Iran’s response to any attack against its interests and security would be faster, heavier and more painful.
• Iran's Foreign Ministry said the US-led war is disrupting global oil trade and costs, while it added that US aggression is causing instability in the Strait of Hormuz.
• Israeli military announced that it struck southern Lebanon after Hezbollah launched drones towards Israeli soldiers in the security zone. Israel's army also issued an evacuation warning to residents of a building in Deir Zahrani, southern Lebanon.
• Israeli Finance Minister Smotrich said PM Netanyahu ordered the evacuation of certain settlement outposts in the West Bank. It was separately reported that Israel conducted an airstrike on eastern Gaza City with four missiles.
• Joint statement by UAE, Saudi Arabia, Qatar, Jordan, Indonesia, Pakistan, Turkey and Egypt Foreign Ministers strongly condemned statements made by Israel's National Security Minister Ben-Gvir and Defence Minister Katz regarding the displacement of Palestinians.
• Yemeni armed forces said they thwarted an attempt by Houthis to infiltrate the Dabab front, while they announced that warplanes struck Houthi positions in Balhaf and south of Hodeidah.

US TRADE

EQUITIES

• US stocks finished mixed on Friday as the tech-heavy Nasdaq 100 outperformed and saw gains, although the S&P 500 and the Dow closed in the red, while the main event was the US jobs report, which was strong and saw a hawkish reaction across markets as it increased the likelihood of a Fed rate hike at the September confab. For that, the clear catalysts come in the week ahead via the US inflation reports, which will likely dictate what the central bank does. Following the dataset, and as mentioned, it was a broad-based hawkish reaction as Treasuries and spot gold saw pressure, while the Dollar gained.
• SPX -0.38% at 7,719, NDX +0.21% at 29,544, DJI -0.51% at 53,419, RUT +0.25% at 2,976.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said Canada’s dollar imbalance with the US is unacceptable.
• US President Trump said on Friday that they have the right to put tariffs on nations like Switzerland and have the right not to trade with financial elite countries, while he also stated that he gets along very well with Mexico's President.
• Japanese Trade Minister Akazawa said progress was made on the USD 550bln investment initiative that was set up as part of a trade deal with the US.

NOTABLE HEADLINES

• Fed's Hammack (2026 voter) said on Friday that Fed policy is not restrictive and inflation is too high, while she stated local contact views indicate now is the time for a Fed hike to control inflation.
• US President Trump said on Friday that they are taking action to help cattle ranchers and signed an order that allows ranchers to process their own beef, while small, medium, and large ranchers can sell to consumers, and he also stated that meatpackers have been charging unsustainable prices.
• There were multiple casualties after an Amazon (AMZN) cargo plane overran the runway and struck vehicles whilst landing at Miami International Airport, while the Miami-Dade County Sheriff announced that at least five people have been confirmed dead.

APAC TRADE

EQUITIES

• APAC stocks traded mixed as the region reflected on the recent strong US jobs data and subsequent Fed rate hike bets, as well as the US and Iran tit-for-tat attacks on vessels in the Strait of Hormuz.
• ASX 200 was little changed as resilience in the energy, resources, materials and mining sectors is offset by underperformance in tech, utilities and telecoms, but with downside in the index cushioned by support at around the 9,000 level.
• Nikkei 225 gapped above the 66,000 level with tech-related stocks heavily represented in the list of biggest gainers in the index.
• KOSPI outperformed amid firm gains in the semiconductor giants, including SK Hynix, which is said to be sharply increasing the production share of its sixth-generation 10nm-class 1c DRAM.
• Hang Seng and Shanghai Comp lagged with the Hong Kong benchmark pressured amid underperformance in the likes of Baidu and Xiaomi, while the big banks also declined after reports that ICBC and AgBank plan large A-share placements to raise CNY 100bln and CNY 160bln, respectively, as part of a Beijing-led CNY 360bln capital injection in financials.
• US equity futures were lacklustre with index futures stuck around last Friday's troughs.
• 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 0.2% on Friday.

FX

• DXY struggled for direction after ultimately fading the knee-jerk uplift from the stronger-than-expected NFP report on Friday, with price action not helped amid the holiday closures in North America on Monday and with the Fed currently on a blackout period, while market participants will have to wait till much later in the week for US CPI data.
• EUR/USD traded little changed just above the 1.1600 level, with the single currency unfazed by news that the German far-right AfD is set for a big election win in the eastern state of Saxony-Anhalt, but will fall short of achieving a majority. Separately, German Chancellor Merz warned about further losses of industrial jobs.
• GBP/USD marginally softened although held on to the 1.3500 status, with participants looking ahead to comments from UK Chancellor Healey, who will outline his economic agenda in a speech today.
• USD/JPY was range-bound on both sides of the 156.00 level in the absence of fresh catalysts from the US or Japan to begin the week, with both their central banks scheduled for key meetings next week.
• Antipodeans conformed to the uneventful trade across the FX space amid the ultimately mixed risk appetite and with no tier-1 data to spur price action.
• PBoC set USD/CNY mid-point at 6.7795 vs Exp. 6.7086 (prev. 6.7787)

FIXED INCOME

• 10yr UST futures lacked direction after whipsawing in the aftermath of last Friday's blockbuster jobs report, while price action is contained with US cash markets closed on Monday for Labor Day.
• Bund futures trickled lower and returned to beneath the 123.00 level amid mild gains in oil prices and with German Industrial Production data due later, while there was little impact from news that Germany's far-right was set for a major victory after elections in the eastern state of Saxony-Anhalt.
• 10yr JGB futures were subdued in the absence of any major fresh drivers or tier-1 data from Japan.

