EU Market Open: DXY a touch lower, Bourses set for a modestly firmer open as Trump delays strikes on Iran

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* US President Trump posted on Truth that the US military is to hold off on the Iran attack that was initially planned for Tuesday after Saudi Arabia, UAE, and Qatar requested him to do so, as serious talks are now taking place. * US President Trump also instructed the US to be prepared to go forward with a full, large-scale assault of Iran on a moment's notice, in the event an acceptable deal is not reached. * US President Trump told The Post on Monday that he is “not open” to any concessions for Tehran after receiving the latest disappointing Iranian response on peace deal talks. * Crude futures were lower following the prior day's choppy mood owing to mixed geopolitical headlines, although the main highlight was US President Trump calling off an attack on Iran. * APAC stocks traded mixed; European equity futures indicate a mildly higher cash market open with Euro Stoxx 50 futures up 0.2%. * Looking ahead, highlights include UK Jobs Report (Mar/Apr), Average Earnings (Mar), US ADP Employment Change Weekly, Canadian CPI (Apr). Speakers include BoE's Breeden, ECB's Lane & Fed's Waller. Supply from UK & Germany, Earnings from Home Depot. SNAPSHOT [https://newsquawk.com/uploads/ckeditor_wave/ck_images/9104d2c8-0f45-41b6-998e-f84e173845e0.jpg] * Click for the Newsquawk Week Ahead. [https://www.newsquawk.com/headlines/newsquawk-week-in-focus-18th-22nd-may-highlights-include-nvda-earnings-fomc-minutes-uk-canadian-japanese-and-nz-inflation-australian-jobs-and-global-flash-pmis-15-05-2026] IRAN CONFLICT * US President Trump posted on Truth that he instructed Secretary of War Hegseth, Joint Chiefs of Staff Chairman Caine and the US military to hold off on the Iran attack that was initially planned for Tuesday after Saudi Arabia, UAE and Qatar requested him to do so, as serious talks are now taking place. Trump added that in their opinion, a deal will be made that is very acceptable to the US and the Middle East, while a deal will include no nuclear weapons for Iran, but he also instructed the US to be prepared to go forward with a full, large-scale assault of Iran on a moment's notice, in the event an acceptable deal is not reached. * US President Trump said 'hopefully, maybe forever' regarding the decision to delay the Iran attack, while he added that they will probably be satisfied if they can make a deal where Iran doesn't get a nuclear weapon. Trump also stated that countries requested to put off the attack on Iran briefly and asked if an attack on Iran could be delayed 2-3 days. * US President Trump told The Post on Monday that he is “not open” to any concessions for Tehran after receiving the latest disappointing Iranian response on peace deal talks, while he said Iran knows “what’s going to be happening soon.” * US State Department spokesperson said President Trump prefers the diplomatic path and has kept this door open from the start, according to Al Jazeera. * US official told CNBC that Iranian state media reports claiming the US had agreed to lift oil sanctions while negotiations were ongoing were false. * Israeli security sources said preparations were completed ahead of another round, which is estimated to last several days and will be the last for the near term, while a source updated on US moves said a strike on Iran "is not a question of whether but of when", according to Israel's Hayom News. * Iranian President Pezeshkian said "Dialogue does not mean surrender" and the Islamic Republic of Iran enters into dialogue with dignity, authority, and the protection of the rights of the nation, and will not retreat from the legal rights of the people and the country in any way. * Iranian Foreign Minister Araghchi met with Pakistan's Interior Minister Naqvi in Tehran, while he considered the contradictory and exaggerated behaviour and positions of the US as a serious obstacle in the path of diplomacy. * Iran's Khatam al-Anbiya headquarters commander warned the US and its allies against strategic mistakes, while he said Iran's forces have become ready and will respond quickly and firmly to any new aggression from the enemies. * Iranian Supreme Leader's military advisor Rezaei said the iron fist of Iran's armed forces and nation will force America to retreat and surrender. * Israeli media said the main reason US President Trump postponed attacks on Iran is the Pentagon's warning that Iran is strengthening its air defences, while senior Pentagon officials warned that Iran is enhancing its warplane detection capabilities and bolstering its air defences, according to Al Mayadeen. It was also reported that air defences were activated in Isfahan, according to Mehr News. * Air defences were activated at Qeshm Island after the detection of micro drones, according to Tasnim. * Four missiles targeted the headquarters of Kurdish separatist groups in Iraqi Kurdistan. * Israeli drone strike was reported in Al-Qarara, Khan Yunis, in the southern Gaza Strip. It was separately reported that Hezbollah announced it attacked Israeli soldiers in the town of Rashaf, southern Lebanon with drones, while the Israeli army issued an evacuation warning for a building in the city of Tyre, southern Lebanon. * IAEA was informed by the UAE that off-site power was restored to Unit 3 of the Barakah NPP earlier today, following yesterday’s drone strike that caused a fire in an electrical generator near the site. US TRADE EQUITIES * US stocks finished mixed on what was a choppy performance as geopolitical headlines dominated price action, although the key development came late in the session after President Trump announced he had called off a planned attack on Iran scheduled for Tuesday, following requests from Saudi Arabia, the UAE and Qatar. Furthermore, Trump said Gulf allies had urged the US to delay military action as “serious negotiations” are now underway and expressed confidence that a deal acceptable to the US could still be reached, including guarantees preventing Iran from obtaining nuclear weapons, but added that officials will remain prepared for a large-scale assault at a moment’s notice should negotiations fail. * SPX -0.08% at 7,403, NDX -0.45% at 26,091, DJI +0.32% at 49,686, RUT -0.61% at 2,776. * Click here for a detailed summary. [https://www.newsquawk.com/headlines/newsquawk-us-market-wrap-markets-chop-to-geopolitics-while-trump-holds-off-on-immediate-iran-attack-18-05-2026] NOTABLE HEADLINES * Kevin Warsh is to be sworn in as the next Fed Chair on Friday, according to Fox Business. * Fed's Goolsbee (2027 voter) said he is excited about Warsh becoming Fed Chair. Goolsbee also stated they have too high inflation and inflation has got to be at the front of mind when Warsh starts as Chair, while he noted the job market is stable. * US President Trump announced that the number of drugs available on TrumpRx is to be increased by nearly 7 times