EU mid-market update: Markets hover amid lack of progress in Iran and continued high valuations in the AI sector; What next? Early Fall could paint a new picture.
Notes/observations
– Another session lacking a substantial shift in narrative. For geopolitics, two ADNOC ships were attacked in Hormuz a day after Trump claimed “total control”; Bessent has flagged unprecedented economic measures against Iran next week, with a fresh carrier deploying, escalation is economic for now. Lavrov ruled out an immediate Ukraine ceasefire, while NATO investigates the Latvian drone incident, the second incursion since June and following a drone detonation near a Bulgarian gas pipeline on 8th August. Cross-border drone spillover is now a recurring EU infrastructure risk.
– Swiss Q2 GDP printed +1.5% q/q against 0.3% expected, an outsized surprise sitting oddly with a weaker franc and EUR/CHF at its highest since August 2025. German wholesale prices firmed to 5.3% y/y; French and Finnish CPI were confirmed at 2.1%. Indices opened mixed, Tech and Media +1.1%, Utilities and Basic Resources -1.7%. The clear negative is Trump’s Section 232 drone proclamation: 25% on smaller units, 100% above 25kg, with 15% country rates on the EU, Japan and Switzerland (UK 10%), effective in 180 days, a negotiating window, but the sectoral template is spreading.
– Digesting a second benign US print: July PPI flat versus +0.2% expected, after in-line CPI, has knocked September Fed hike odds to around 30% from 50% earlier in the week, easing yields globally and supporting some risk. Goolsbee welcomed the improvement without committing. Fitch affirmed the US at AA+/stable but flagged growth slowing to 1.9%, deficits at 7.4% of GDP and debt/GDP at 123% by 2028, a term-premium story, not a today story.
– Worth noting UK Reform leader Nigel Farage won the Clacton by-election following his resignation, which was widely expected. More focus was on the vote share, to indicate how well his support is holding up given the scrutiny on his political donations. All other major parties boycotted the event with only a novelty candidate challenging him. Vote: Farage 22.2K, Count Binface 9.5K. Voter turnout low at 44.4% due to heatwave.
– Z.ai has confirmed GLM-5.3, built on the identical 743B-class base as GLM-5.2, with all gains coming purely from aggressive post-training scaling; weights will open in two weeks after safety hardening. Pure post-training delivered the standout leap – Terminal Bench 3.0 exploding from 4.6 to 28.3, plus strong long-horizon agentic coding and emergent end-to-end cyber/exploitation skills that put it among the top open models, trading blows with (and sometimes beating) Kimi K3 while still trailing the strongest closed systems in most sophisticated tasks. Parallel signals of China’s under-tracked 1GW-scale inference buildout, heterogeneous domestic-chip campuses, and the XCore Sigma compiler acquisition point to a strategy of making fragmented accelerators fungible through software rather than chasing Nvidia parity. Open weights then let this amortized Chinese compute embed itself globally – foreign users can run the models locally without shipping data – shifting the real contest from single-chip supremacy toward useful tokens, approved agent tasks, and video seconds per watt across an entire industrial stack.
– Asia closed mixed with KOSPI outperforming +2.4%. EU indices -0.3% to +0.6%. US futures -0.1% to +0.1%. Gold -0.1%, DXY -0.2%; Commodity: Brent +1.0%, WTI +1.6%; Crypto: BTC -1.4%, ETH -0.7%.
Asia
– South Korea July Export Price Index M/M: 1.0% v -0.1% prior; Y/Y: 49.1% v 48.7% prior.
– South Korea July Import Price Index M/M: -1.0% v -4.2% prior; Y/Y: 18.7% v 20.9% prior.
– New Zealand July Manufacturing PMI: 54.3 v 60.1 prior (10th month of expansion).
– Australia Q2 Home Loans Value Q/Q: -5.2% v -5.3%e.
Global conflict/tensions
– Treasury Sec Bessent stated that the US would soon apply measures that have never been seen on Iran in the history of economic isolation on a country. To be a combination of economic isolation and the continued blockade in the Strait of Hormuz.
Europe
– UK Clacton By-Election saw Reform Party’s Farage win and retaining parliamentary seat.
Americas
– Fitch affirmed U.S sovereign rating at ‘AA+’; Outlook stable.
– Fed’s Goolsbee (non-voter) noted that had been getting a little bit better readings on inflation, hopefully it would continue.
Trade
– Trump signed proclamation setting various tariffs on drones, based on Section 232 trade investigation; Effective starting in 180 days.
– White House accused China of tariff evasion by redirecting its exports to the US via third countries.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [FTSE -0.22% at 10,748.65, DAX +0.59% at 26,447.82, CAC-40 -0.07% at 8,644.57, IBEX-35 -0.05% at 20,158.60, FTSE MIB -0.04% at 53,672.00, SMI -0.36% at 14,422.30, S&P 500 Futures +0.04].