COMMODITIES

• Crude futures mildly gained after the US and Iran conducted tit-for-tat attacks on vessels in the Strait of Hormuz during the weekend, but with upside capped as it was also reported that Iran's top security official Rezaei said Tehran will declare a restricted zone near the Strait of Hormuz and announce a new shipping route agreed on with Oman in the coming days and weeks.
• Major OPEC+ countries stuck with the plan to keep oil output quotas unchanged for October.
• Iraq raised oil export capacity to over 3mln bpd, according to state media.
• US Energy Secretary Wright said the Trump administration is focused on boosting crude and fuel supplies rather than curbing US exports, as a way to reduce prices. Wright also said that US Navy escorts that are assisting tankers across the Strait of Hormuz are vital in sustaining crude flows and suggested they will continue to do so until Iran backs down.
• Russia’s Vostok Oil project loaded its first crude for shipment via the Northern Sea route.
• Iran is to increase gasoline prices for heavy consumers using more than 110 litres per month, effective on Tuesday.
• Spot gold retested the USD 4,400/oz level to the downside following last week's stronger-than-expected US jobs data, which supports the case for the Fed to hike rates this month.
• Copper futures ultimately declined with early indecision on the recent key market themes including US data, Fed rate expectations and ongoing geopolitical tensions.

CRYPTO

• Bitcoin was marginally lower with choppy price action on both sides of the USD 80,000 level.

NOTABLE ASIA-PAC HEADLINES

• US President Trump said on Friday that he will be hosting a state dinner for Chinese President Xi when he comes and that China has very little involvement with Iran.
• China’s Finance Ministry announced it will lead a capital injection of CNY 360bln in state banks and insurers, with ICBC (601398 CH) planning to raise CNY 100bln to bolster its capital, and Agricultural Bank of China (601288 CH) to raise CNY 160bln through a private placement of A shares, while the insurers include China Life Insurance (601628 CH), China Taiping Insurance (966 HK) and People’s Insurance Company of China (601319 CH).
• China unveiled a plan to strengthen rural investment and will boost rural revitalisation investments to boost agricultural productivity, while it will enhance bond and credit support for qualified agricultural initiatives.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky sees no quick end to the war with Russia following a meeting with US envoys Witkoff and Kushner, and is seeking a package from allies that would cover defence reinforcements, as well as energy, including US LNG.
• Russian President Putin ordered troops not to fire on Kyiv for three days during US envoys Witkoff and Kushner's visit to Ukraine’s capital, according to Kremlin spokesman Peskov. However, it was reported that Russia and Ukraine exchanged a wave of strikes prior to the US envoys’ visit to Kyiv.
• Russian Kremlin aide said talks between Russia and the US were highly useful and lasted for over three hours, but gave no indication of a breakthrough.
• White House official said US and Russian officials discussed substantive plans for the next steps in talks aimed at ending Russia’s war in Ukraine, which will be announced in the coming weeks.
• France’s far-right National Rally chief Bardella wants Ukraine to pay for Europe’s help and said France’s unconditional support for Ukraine should be replaced by a more transactional relationship.

OTHER

• North Korean leader Kim said North Korea's navy nuclear armament will put nuclear combat systems to practical use and will restrain the enemy's invading fleet, while he added that their new warship can carry out annihilating retaliatory strikes on the enemy at any time.

EU/UK

NOTABLE HEADLINES

• UK Chancellor Healey said Britain’s economic growth must extend beyond the largest cities as he prepares to outline his economic agenda in a major speech on Monday. He is reportedly to set to announce a GBP 150mln fund for northern firms, aiming to boost growth.
• UK recruiters saw hiring pick up for the first time in four years in August, according to the FT citing a survey by KPMG and the Recruitment and Employment Confederation.
• Hundreds of masked anti-immigration protesters blocked roads leading to Britain’s busiest ferry port in Dover on Saturday.
• German Chancellor Merz warned about further losses of industrial jobs and said that they are losing industrial jobs on a large scale, although he welcomed the latest agreement on Volkswagen’s supervisory board.
• Germany’s far-right AfD is set to win the election in the eastern German state of Saxony-Anhalt with 44.5% of the vote.
• German police discovered 12 explosive devices near overhead powerlines in two districts in east Germany, which is the latest spate of incidents targeting Germany’s electricity infrastructure.
• Greek PM Mitsotakis unveiled a package of economic measures including tax breaks and wage increases for pensioners and employees, with the measures costing EUR 3.5bln by 2030.
• Fitch raised Portugal's sovereign rating from A to A+; Outlook Stable.