and that over 600 generics are to be added to TrumpRx. APAC TRADE EQUITIES * APAC stocks traded mixed following the choppy performance in US peers as geopolitical headlines dominated price action stateside, while there was an announcement late in the session on Monday by President Trump that he instructed defence officials to hold off on a planned attack on Iran that was scheduled for Tuesday. The decision followed a request from Middle East allies as serious negotiations were said to be taking place, and they had the opinion that a deal will be made, which would be very acceptable to the US, although Trump added that he further instructed top defence officials and the military to be prepared to go forward with a full, large scale assault of Iran, on a moment’s notice, if an acceptable deal is not reached. * ASX 200 was led higher by notable strength in the consumer, telecom, real estate and financial sectors, while the minutes from the RBA's May meeting also noted that the board judged financial conditions would be somewhat restrictive after the May hike. * Nikkei 225 swung between gains and losses as participants reflected on recent currency fluctuations, stronger-than-expected GDP data, and the potential ramifications for BoJ policy. * Hang Seng and Shanghai Comp were rangebound with little fresh catalysts outside of geopolitics. * US equity futures were lacklustre as geopolitical uncertainty lingered, despite US President Trump calling off Iran strikes. * European equity futures indicate a mildly higher cash market open with Euro Stoxx 50 futures up 0.2% after the cash market closed with gains of 0.4% on Monday. FX * DXY was marginally firmer and got some slight reprieve after losing ground to its major peers yesterday, as recent price action across markets was largely driven by mixed geopolitical headlines, although the main development was President Trump's announcement to postpone a strike on Iran that was planned for Tuesday following a request from Middle East allies. Aside from geopolitics, there was little else to spur price action in the dollar as reports that Warsh's confirmation for Fed Chair is set for Friday, and comments from Fed's Goolsbee, were met with a muted reaction. * EUR/USD partially faded Monday's choppy rebound with trade quiet amid light newsflow from the bloc, while the EU flagged a cut to the growth outlook and an increase in the inflation forecast due to the Iran war. * GBP/USD slightly pulled back after yesterday's outperformance, which was helped by potential leadership challenger, Andy Burnham, fully ruling out changing Chancellor Reeves’s fiscal rules if he became PM, while participants now await UK employment and earnings data. * USD/JPY eked slight gains but with the upside capped by resistance around the 159.00 level and following recent fluctuations, as well as stronger-than-expected Japanese GDP data. * Antipodeans retreated amid the mixed risk appetite and pressure in the metals complex, while the RBA Minutes from the May meeting noted that the board judged financial conditions would be somewhat restrictive after the May hike and that a hike would provide space to see how the Gulf conflict develops, as well as the response of households and businesses. * PBoC set USD/CNY mid-point at 6.8375 vs exp. 6.7909 (prev. 6.8435). FIXED INCOME * 10yr UST futures eked mild gains but with the upside capped following the prior day's indecisive performance, as markets were fixated on mixed geopolitical headlines. * Bund futures remained afloat in quiet trade and heading into supply with a EUR 5bln Bobl issuance scheduled later, followed by a similarly-sized Bund auction tomorrow. * 10yr JGB futures pulled back after yesterday's modest recovery and following better-than-expected Q1 GDP data. COMMODITIES * Crude futures were lower following the prior day's choppy mood owing to mixed geopolitical headlines, although the main highlight was US President Trump calling off an attack on Iran that was planned for Tuesday following a request by Saudi Arabia, Qatar and the UAE, with serious negotiations said to be taking place. * US Treasury Secretary Bessent confirmed a temporary 30-day general license to provide the most vulnerable nations with the ability to temporarily access Russian oil currently stranded at sea. * Australian PM Albanese said Australia secured over 600k barrels of jet fuel and that three cargoes of jet fuel from China are expected to arrive from early June. * Spot gold was subdued following its recent range-bound performance beneath the USD 4,600/oz level. * Copper futures gradually extended declines with demand constrained amid the mixed risk appetite. CRYPTO * Bitcoin was indecisive and briefly climbed back above USD 77,000 before wiping out its gains. NOTABLE ASIA-PAC HEADLINES * RBA Minutes from the May meeting stated the board judged financial conditions would be somewhat restrictive after the May hike and that a hike would provide space to see how the Gulf conflict develops, as well as the response of households and businesses. Board considered whether to hike by 25bps or to keep rates at 4.1%, while it was stated that for future decisions, the board agreed monetary policy could not alter the near-term trajectory of inflation, and also agreed Australian economic growth is likely to be below potential for some time. Furthermore, the board will do what is considered necessary to meet inflation and employment mandates, while the majority emphasised that core inflation was projected above target for an extended period. DATA RECAP * Japanese GDP Growth Rate QoQ Prel (Q1) Q/Q 0.5% vs. Exp. 0.4% (Prev. 0.3%, Low. 0.1%, High. 0.7%) * Japanese GDP Growth Annualised Prel (Q1) 2.1% vs. Exp. 1.7% (Prev. 1.3%, Low. 0.4%, High. 2.9%) GEOPOLITICS RUSSIA-UKRAINE * Chinese President Xi told US President Trump during their talks last week that Russian President Putin might end up regretting his invasion of Ukraine, according to FT. OTHER * Cuba’s leader warned on Monday of a “bloodbath” in the event of a US attack, while the US imposed new sanctions on the country’s intelligence agency and senior officials. * Germany is to deploy a Patriot air defence system and 150 troops to Turkey, starting late June. * UK was reportedly preparing a multibillion-pound cash injection into joint stealth fighter jet programme with Japan and Italy, according to FT. EU/UK NOTABLE HEADLINES * UK former Health Secretary Streeting is set to attack Chancellor Reeves's record in a major escalation of Labour in-fighting, The I Paper reports. Streeting is expected to make the economy a new front of his leadership campaign, with allies accusing Reeves and Starmer of lacking ambition on growth. * UK's Andy Burnham fully ruled out changing Chancellor Reeves’ fiscal rules if he becomes PM. His team had previously left it open whether he might change them in the future, although his spokesperson told Bloomberg that he is explicitly ruling out any changes to the existing fiscal rules.

