Newsquawk European Market Wrap - 19th August 2025

• European stocks gradually climbed higher and looked to close the European day at peaks


• Nasdaq underperformed at the US open amid weakness in the Tech sector


• CAD weakened on net softer Canadian CPI; pricing tilted slightly dovishly

EQUITIES

• 
  European bourses opened modestly firmer across the board, with cautious optimism stemming from the recent US President Trump/Ukrainian President Zelensky/EU Leaders meeting. On that, Trump described it as a very good meeting, while he also called Russian President Putin to begin arrangements for a Putin-Zelensky meeting, which would be followed by a trilateral meeting with Trump. Reportedly, security agreements were discussed; on territorial developments, Zelensky suggested it would be a discussion between Ukraine and Russia. As the session progressed, stocks have gradually climbed higher and looked to close the European day at peaks.


• 
  European sectors held a positive bias, but the breadth of the market is fairly narrow. Consumer Products took the top spot, joined closely by Basic Resources and Retail; nothing really company-specific drove the upside in these sectors, but largely benefited from the risk tone. Industrials were found right at the bottom of the pack, with defence names broadly in the red as traders price in the ongoing geopolitical optimism. Europea's Aerospace & Defence sector was -3%, posting its largest daiy drop since early July, according to Reuters.


• 
  US equity futures are lower across the board, with clear underperformance in the NQ – seemingly broader weakness in the Tech sector; in terms of key movers, Palo Alto (+7%, EPS & rev. beat w/ stellar guidance), Intel (+10%, FT reported SFTBY held talks with Intel on buying contract chipmaking business), NVIDIA (-1%, moves lower despite reportedly working on a new AI chip for China which outperforms the H20).


• 
  NVIDIA (NVDA) is reportedly working on a new AI chip for China which outperforms the H20, via Reuters citing sources; likely deliver half of the computing power as the B300. Samples potentially to be delivered for testing in September.


• 
  Softbank (9984 JT) reportedly held talks with Intel (INTC) on buying its contract chipmaking business, via FT citing sources; talks occurred in the period before the announcement on August 18th that Softbank would be taking a USD 2bln stake in Intel.


• 
  Home Depot Inc (HD) Q2 2025 (USD): adj. EPS 4.68 (exp. 4.70), Revenue 45.28bln (exp. 45.41bln); reaffirms guidance. The momentum that began in the back half of last year continued throughout the first half as customers engaged more broadly in smaller home improvement projects

FX

• 
  USD - Relatively rangebound trade this morning with a slight negative bias and price action contained to either side of the 98.00 mark, notching a narrow range between 97.94-98.32 parameter vs yesterday's 97.77-98.19 range. The theme over the last couple of days has been geopolitics, with deliberations over the Russia-Ukraine war in Washington concluding for now. Overall, there has been no breakthrough in yesterday's discussions, although talks may advance with a possible Zelensky–Putin meeting in two weeks, their first since the war began. Despite the mild optimism, betting markets remain pessimistic, with Polymarket pointing to a 38% chance of a Russia-Ukraine ceasefire this year. The focus for now turns to FOMC minutes on Wednesday ahead of Chair Powell's commentary on Friday at the Jackson Hole Symposium. Desks are on the lookout for commentary on dovish dissenter Bowman, who is due to give remarks on Bloomberg TV at 15:00 BST. Desks expect questions on whether she will vote on a 50bps rate cut. Analysts at ING "suspect the dollar may lose some support as we approach tomorrow’s FOMC minutes – the risk is more than two members voicing openness to cuts – and Jackson Hole."


• 
  EUR - Held a mild upward bias after finding support at its 50 DMA (1.1641) following yesterday's slide under 1.1700, with very little newsflow from the bloc aside from the comments from various European leaders following the multilateral meeting on Ukraine at the White House.


• 
  GBP - GBP continued to struggle for direction as newsflow from the UK remains very quiet, although there were reports that UK Chancellor Reeves is considering replacing stamp duty with a new property tax. GBP/USD traded in a 1.3486-1.3531 range (vs yesterday's 1.3501-1.3568), with the 50 DMA at 1.3501 today.


• 
  JPY - Modest downward bias in USD/JPY, albeit in tandem with USD weakness, with little in terms of fresh catalysts from Japan. USD/JPY traded on either side of 148.00 in a 147.53-148.11 parameter, vs yesterday's 147.06-147.99 range, with the 50 DMA at 146.60 and the 200 DMA at 149.22.


• 
  CAD - Overall softer following the Canadian CPI metrics which were net-net modestly softer, and enough to modestly tilt pricing more dovishly, with markets expecting near 10bps worth of cuts vs ~8bps pre-data, whilst December pricing tilted from 19bps worth of cuts to 23bps. USD/CAD rose from 1.3806 to a session peak of 1.3832 over the course of around 8 minutes following the report - currently 1.3838.