Market focal points/key themes: European stocks barely budged on Friday and looked set to close the week modestly lower – their first weekly retreat in over a month – after the Stoxx 600’s four-week winning streak ran into a wall of profit-taking, mixed inflation prints and a sharp re-pricing of Persian Gulf risk. Germany’s DAX managed a 0.6% gain while the CAC 40 and FTSE 100 essentially marked time, as traders weighed solid UK GDP and cooler U.S. CPI/PPI data (which slashed September Fed-hike odds from nearly two-thirds to about 35%) against crude’s 4% weekly surge on Washington’s threat of maximum pressure and a possible Hormuz blockade. That energy spike kept a lid on any broader rally even as disinflationary relief provided a floor near the recent record highs. Among single names, DFDS rocketed 18% on sharply raised revenue and cash-flow guidance, Valneva jumped 16% after the EMA began formal review of its Lyme vaccine, while Energiekontor plunged 15% on a cut outlook and Innate Pharma dropped 16.5% after announcing a dilutive private placement.
Equities
– Consumer discretionary: HelloFresh [HFG.DE] –6.5% (open –5.5% → now –6.5%; [L━●━━━━H]; Barclays downgraded to Underweight and cut PT to €3.10 from €4.40, citing doubts over revenue momentum; UBS separately cut PT to €3.60 from €4.70).
– Energy: Equinor [EQNR.NO] +2.0% (open +2.5% → now +2.0%; [L━━━━●━H]; energy-sector read-through as Brent rises on renewed Middle East supply/geopolitical concerns).
– Healthcare: Valneva [VLA.FR] +16.0% (open +9.0% → now +16.0%; [L━━━━●━H]; EMA validated the marketing-authorisation application for Pfizer/Valneva’s VLA15 Lyme-disease vaccine and started formal review; major regulatory de-risking after positive Phase 3 data), Innate Pharma [IPH.FR] –16.5% (open –15.5% → now –16.5%; [L━━━●━━H]; launched an approximately €22.5m private placement of ordinary shares, creating immediate dilution/discount pressure).
– Industrials: DFDS [DFDS.DK] +18.0% (open +11.0% → now +18.0%; [L━━━━●━H]; 2026 revenue-growth outlook raised to +3–5% from roughly flat; EBIT floor raised to DKK1.2bn from DKK1.0bn and adjusted FCF outlook roughly doubled to ~DKK500m).
-Materials: Glencore [GLEN.UK] –2.5% (open –1.0% → now –2.5%; [L●━━━━━H]; broad mining/basic-resources selloff rather than a fresh company-specific announcement), Fresnillo [FRES.UK] –2.0% (open –2.0% → now –2.0%; [L━●━━━━H]; precious-metals read-through with gold lower and silver soft, reinforcing wider mining-sector weakness), Rio Tinto [RIO.UK] –1.0% (open –1.0% → now –1.0%; [L━━━━━●H]; basic-resources sympathy amid broad weakness across London-listed miners), Exel Composites [EXL1.FI] +12.5% (open +13.0% → now +12.5%; [L●━━━━━H]; Q2 revenue +40% and adjusted operating profit more than doubled; management expects significantly higher FY26 revenue and adjusted operating profit with stronger H2 momentum).
Speakers
– Russia Foreign Min Lavrov reiterated govt stance that an immediate ceasefire in Ukraine was not possible.
– BOJ said to set to be prepared raise interest rates as soon as September and then consider hiking more aggressively thereafter.
– Taiwan govt raised its 2026 GDP growth forecast from 9.6% to 11.1%.
– Indonesia President Prabowo 2027 budget speech: To set GDP growth at 6.0%; inflation at 2.5%. Saw 2027 budget deficit to GDP at 2.40% (IDR671.2T).
Currencies
– USD was slight weaker against the major pairs in continued tight ranges. Recent soft US inflation data dialed back expectations that the Fed could hike rates before year-end.
– EUR/USD inched up to test above 1.1550 level.
– USD/JPY just above the 159 level as more reports circulated that BOJ was prepared raise interest rates as soon as September and then consider hiking more aggressively thereafter.
– The 10-year German Bund yield last at 3.16%, France 10-year Oat at 3.99% and 10-year Gilt yield at 4.99%; 10-year Treasury yield: 4.66%; 10-year JGB: 2.85%.
Economic data
– (FI) Finland July CPI M/M: +0.2 v -0.2% prior; Y/Y: 2.1 v 2.1% prior.
– (DE) Germany July Wholesale Price Index M/M: +0.2% v -0.7% prior; Y/Y: 5.3% v 4.9% prior.
– (RO) Romania Q2 Advance GDP Q/Q: 0.0% v 0.3%e; Y/Y: -0.4% v -1.4%e.
– (IN) India July Wholesale Prices (WPI) Y/Y: 9.8% v 10.0%e.