US Market Open: Brent pulls back from $112/bbl as Trump warns Iran, USTs hit fresh contract low, Equites lower

* US President Trump warned that the clock is ticking for Iran, though he declined to give a specific deadline. Situation room meeting due Tuesday. * Pakistan shared a revised Iranian proposal to end the war with the US on Sunday night, according to Pakistani sources. * European bourses broadly in the red, but off lows as reports tout a sharing of US-Iran proposals. * DXY reverses earlier gains, GBP helped by technicals & JPY lags on budget fears. * Fixed income benchmarks rebound, in synchrony with energy downside. * Crude futures lifted following punchy Trump rhetoric, gold/silver supported by tighter Indian import restrictions. * Looking ahead, highlights include US NAHB Housing Market Index (May), Canadian Victoria Day holiday, Supply from the EU. [https://newsquawk.com/uploads/ckeditor_wave/ck_images/7a5663dd-ffef-4e86-9f9a-78f175a2d99c.jpg] IRAN CONFLICT * US President Trump warned on Truth Social that the clock is ticking for Iran and that they better get moving fast, or there won’t be anything left for them, and that time is of the essence. * US President Trump declined to give a specific deadline for negotiations with Iran and will hold a Situation Room meeting with his national security team on Tuesday to discuss possible options for military action, while he spoke with Israeli PM Netanyahu about the situation in Iran, according to Axios. Trump also stated that he still thinks Iran wants a deal and he is waiting for an updated Iranian proposal, which he hopes will be better than the prior offer. Furthermore, Axios’s Ravid reported that Trump threatened that attacks would resume with greater intensity if the Iranian regime does not come up with a better proposal, while Channel 12’s Kraus posted that President Trump said in a phone call that he thinks the Iranians should be afraid of what’s going on right now. * Pakistan shared revised Iranian proposal to end the war with the US on Sunday night, according to Pakistani sources. The course added that "we don't have much time", adding that both countries "keep changing their goalposts". * Western sources say the new Iranian proposal includes a commitment of unclear value not to produce nuclear weapons but no mention of uranium or Hormuz, according to Journalist Segal. * Iranian Foreign Ministry Spokesperson Baghaei said talks with the US continue through Pakistani mediation. The spokesperson added that they have made great efforts for safe movement and protection of the Strait of Hormuz and are in constant contact with Oman to develop a mechanism. On Uranium, Baghaei said Tehran does not need any party to recognize its right to uranium enrichment and will not discuss during negotiations with the US. * Iranian Defence Ministry spokesman Brigadier General Reza Talaei-Nik warned of a regretful response to enemies and said that Iranian armed forces are fully prepared to confront any potential attack by the US and Israeli regime, according to IRNA. * Iranian Major General Rezaei said Iran is serious about diplomacy and negotiations, but is more serious about dealing with the aggressor, while he added that the US must now prove its good intentions and that Iranian armed forces are on the trigger as diplomatic efforts continue. * Iran said transit through the Strait of Hormuz would flow again once its conflict with the US and Israel is over, although the sides remain far from resolving their differences, according to Bloomberg. In relevant news, three cargo-empty, US-sanctioned tankers reportedly slipped through the US naval blockade in recent days, according to TankerTrackers.com [http://tankertrackers.com/]. * Israel said it carried out a Gaza strike targeting the de facto head of Hamas's armed wing, while Israel also conducted an airstrike on the towns of Froun, Kfar Hounah and Zawtar al-Sharqiya in southern Lebanon. Furthermore, an Israeli air strike targeted Baalbek, Lebanon and killed an Islamic Jihad commander and his daughter. * UAE officials said a drone attack set off a fire near the UAE’s nuclear power station, while it was still investigating the source of the attack. * Saudi Defence Ministry said it intercepted three drones launched from Iraq after entering the kingdom’s airspace. EUROPEAN TRADE EQUITIES * European bourses (STOXX 600 -0.2%) opened entirely in the red this morning, given the lack of US-Iran progress, and further punchy rhetoric from President Trump. Over the weekend, he stated that the clock is ticking for Iran, though he declined to give a specific deadline. Since then, bourses have clambered off lows amidst positive geopolitical updates; notably, Iran’s Baghaei suggesting that talks with the US continue through Pakistani mediation. Moreover, Pakistani sources suggested that Pakistan shared a revised Iranian proposal to end the war with the US on Sunday night. * European sectors opened with a clear negative bias, but this picture is now a little more mixed. Energy takes pole position, benefiting from higher underlying crude prices; Media and Utilities complete the top three. At the bottom of the pile reside cyclical sectors, such as Autos and Travel & Leisure. The latter has been pressured by post-earning losses in Ryanair after reporting in-line metrics, but warned that flat fares may put pressure on profits. * US equity futures (ES -0.3% NQ -0.1% RTY -0.3%) are entirely in the red, albeit modestly so. In terms of key stories this morning, Samsung Electronics (+4% in Korean trade) moved higher after reporting that Samsung and the union held talks to avert a strike; elsewhere, a South Korean court granted the company an injunction that could limit the scope of the planned strike. Elsewhere, Reuters reported that Tesla (-0.8% pre-market) raised US prices for its Model Y car, but did not provide a reason. * Click for the sessions European pre-market equity newsflow [https://www.newsquawk.com/headlines/newsquawk-daily-european-equity-opening-news-18th-may-2026-18-05-2026] * Click for the additional news [https://www.newsquawk.com/headlines/additional-european-equity-news-18-05-2026] FX * FX shows a risk-on bias with high-beta outperforming and DXY in the red. * DXY firmed at the Asia reopen and rose to a 99.40 peak as participants digested US President Trump’s remarks over the weekend, “the clock is ticking for Iran.” However, with Brent crude falling from its USD 112/bbl peak (curr. 110/bbl), the index now trades modestly in the red, a touch above 99.00 where its 50 DMA lies. Nothing notable scheduled today, though the rest of the week sees weekly ADP jobs on Tuesday, FOMC Minutes + NVIDIA earnings Wednesday, Jobless Claims and PMIs Thursday and UoM on