• 
  Antipodeans - Antipodeans are modestly softer vs the USD, amid the tentative mood, lack of pertinent data and after proceeding sideways for the majority of the previous US trading session.

FIXED

• 
  The session began with USTs flat, amid a lack of non-geopolitical catalysts, while EGBs and Gilts were softer.


• 
  Bunds and Gilts saw downside of c. 10 and just over 15 ticks at worst, weighed on into the morning’s supply and also as in recognition of an FT report that the coalition of the willing will be spending EUR 100bln on US weapons in order to help attain the security guarantees Ukraine needs.


• Thereafter, EGBs led a bounce back to unchanged, and then into the green with upside of 22 ticks at most for Bunds after the results of a 2030 Bobl tap. An outing that drew a b/c of 1.90x vs the 1.50x this tranche has drawn on its last two outings, demand that while still tepid was better than we have become accustomed to in recent weeks for Bobls.


• Since, newsflow remains focussed on geopols with remarks firstly from the US Treasury Secretary and the President Trump himself. Overall, they didn’t add much that changes the narrative and we continue to wait for more details on the Zelensky-Putin meeting, reports thus far suggest it could occur in Hungary.


• 
  USTs followed suit to Bunds, no movement during remarks from the above officials though did notch an incremental 111-23+ peak amidst the 13:30BST data and then added to by renewed tech weakness. US metrics were mixed with soft Building Permits printing alongside stronger Housing Starts, while at the same time Canada’s inflation came in cooler-than-forecast, weighing on the CAD and potentially influencing bonds.


• Ahead, we await any fresh geopolitical updates while the schedule has multiple appearances from Fed’s Bowman (voter). Bowman has not spoken since she explained her dissent and noted that additional weight should begin to be placed on risks to the employment mandate. A topic that is of course of particular interest ahead of Powell’s Jackson Hole speech, particularly as the symposium itself is focused on the labour market.


• 
  UK sells GBP 1.6bln 1.125% 2035 I/L Gilt: b/c 3.1x (prev. 3.35x) & real yield 1.728% (prev. 1.588%).


• 
  Germany sells EUR 3.424bln vs exp. EUR 4.5bln 2.20% 2030 Bobl: b/c 1.90x (prev. 1.50x), average yield 2.32% (prev. 2.28%) & retention 23.19% (prev. 24.24%).

COMMODITIES

• 
  Crude - Softer trade following the Washington confabs between the US, Ukraine, EU, and NATO .Overall, there has been no breakthrough in yesterday's discussions, although talks may advance with a possible Zelensky–Putin meeting in two weeks, their first since the war began. The main obstacle remains Russia’s demand for full control of Donetsk and Luhansk, which Ukraine rejects. Despite the mild optimism, betting markets remain pessimistic, with Polymarket pointing to a 39% chance of a Russia-Ukraine ceasefire this year. It is still possible that Trump could impose sanctions if talks break down or if Russia goes on a renewed offensive on the ground during negotiations. WTI currently resides in a 61.84-62.68/bbl range while Brent sits in a USD 65.73-66.58/bbl range.


• 
  Precious Metals - Flat trade for most of the session before gradually waning, albeit amid quiet markets and with little fallout seen in the yellow metal from the deliberations on Russia-Ukraine, as traders await a clearer hint of what will result from the talks. Price action this morning sees the precious metals complex eking mild gains, with spot gold trading under its 50 DMA (3,349.61/oz) in a USD 3,325.78-3,345.56/oz range.


• 
  Base Metals - Mostly lower following an earlier mixed picture, with markets tentative ahead of the Jackson Hole symposium. Iron ore prices fell on Tuesday with traders citing demand concerns from China. Dalian iron ore, however, only closed by 0.4% intraday. 3M LME copper prices resided in a USD 9,720.40-9,782.00/t range.


• 
  Chinese July crude iron ore output +21.8% Y/Y at 86.33mln metric tonnes, according to the Stats Bureau.


• 
  NHC says Hurricane Erin expected to become even larger while moving over the western Atlantic through the week; dangerous rip currents expected along the US East Coast beaches.

NOTABLE EUROPEAN NEWS

• UK's ONS says Friday's scheduled retail sales data release has been delayed until September 5th.

TRADE

• EU says it has sent back the draft trade joint statement to US; work continues.


• 
  China lifts curbs on export of rare earth magnets to India, according to local media.


• 
  Japan-India framework to focus on chips, mineral resources, and AI, according to reports citing Nikkei.