– (FR) France July Final CPI M/M: 0.6% v 0.6% prelim; Y/Y: 2.1% v 2.1% prelim.
– (FR) France July Final CPI EU Harmonized M/M: 0.6% v 0.6% prelim; Y/Y: 2.4% v 2.4% prelim; CPI Index (ex-tobacco):# v 102.67e.
– (CH) Swiss Q2 Preliminary GDP (Sport Adj) Q/Q: 1.5% v 0.3%e.
– (TR) Turkey Central Bank (TCMB) Aug Inflation Expectation Survey: 12-month inflation outlook: 23.7% v 24.0% prior.
– (TH) Thailand May Foreign Reserves w/e Aug 7th: $280.6B v $275.4B prior.
– (CN) Weekly Shanghai Deliverable Copper Inventories (SHFE): 69.7K v 70.1K tons prior.
– (RU) Russia Narrow Money Supply w/e Aug 7th (RUB): 22.19T v 22.03T prior.
– (TW) Taiwan Q2 Preliminary GDP (2nd reading) Y/Y: 12.9% v 12.9% advance.
– (HK) Hong Kong Q2 Final GDP Q/Q: -0.6% v -0.6% prelim; Y/Y: 4.3% v 4.3% prelim.
– (CN) China July YTD New Yuan Loans (CNY): 10.380T v 10.620Te.
– (CN) China July YTD Aggregate Financing (CNY): 22.250T v 21.925Te.
– (CN) China July M2 Money Supply Y/Y: 7.7% v 7.9%e ; M1 Money Supply Y/Y: 4.0% v 3.9%e ; M0 Money Supply Y/Y: 11.6% v 11.8% prior.
– (CN) China Q2 Preliminary Current Account Balance: $195.1B v $184.3B prior.
– (EU) Euro Zone Q2 Preliminary GDP (2nd of 3 readings) Q/Q: 0.4% v 0.4% advance; Y/Y: 1.0% v 1.0% advance.
– (EU) Euro Zone Q2 Preliminary Employment Q/Q: 0.1% v 0.1% prior; Y/Y: 0.5% v 0.5% prior.
– (EU) Euro Zone Jun Trade Balance: +€1.8B v -€6.1B prior; Trade Balance NSA (unadj): +€8.6B v -€7.8B prior.
– (CC) Cyprus Q2 Preliminary GDP Q/Q: 0.8% v 0.5% prior; Y/Y: 3.3% v 3.0% prior.
Fixed income issuance
– (IN) India sold total INR320B vs. INR320B indicated in 2029, 2033, 2055 and 2056 bonds.
Looking ahead
– 05:25 (EU) Daily ECB Liquidity Stats.
– 05:30 (ZA) South Africa to sell combined ZAR1.0B in I/L 2031, 2043 and 2050 Bonds.
– 06:00 (UK) DMO to sell £5.5B in 1-month, 3-month and 6-month bills (£0.5B, £2.0B and £3.0B respectively).
– 07:00 (IL) Israel July CPI M/M: 0.3%e v 0.0% prior; Y/Y: 1.5%e v 1.6% prior.
– 07:30 (IN) India Forex Reserve w/e Aug 7th: No est v $692.9B prior.
– 08:00 (PL) Poland July CPI Core M/M: 0.4%e v 0.3% prior; Y/Y: 3.1%e v 3.0% prior.
– 08:00 (UK) Daily Baltic Dry Bulk Index.
– 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance.
– 08:30 (US) July Advance Retail Sales M/M: 0.1%e v 0.2% prior; Retail Sales (ex-auto) M/M: 0.2%e v -0.2% prior; Retail Sales (ex-auto/gas): 0.3%e v 0.4% prior; Retail Sales (Control Group): 0.3%e v 0.5% prior.
– 08:30 (CA) Canada Jun Wholesale Sales (ex-petroleum) M/M: 2.7%e v 0.0% prior; Manufacturing Sales M/M: -0.1%e v +1.3% prior.
– 09:00 (IN) India announces upcoming bill issuance (held on Wed).
– 10:00 (US) Aug Preliminary University of Michigan Confidence: 54.9e v 55.2 prior.
– 10:00 (US) Jun Business Inventories: 0.1%e v 0.3% prior.
– 11:00 (CO) Colombia Jun Retail Sales Y/Y: 14.0%e v 11.7% prior.
– 11:00 (CO) Colombia Jun Manufacturing Production Y/Y: +2.1%e v -0.4% prior; Industrial Production Y/Y: 2.6%e v 2.3% prior.
– 13:00 (US) Weekly Baker Hughes Rig Count data.
– 13:00 (EU) Potential sovereign ratings after European close (Moody’s on Austria; Fitch on UK).
Weekend data
– (PE) Peru July Unemployment Rate: No est v 4.9% prior.
– (PE) Peru Jun Economic Activity Index (Monthly GDP) Y/Y: 2.3%e v 1.8% prior.
Be the first to comment