Friday. * GBP is one of the best G10 performers, likely a factor of technical factors than political reprieve with newsflow light heading into the likely June 18th by-election. EUR/GBP reversed from 0.8730, and Cable bounced from 1.33. On domestic politics, PM potential candidates Streeting and Burnham were on the wires talking up the importance of rejoining the EU. On the Fiscal/Consumer front, the Times reported Chancellor Reeves has plans to retain the cut on fuel duty from September amid fuel price concerns, while separately drawing up plans for a targeted intervention on energy bills - both potentially factors helping the Pound today. The week ahead sees Jobs on Tuesday, CPI on Wednesday and PSNB on Friday, the former which ING says is expected to be mild because of base effects. * JPY is the only G10 currency that trades lower against the buck amid: a) a weak 5yr JGB auction, b) reports that the Japanese government is to start compiling a supplementary budget, c) lack of Iran progress, and d) surging energy prices. (See Fixed Income 09:35 BST for more). USD/JPY +0.1%, up a touch despite earlier gains which were capped by the 159 mark. FIXED INCOME * A bearish start to the week as US President Trump's escalatory language on Iran and the associated energy move, with Brent peaking at USD 112/bbl overnight. * Amidst this, fixed benchmarks spent the APAC session in the red. Note, JGBs derived pressure from this alongside a weak 5yr outing and reports around the compiling of a supplementary Japanese budget, see 09:35 BST for more details. * USTs hit a 108-30 trough, a fresh contract low, in the early hours. Since, and particularly after remarks from the Iranian Foreign Ministry spokesperson, energy benchmarks have eased off, which has allowed fixed to lift, taking USTs to a 109-08 high with gains of one tick on the session. Today's US docket is quiet, but the week is busy with Nvidia due before the FOMC Minutes and a 20yr auction. From the Minutes, the last with Powell as Chair, BofA expects the account to "reinforce the Fed's recent hawkish tone", showing that Warsh will inherit a Fed with "little appetite to cut". * Bunds in-fitting with the above, hit a 123.74 base, which is also a new contract low. Given the discussed energy moves, the benchmark has pared much of its 53 ticks of downside and is now lower by a more modest c. 15 ticks, just off a 124.20 peak. Newsflow has been relatively limited, we had remarks from but no move to ECB's Lagarde, who essentially noted that she is watching the yield space. On yields, the German 10yr hit a 3.19% peak overnight, a new high for the year and the highest since 2011's 3.49% best. Furthermore, the energy moves continue to be reflected in near-term policy expectations, with 21bps of ECB tightening implied for June and 75bps by end-2026. * Gilts opened near-enough flat, as the bearish leads from overnight had already begun to moderate, in addition to the lack of significant weekend development on the fate of PM Starmer. Furthermore, the complex is perhaps deriving some support from a revival of coverage that contenders Burnham and Streeting would like to rejoin the EU at some point; albeit, Burnham did somewhat distance himself from this over the weekend, concerning the upcoming by-election campaigning at least. As it stands, Gilts are holding at highs of 85.53 with gains of c. 25 ticks. A bounce from the 84.96 base this morning, another contract low. * Japan sells JPY 1.9tln 5yr JGBs; b/c 3.22x (prev. 3.58x), average yield 2.024% (prev. 1.826%), Lowest accepted price 99.85 (prev. 99.84), Weighted average price 99.89 (prev. 99.88), Tail in price 0.05 (prev. 0.04). COMMODITIES * Crude futures surged at the start of Asia-Pac trade, with WTI making a new contract high of USD 104.37/bbl while Brent peaked at USD 112.00/bbl. Punchy rhetoric over the weekend by US President Trump, warning Iran that the “clock is ticking” and that “they better get moving, fast, or there won’t be anything left of them" initially spurred the upside in energy prices. However, benchmarks have pulled back as European trade gets underway, with WTI and Brent now trading at the lower end of its USD 101.59-104.37/bbl and USD 109.56-112/bbl range, respectively. More recently, according to Pakistani sources, Pakistan shared a revised Iranian proposal to end the war with the US on Sunday night. * Spot gold briefly dipped below USD 4,500/oz amid higher energy prices as trade got underway but has since regained the handle and currently trading at the upper end of its USD 4481-4560/oz range. Jewellers in India have reported higher demand for the yellow metal, ahead of the wedding season, after Indian authorities hiked gold import tariffs and then later curbed the amount of gold that can be imported. Silver has also faced restrictions with tightening rules for imports, describing imports as now “restricted” rather than “free”. Spot silver is currently in a USD 73.71-76.76/oz range, consolidating following Friday’s selloff. * 3M LME Copper has started Monday’s trade on the backfoot, slipping back below USD 13.5k/t and falling closer towards last week’s trough of USD 13.4k/t. China’s growth slowed in April, with investment contracting while retail sales printed essentially flat Y/Y. TRADE/TARIFFS * USTR Greer said President Trump will be presented with options for action on China if US investigations determine that industrial overcapacity is influencing Chinese exports. * White House released a Fact Sheet on Sunday following last week’s Trump-Xi summit, which stated that China will purchase at least USD 17bln in US agricultural products annually for 2026, 2027 and 2028. * EU is drawing up plans to force European companies to purchase critical components from at least three different suppliers, in an effort to lower the bloc’s reliance on China, according to FT. * France wants Stellantis (STLAM IM/STLAP FP) and Renault (RNO FP) to favour local parts suppliers to protect jobs and keep know-how in the region as Europe’s automakers deepen ties with manufacturers from China. * China flagged that Australian beef imports are approaching the safeguard threshold and are at the 80% of the annual quota, which caps imports at current tariff rates, while additional imports would be subject to 55% tariffs on top of existing tariffs three days after shipments reach 100% of the quota. NOTABLE EUROPEAN HEADLINES * UK PM Starmer has decided not to announce a departure timetable unless and until Andy Burnham wins the Makerfield by-election, ITV's Peston reported. * UK Deputy PM Lammy said PM Starmer will not be announcing a timetable for departure, speaking to Sky News. * UK PM Starmer was reportedly mulling whether he would bring more government stability by announcing