GEOPOLITICS

• 
  US President Trump told Fox News that the US has become the hottest country in the world. On Russia/Ukraine, when asked about a trilateral meeting, he said let Putin and Zelensky meet first, adding he hopes Putin is going to be good but if not, it will be a rough situation. He said Zelensky has to show some flexibility, thinks Putin and Zelensky are doing okay, and even slightly better than he thought, though it is possible Putin doesn’t want to make a deal. He said Ukraine should not have asked to be in NATO, and we will find out about Putin in the next couple of weeks. Asked about no US boots on the ground amid the war, he said “you have my assurance,” while noting Ukraine is going to get a lot of land when asked about land swaps. He added Europe is willing to put people on the ground, that there will be some form of security but not NATO, and reiterated that he always thought Ukraine was a buffer between Russia and Europe. He also clarified he did not call Putin in front of European leaders, and added that Putin would not speak with European leaders. He noted a warm relationship with Putin is a good thing, and he does not want to waste time on Ukraine war, just want to end it.


• Ukraine's Air Force says Russia launched 270 drones and 10 missiles during an overnight attack.


• 
  US and Europe to work immediately on Ukraine security guarantees, via Bloomberg.


• Ukraine Foreign Minister says future trilateral leaders meeting can bring a breakthrough on the path to peace.


• Ukraine's Energy Ministry says Russian attacks damaged gas transport infrastructure.


• 
  Russian strategic bombers conducted flight over the Sea of Japan, according to Ria.


• 
  Russian Defence Ministry says they have conducted strikes on oil refinery supplying fuel to Ukrainian armed forces, according to Ifax.


• 
  Eurasia's Rahman reports that Europeans continue to push for a ceasefire or truce before the bilateral meeting between Russian President Putin and Ukrainian President Zelensky. Rahman adds "that's of course unlikely".


• Delivery route for Kazakhstan oil exports via Russia's Druzhba pipeline was briefly disrupted after Ukrainian attacks on infrastructure; oil supplies to Germany via the pipeline have not been restricted.


• 
  NATO leaders and Ukraine meeting is set to take place on Wednesday, according to Reuters, citing NATO.


• Slovak PM Fico says they will not make progress on ending Ukraine war without discussing territorial changes in Ukraine.


• "Israeli media: The Chief of Staff will present today to the Minister of Defense the plan to occupy Gaza City", according to Al Arabiya.


• 
  "[Israeli PM] Netanyahu says "no" to Hamas-approved latest Gaza proposal", according to Al Arabiya.

NOTABLE NORTH AMERICAN NEWS

• 
  US Treasury Secretary Bessent says Alaska was a show of strength by US President Trump, believes there will be a meeting between Russian President Putin and Ukraine President Zelensky, and senses that both sides are ready for the conflict to end. On geopolitics, he noted plans to up tariffs on India over Russian oil buying, claiming India is profiteering from the war by purchasing cheap Russian oil and re-selling it, but added that we can look forward to getting the conflict resolved. On taxes, he stressed the US will push back on digital services taxes globally. On chips, he said the US wants its standard to be the global standard, warning that the last thing the US wants is Huawei selling worldwide while US tech is excluded; he added the new NVDA China chip will require a license, while US investment in Intel (INTC) would be structured as a conversion of grants and possibly increased to help the company stabilize, with no requirement to sell exclusively to US firms, and emphasized the need to stop a single point of failure in semiconductors. On the Fed and economy, he said he will meet with Fed candidates right before and after Labor Day, noted PPI was boosted by investment services due to market gains, and suggested rate cuts could help the housing sector. On trade, he said tariff revenues will be used to pay down debt and that revenues from tariffs will be revised up substantially from the current USD 300bln this year.

NORTH AMERICAN DATA

• US House Starts MM: Change (Jul) 5.2% (Prev. 4.6%, Rev. 5.9%)


• US Build Permits: Change MM (Jul) -2.8% (Prev. -0.1%)


• US Housing Starts Number (Jul) 1.428M vs. Exp. 1.29M (Prev. 1.321M, Rev. 1.358M)


• US Building Permits: Number (Jul) 1.354M vs. Exp. 1.386M (Prev. 1.393M)


• BoC Core CPI Measures Average (Jul): 2.90% (prev. 2.90%, rev. 2.866%)


• Canadian CPI BoC Core YY (Jul) 2.6% (Prev. 2.7%)


• Canadian CPI BoC Core MM (Jul) 0.1% (Prev. 0.1%)


• Canadian Core CPI MM SA (Jul) 0.1% (Prev. 0.3%)


• Canadian CPI MM SA (Jul) 0.1% (Prev. 0.2%)


• Canadian CPI Common (Jul) 2.6% (Prev. 2.6%)


• Canadian CPI Trim (Jul) 3.0% vs. Exp. 3.1% (Prev. 3.0%)


• Canadian CPI Inflation MM (Jul) 0.3% vs. Exp. 0.3% (Prev. 0.1%)


• Canadian CPI Inflation YY (Jul) 1.7% vs. Exp. 1.8% (Prev. 1.9%)

19 Aug 2025 - 15:00- MetalsGeopolitical- Source: Newsquawk