a timetable for his departure and a leadership election, according to ITV. * Former UK Health Secretary Streeting vowed to stand in any Labour Party leadership contest to oust UK PM Starmer. In relevant news, Streeting said he would battle Manchester Mayor Burnham for the Labour leadership and called for the UK to rejoin the EU, while Burnham played down rejoining the EU. * UK Chancellor Reeves is reportedly to lay out more details in the week ahead regarding proposals to ease bank regulations that were imposed to prevent a repeat of the 2008 GFC. * Fitch affirmed Germany's sovereign rating at AAA; Outlook Stable, while DBRS maintained Portugal at A (high), Outlook Raised to Positive. NOTABLE EUROPEAN DATA RECAP * UK Rightmove House Prices MM (May) 1.2% (Prev. 0.8%). * UK Rightmove House Prices YY (May) -0.3% (Prev. -0.9%). * Swiss GDP Growth Rate QoQ Flash (Q1) Q/Q 0.5% (Prev. 0.2%). CENTRAL BANKS * BoE's Greene said some of the global economic resilience to the Iran war is due to inventories while second round effects of the energy price shock will not show up for another year. Should not be looking through negative supply shocks. * BoE's Breeden said the central bank should not be ‘trigger happy’ on rates, while she warned of a hit to business from political uncertainty, according to FT. NOTABLE US HEADLINES * US President Trump told Fortune he thinks US could sell Intel (INTC) shares slowly over time without tanking the stock market. He added that "Intel should be the biggest company in the world right now... If I had been president when all these companies started sending their chips in from China, I would have put a tariff on that would have protected Intel." * Over 60 allies of US President Trump have urged him to test and approve the most powerful AI models before its released, Axios reported citing sources. GEOPOLITICS RUSSIA-UKRAINE * Ukraine upped the pressure on Russia with the biggest strike on Moscow in over a year involving dozens of drones on Sunday, according to WSJ. * Russian drones hit Odessa and damaged residential homes, according to Interfax. * Ukrainian manufacturers and officials warned the EU’s plan to slash steel imports would hurt Ukraine. OTHER * Intelligence claimed that Cuba has acquired more than 300 military drones and recently began discussing plans to use them to attack the US base at Guantanamo Bay, US military vessels and possibly Key West, Florida, according to Axios, which added that the intelligence could become a pretext for US military action and shows the degree to which the Trump administration sees Cuba as a threat. * Taiwan’s President Lai said on Sunday that Taiwan will never be sacrificed or traded, after US President Trump recently described a planned USD 14bln arms sale to Taipei as a bargaining chip with China. CRYPTO * Bitcoin continued to pull back and slipped back below USD 77k. APAC TRADE * APAC stocks were mostly in the red after last Friday's losses on Wall St, and with risk sentiment sapped as oil prices and yields extended higher after US President Trump warned the clock was ticking on Iran, heading into a meeting on Tuesday with his national security team to discuss possible options for military action, while participants in the region also digest disappointing Chinese activity data. * ASX 200 was dragged lower amid losses across nearly all sectors aside from energy, and with sentiment not helped by disappointing data from Australia's largest trading partner. * Nikkei 225 resumed its pullback from last week's record highs amid higher oil prices and the anticipation of the BoJ to resume rate normalisation next month. * KOSPI was volatile as the index initially suffered heavy losses and the Korea Exchange triggered a sidecar after KOSPI 200 futures dropped 5.0% with jitters seen as Samsung Electronics faces an 18-day strike involving nearly 45,000 of Samsung’s unionised workers starting on May 21st. The index then staged a firm rebound alongside Samsung shares after the union said it would engage in government-mediated pay talks, and a court was said to partially accept an injunction request against the union's planned strike, although the union later announced that it would proceed with the strike as planned. * Hang Seng and Shanghai Comp were pressured following the disappointing activity data in which Industrial Production, Retail Sales and Fixed Assets Ex-Rural Investment all missed forecasts, with the latter showing a surprise contraction, while the stats bureau noted the external situation is complex and that China's economic foundation still needs to be consolidated. NOTABLE ASIA-PAC HEADLINES * China State Council said it will leverage national venture capital guidance fund to increase support for entrepreneurship in tech innovation. * Chinese MIIT Minister Li Lecheng said China should upgrade “outdated” industries, and not scrap them, because manufacturing remains the backbone of the economy. * China’s State Administration for Market Regulation set 34 priorities for this year to support private sector growth, with a focus on fair competition, legal protections and efficient regulation. * China's stats bureau said the external situation is complex and China's economic foundation still needs to be consolidated, while it added that China is to continue to optimise supply and that the domestic supply-demand imbalance remains prominent. China's stats bureau said China will continue to expand the domestic demand and should implement more active fiscal policies and moderately loose monetary policies. Furthermore, it said the international situation remains grim and complicated as of April, and the world economic recovery is facing greater headwinds, as well as stated that the will and capacity of people to spend needs improving. * Japan is likely to issue fresh debt as part of funding for a planned extra budget to soften the blow from the Middle East conflict, according to sources cited by Reuters. A separate report confirmed that Japanese PM Takaichi was set to announce an extra Japan budget. However, conflicting comments by Japanese Finance Minister Katayama followed, stating that they are not yet at a stage to talk about the specifics of an extra budget. * Japanese Chief Cabinet Secretary Kihara said they are watching market moves with a high sense of urgency, including long-term rates. No comment on FX intervention. NOTABLE APAC DATA RECAP * Chinese Industrial Production YoY (Apr) Y/Y 4.1% (Prev. 5.7%). * Chinese Retail Sales YoY (Apr) Y/Y 0.2% vs Exp. 2.0% (Prev. 1.7%). * Chinese Fixed Asset Investment (YTD) YoY (Apr) Y/Y -1.6% vs. Exp. 1.7% (Prev. 1.7%). * Chinese House Price Index MoM (Apr) M/M -0.1% (Prev. -0.2%). * Chinese House Price Index YoY (Apr) Y/Y -3.5% (Prev. -3.4%).

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US Market Open: Stocks hit as Yields/Energy firm on renewed fears of US-Iran conflict resumption

* US President Trump said it's just a question of time regarding Iran, but added that he is not going to be much more patient with Iran. * US President Trump said he made fantastic trade deals with China, and it was an incredible visit, while they've settled a lot of different problems, and the relationship is a very strong one. * Global equities hit, led by Tech and Basic Resources amid a number of factors: 1) Central bank repricing, 2) Tech sell-off driven by higher yields and strikes at Samsung Electronics, 3) Surging energy prices. * DXY bid amid higher energy, GBP knocked by the potential of a Burnham premiership. * Global yields jump amidst central bank repricing and higher energy prices. * Crude grinds higher heading into the weekend as Trump returns from China and refocuses on Iran. * Looking ahead, highlights include Canadian Wholesale Sales (Mar), US Industrial Production (Apr) and Credit Ratings Updates including Fitch on Germany, S&P on Italy, Morningstar DBRS on Portugal and the UK, Scope Ratings on Poland. [https://newsquawk.com/uploads/ckeditor_wave/ck_images/34bc3018-2ecf-49d3-a07a-8a850de5104a.jpg] EUROPEAN TRADE EQUITIES * European bourses (STOXX 600 -1.4%) are entirely in the red, with sentiment hit for a multitude of factors: 1) Central bank repricing, 2) Tech sell-off driven by higher yields and strikes at Samsung Electronics, 3) Surging energy prices. * European sectors confirm the negative bias, with only Health Care posting solid gains. Basic Resources and Tech sit at the bottom of the pile. Metal prices have slumped (XAU/USD -1.8%, XAG/USD -6%), as markets price in further rate hikes across the globe. In addition, South Korea’s KOSPI closed with losses of over 6%, adding to the pressure on silver prices as it highlights silver’s high-beta characteristics (as it stands, KOSPI-Silver correlation is c. +0.7). * US equity futures fall as the global risk tone sours, with bond markets selling off. The surge to ATHs across the US equity space has been on a rocky footing anyway, as the market breadth fails to confirm the bid higher. One point to note, a record 30 S&P 500 stocks hit one-year lows on Wednesday. * Click for the sessions European pre-market equity newsflow [https://www.newsquawk.com/headlines/newsquawk-daily-european-equity-opening-news-15th-may-2026-15-05-2026] * Click for the additional news [https://www.newsquawk.com/headlines/additional-european-equity-news-15-05-2026] FX * G10s showing a risk-off bias as the Buck in tandem with Crude prices. Antipodeans are the underperformers, while EUR and GBP also lag amid energy/political related headwinds. * DXY continues to perform well, vaulting 50,100 and 200 DMAs over the past two sessions amid a mix of hot US inflation data, resilient jobs data/retail sales and exponentially firm oil prices. The session ahead is absent of major data/speakers, and as such, the Greenback will likely be dictated by incoming geopolitical headlines. As a reminder, Warsh today officially takes the title of Fed Chair, while Powell becomes governor and Miran steps down. MUFG in its morning note said "This week has seen the rolling correlation between DXY and the 2-year US-DXY rates spread strengthen notably, which points to scope for US dollar strength to extend further if rate hike pricing momentum continues”. * Once again, the centre of attention continues to be UK political developments, as markets increasingly price in the possibility of a left-leaning Burnham premiership after he announced his running in an engineered Makerfield by-election. (See 07:35 BST analysis). Sterling has weakened since the announcement on Thursday evening, but losses are somewhat limited given the continued uncertainty about whether the Manchester Mayor would be able to 1) Succeed in winning the by-election, 2) Beat incumbent Starmer in a leadership challenge. Elsewhere, keep an eye on a potential announcement on a support package for bills next week, after Housing Secretary Steve Reed touted it this morning. GBP/USD fell to a 1.3328 low where it found support. FIXED INCOME * Global benchmarks are down, dragged lower early in the week as markets digested hotter-than-expected CPI/PPI, the prolonged Iran conflict (higher energy prices), with fears also exacerbated by the turmoil in the UK’s Labour Party. Markets remain on tenterhooks given the mentioned factors, and this has been reflected in market pricing across several major central banks. Traders now assign a 70% chance of a 25bps hike by year-end and fully priced in for July 2027. * USTs are currently down by 16+ ticks, and trading at the bottom end of a 109-16 to 109-29+ range. Attention over the past day has been on the Trump-Xi meeting, where initial commentary suggested positive developments; President Trump stated that many problems with China were “settled”. Focus now shifts from China, and back to Iran, where no progress has been made. Some reports have touted that Trump may look to immediately strike Iran after his China visit, to force Iran into a deal. If enacted, there is a risk that Iran chooses to restart strikes on US allies in the Middle East, leading to another spike in energy prices, hence filtering through into US yields. * Bunds follow the negative action seen across peers, and trade at the bottom end of a 124.58 to 125.03 range. Whilst yields are firmer across the curve today, levels remain within familiar levels; 10yr holds around 3.108% vs a near-term high of 3.133%. As it stands, the belly of the curve is outperforming; however, traders may soon begin to factor in weaker economic growth across the EZ, which may see medium-term yields begin turning lower. * Gilts underperform vs peers and are currently off by 137 ticks; holding at the bottom of an 85.44-85.85, a trough amongst the contract low. Ultimately, following peers, but the move also exacerbated by domestic politics. A full review is on the Newsquawk feed at 07:35 BST, but in brief: Labour MP for Makerfield announce he is willing to stand aside and spark a by-election, to allow current Greater Manchester Mayor Burnham to run and then, if successful, to challenge for the Labour leadership and, by association, the role of Prime Minister. For reference, Burnham was touted as the “least” market-friendly outcome by a recent FT fund manager survey. * Australia sells AUD 1bln 1.00% December 2030 bonds b/c 3.69, avg yield 4.7049%. COMMODITIES * Geopolitical risk has heightened as US President Trump returns from his trip to Beijing and refocuses on the Iran situation. As a reminder, reports yesterday via Axios suggested US President Trump's team is now discussing options for military escalation to break the deadlock. Axios added that US officials said Trump could make his next move immediately after his trip to China. Options reportedly include 1) resumption of "Project Freedom," with the Navy attempting to break the logjam in the Strait of Hormuz, 2) the launch of a new bombing campaign focusing on Iranian infrastructure. Meanwhile, Israeli officials cited by Axios said they'll be on high alert this weekend in case Trump decides to resume the war. * In terms of more recent updates, Trump warned it is “just a question of time” regarding Iran and said he will not be “much more patient” with Tehran, while reiterating that the US is monitoring Iran’s enriched uranium and could strike again if necessary, although he would prefer a diplomatic outcome. Trump added that he discussed Iran with Chinese President Xi and both sides agreed the war should end, with China later confirming the leaders reached new consensuses and calling for a comprehensive and lasting ceasefire alongside dialogue on Tehran’s nuclear programme. However, reports suggested that Washington informed Israel that Trump could still authorise fresh strikes inside Iran, while the Tehran Times reported the US formally rejected Iran’s 14-point proposal and maintained its hardline nuclear stance. * In the European morning, an uptick in crude and a leg lower in sentiment coincided with comments from Iranian Foreign Minister Araghchi, who noted contradictory messages from the US remain the main issue. On the supply side, it’s also worth noting that the UAE announces accelerated pipeline construction to bypass the Strait of Hormuz. Nonetheless, WTI Jul rose above USD 100/bbl to currently trade towards the top end of a USD 97.23-100.93/bbl range, while its Brent Jul counterpart resides at the upper end of a 106.26-109.68/bbl parameter. Dutch TTF front-month trades higher by just shy of 3% at the time of writing, north of EUR 49.MWh, vs an earlier low of around EUR 47.60/MWh. * Precious and base metals are softer across the board, given the energy-induced strength in the USD. Spot gold trades in a USD 4,532-4,665/oz, while Spot silver sees deep losses for a second straight session as it continues to recoil from a recent rally, with prices hitting a USD 77.66/oz low vs USD 83.88/oz intraday high, and after hitting a USD 89.37/oz peak on Wednesday. 3M LME copper continues to pull back from record levels, dipping under USD 14,000/t to trade in a current USD 13,586.00- 13,961.03/t range. * UAE is to complete the construction of a new West-East pipeline project in 2027, Bloomberg reported. The ADNOC Chairman later said they are reviewing progress on the new West-East Pipeline (c. 1.5mln BPD, when complete), set to double the co.'s export capacity via Fujairah. * Abu Dhabi backs USD 13bln US gas plant as Middle East supplies falter, according to FT. * Japan's METI met and confirmed that, at the next meeting, they will deepen consideration on the diversification of oil procurement sources and improve the domestic supply system and future oil reserves, Nikkei reported. TRADE/TARIFFS * US President Trump said they have gotten along well with Chinese President Xi and have a very good relationship with China, while he added Xi is a tremendous and strong leader, and that he would like to see US companies do more business in China. Trump said he spoke to Xi strongly about trade and intellectual property, as well as noted that China will open the country in stages and that it would be good for US companies. Furthermore, Trump said China is going to be buying a lot of farm products, as well as stated that he asked China about using Visa (V), and maybe the China Visa ban will come off. * Chinese President Xi said the US and China agreed to enhance talks on regional issues, Chinese State media reported. The two sides reached an important consensus and agreed to stabilise trade relations. * China's Foreign Ministry said US President Trump and Chinese President Xi reached a series of new consensuses, while it added that the war should not continue and that China is to contribute to Middle East peace. It also said a comprehensive and lasting ceasefire should be reached as soon as possible, and urged solving the Iranian nuclear issue through dialogue. * US President Trump posted that Chinese President Xi congratulated him on so many tremendous successes in such a short period of time, while Trump added that the US was in decline two years ago, but is now the hottest nation. * USTR Greer said they had a lot of successes in rebalancing trade with China and expect to see an agreement for double-digit billions of dollars of agricultural sales to China coming out of the summit. Greer said China is fulfilling its promises on soybean purchases and that China knows there is going to be a certain level of US tariffs on Chinese goods. Furthermore, he cannot commit to a given rate of tariff on Chinese goods and will release findings of trade investigations in weeks, while he stated purchases of NVIDIA H200 chips will be a sovereign decision by China, and that chip export controls were not a major topic in the meeting. NOTABLE EUROPEAN HEADLINES * UK Labour NEC decision on allowing Burnham to run in the Makerfield by-election is not as clear cut as many are reporting, according to GB News' Harwood. The vote is said to be on a "knife edge", sources say "everyone is wavering". * German Economic Ministry said current indicators suggest a significant slowdown in Q2 GDP growth. NOTABLE EUROPEAN DATA RECAP * Italian Inflation Rate YoY Final (Apr) Y/Y 2.7% vs. Exp. 2.8% (Prev. 1.7%). * Italian Inflation Rate MoM Final (Apr) M/M 1.1% vs. Exp. 1.2% (Prev. 0.5%). CENTRAL BANKS * Fed's Barr (voter) said smaller Fed balance sheets would likely increase Fed interventions and that reducing liquidity rules to shrink the Fed balance sheet is not a good idea. Barr stated that lowering the liquidity requirement would simply increase stability risks, and if anything, the liquidity requirement should go up, not down. Furthermore, he said they are not in a recession, but there's been little job creation, while he hasn't decided on what to do at the June FOMC meeting. * Fed's Williams (voter) said Fed independence delivers better economic outcomes, and it is not time to worry about Fed independence, with staff focused on the mission. Williams said the context matters for inflation given its persistence above target, while he is not surprised to see near-term inflation expectations rise and is seeing pretty stable longer-term inflation expectations. Williams noted there is a lot of uncertainty around energy price outlook and that the job market is not "hot" but also not slowing dramatically, while he added that monetary policy is mildly restrictive and he doesn't see any reason to hike or cut rates right now. NOTABLE US HEADLINES * BofA weekly flow data shows USD 20.5bln into stocks, USD 28.1bln into bonds, USD 5.8bln into cash, USD 2.0bln into gold and USD 1.3bln out of crypto. Bull & Bear Indicator rose to 7.6 (from 7.2). GEOPOLITICS MIDDLE EAST * US President Trump said it's just a question of time regarding Iran, while he also stated that current Iranian leaders are more reasonable and Iran has a lot of inner turmoil, but added that he is not going to be much more patient with Iran, according to a Fox News Interview. Trump also stated that Iran's enriched uranium could be entombed, but would rather get it, as well as stated that they have their eyes on Iran's enriched uranium and could bomb it again, but he would rather get it. Trump separately commented that he discussed Iran with Chinese President Xi, and they feel very similar about how they want to end the Iran war. * US has rejected Iran's 14-point proposal, Tehran Time reported citing sources. According to the information, the US government has responded to Iran's written proposal regarding the end of the war. * "Perhaps another of the Confidence Building Measures (CBM) between US and Iran is in the play", Pakistani Journalist Mallick posted. * Iranian Foreign Minister Araghchi said contradictory messages from the US remain the main issue. He added that there is no military solution, and thinks the US needs to understand that fact. They have tested us at least twice and have now concluded that there is no military solution. * Iranian Foreign Minister Araghchi said at the BRICS meeting that the US empire is in decline and Iran will never bow to pressure, according to Press TV. * Iranian Foreign Minister Araghchi said evidence shows that the UAE made American bases available for operations against Iran, provided its airspace and territory for those operations * Iranian Parliamentary Speaker Ghalibaf warned that US efforts at sustaining military escalation near the Strait of Hormuz could trigger a fresh global financial crisis at a time when US national debt already stands at a whopping USD 39tln. * Iran's Ambassador to Belarus criticised the US negotiation stance and said US President Trump's excessive ambitions hinder US-Iran talks, according to TASS. * UAE attempted to get Saudi Arabia and Qatar to coordinate on a military response to Iran's airstrikes, Bloomberg reported citing sources. * Qatar's Foreign Ministry told Al Arabiya it had shot down several Iranian drones near its airspace, while it stressed the need to open the Strait of Hormuz in its contacts with the Islamic Republic. * Israel has commenced strikes on Hezbollah in the Tyre region of Lebanon. * Israeli army detected rocket launches from Lebanon towards Israeli territory, while Israeli artillery shelling was reported on the town of Nabatieh al-Fawqa in southern Lebanon. RUSSIA-UKRAINE * Commander of Ukrainian drone forces said drones struck Russian oil refinery in the Ryazan region. OTHER * US Secretary of State Rubio said China's preference is probably to get Taiwan willingly and that there will be some agricultural purchases from China, while Rubio hoped to get a positive response from China regarding the case of Jimmy Lai and others. * CIA Director delivered a message from US President Trump that the US is prepared to engage on economic and security issues if Cuba makes fundamental changes, according to a CIA official. CRYPTO * Bitcoin pulled back below USD 81k amid sour risk tone. APAC TRADE * APAC stocks were mostly subdued after failing to sustain the early momentum that was spurred by the gains on Wall St, where tech outperformed, and sentiment was underpinned amid constructive headlines from the Trump-Xi summit, while the souring of risk sentiment coincided with higher oil prices and yields amid risk that the geopolitical situation in Iran could escalate when US President Trump returns from Beijing. * ASX 200 lacked direction as strength in tech and financials was offset by losses in mining, materials, resources and utilities. * Nikkei 225 swung between gains and losses but ultimately continued its pullback from the recent peak amid oil-related headwinds and after hot PPI data further supported the case for a rate hike at next month's BoJ meeting. * Hang Seng and Shanghai Comp were mixed despite the recent constructive headlines from the Trump-Xi summit, while the leaders are meeting again today in a restricted working lunch session prior to US President Trump's return to the US. Furthermore, sentiment was not helped by recent disappointing lending and aggregate financing data from China for April, which showed a surprise contraction in loans. NOTABLE ASIA-PAC HEADLINES * Japan's Minister for Economy, Trade and Industry Akazawa said they can tap FY26 budget reserves if the Middle East impact lasts. However, it was also reported that Japanese Finance Minister Katayama said they are not in a situation where an extra budget is needed, while she stated they have JPY 1tln in reserve funds in the FY26 budget, but added there's no immediate need for an extra budget. NOTABLE APAC DATA RECAP * Japanese PPI MM (Apr) 2.3% vs Exp. 0.7% (Prev. 0.8%, Rev. 1.0%). * Japanese PPI YY (Apr) 4.9% vs. Exp. 3.0% (Prev. 2.6%, Rev. 2.9%).

15. touko 20262 min

EU Market Open: DXY a touch lower, Bourses set for a modestly firmer open as Trump delays strikes on Iran

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