EMEA Morning Briefing : U.S., Iran Move Closer Toward Restarting Talks

MARKET WRAPS

Watch For:

EU retail trade; Germany manufacturing orders; trading updates from Shell, Maersk, Henkel, InterContinental, Swiss Re, Enel, Siemens Healthineers, Bouygues, Rheinmetall, Pirelli, EDP, JD Sports, Legrand, Engie, Royal BAM

Opening Call:

European stock futures traded mixed early Thursday. Asian stock benchmarks were up; the dollar weakened; Treasury yields were flat, while oil futures and gold gained.

Equities:

European stock futures were trading mixed as investors track developments in the Middle East. "The main theme overnight was a sharp risk-on rally driven by hopes that the U.S.-Iran war is nearing an end," Commerzbank Research said.

Iran and the U.S. are working with mediators on a one-page framework to restart negotiations aimed at ending the conflict and opening the Strait of Hormuz, with talks potentially beginning next week in Islamabad.

President Trump has warned the U.S. would resume bombing of Iran "at a much higher level and intensity" if Tehran doesn't agree to a deal.

An Iranian Foreign Ministry spokesman said Iran was reviewing the U.S. proposal, and after completing its assessment would convey its views to the Pakistani mediators.

Forex:

The U.S. dollar weakened slightly amid risk-on sentiment as the U.S. and Iran move closer on a proposal to restart talks. Risk sentiment has been boosted by the development, Maybank analysts said. However, they cautioned that "similar hopes for peace have emerged several times during the conflict only to later fade."

Meanwhile, the Chinese yuan strengthened against the dollar after the PBOC set the yuan's fixing at 6.8487, the highest since March 2023. "Further de-escalation in the Middle East, such as Iran accepting the U.S. proposed deal and a gradual reopening of the Strait of Hormuz, could continue to support gains in Asia FX," MUFG Bank's Lloyd Chan said.

Bonds:

Treasury yields were little changed amid reports that the U.S. and Iran could be about to restart negotiations to end their conflict. "This is the third or fourth time that we've had an 'imminent deal'," 21shares' Stephen Coltman said.

The U.S. ADP reported stronger-than-expected April job creation by private employers. The weekly jobless claims due later in the day are forecast, in a WSJ consensus, to accelerate to 206,000 from 189,000. Payrolls are due Friday, and a decline is expected.

Energy:

Oil gained on a likely technical recovery after dropping overnight. The "markets were driven by optimism about an agreement [between the U.S. and Iran] being reached in the coming days to end the Middle East conflict," ANZ Research analysts said.

However, "the situation remains highly fluid with intraday volatility likely to remain high until greater substance emerges," the analysts added.

President Trump said Wednesday he was surprised the price of oil hadn't been driven higher by the Iran war. "I thought oil prices would go to $200, $250," Trump told reporters. "You're surprised and I'm surprised. But even if it went to $200, it would have been worth it."

Metals:

Gold rose, supported by lower U.S. Treasury yields, which typically enhance the appeal of the non-interest-yielding asset. Gold prices may also be underpinned by a calmer Middle East situation that could lead to lower oil prices and ease inflation concerns.

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Iron ore futures advanced. Supply has been steady overall, but demand has been relatively weak, with average daily hot metal production declining slightly, Nanhua Futures analysts said.

TODAY'S TOP HEADLINES

Jet-Fuel Prices Are Spiking and Trump's Advisers Are Worried

Former New Hampshire Gov. Chris Sununu delivered a warning to Treasury Secretary Scott Bessent during a recent visit to Washington: Already-high airfares will surge if the war in Iran doesn't end soon.

Sununu, a Republican who represents some of the biggest airlines as the president of the industry group Airlines for America, has for weeks sounded the alarm to Trump administration officials about the economic fallout from high jet-fuel prices. The war, Sununu has argued, must come to a close soon, or things will get worse.

Arm Holdings Lacks Supply to Meet Roaring Demand for New Chips

Arm Holdings said it expects higher demand for its new line of computer chips, but left its revenue guidance from the chips unchanged as it works to boost supply.

The British semiconductor company said in March that it expected to sell $1 billion worth of the chips through early 2028. On Wednesday, it said its demand forecast had doubled to $2 billion, but said that it lacked supply to meet the new order requests.

The Opaque Private-Lending Deals That Left HSBC With a $400 Million Hole

When mortgage broker Market Financial Solutions collapsed in February, investors scoured court filings and queried lenders to see who took the hit.

One name they hadn't found was HSBC. Through a complex loan via a chain of special-purpose vehicles, the British bank with a global footprint has turned out to be among the most exposed to the defunct broker's allegedly fraudulent business.

Hantavirus Case in Switzerland Spurs Race to Trace Contacts

Swiss officials are rushing to trace the contacts of a man who has been hospitalized in Zurich with a strain of the hantavirus that is capable of human-to-human transmission.

The patient became ill in Switzerland after returning from a three-week April cruise that took him and his wife from the tip of South America to the South Atlantic island of St. Helena, officials said Wednesday. The man traveled on the cruise ship where several cases of hantavirus, a disease typically carried by rodents, have killed at least three people, Switzerland's Health Ministry added.

Warner Bros. Discovery Logs $2.92 Billion Loss Tied to Netflix Termination Fee

Warner Bros. Discovery posted a huge loss in the first quarter after recording a $2.8 billion charge on its books for the termination fee paid to Netflix during a bidding war for the media and entertainment company.

Warner on Wednesday posted a loss of $2.92 billion, or $1.17 a share, compared with a loss of $453 million, or 18 cents a share, a year earlier. Analysts polled by FactSet expected a loss of 11 cents a share.

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Expected Major Events for Thursday

05:45/SWI: Apr Unemployment

06:00/GER: Mar Manufacturing orders

06:00/GER: Mar Manufacturing turnover

06:00/ROM: Mar Retail trade

06:00/DEN: Mar Industrial production & new orders

06:00/NOR: 1Q Labour force survey

06:30/HUN: Mar Retail Sales

06:45/FRA: Mar Foreign trade

06:45/FRA: Mar Balance of payments

07:00/SVK: Mar Internal trade, incl Wholesale & Retail

07:00/AUT: Apr Wholesale Price Index

07:00/SWI: Apr SNB foreign currency reserves

07:00/CZE: Mar Industry, Construction

07:00/CZE: Mar External trade

07:00/AUT: Feb Foreign Trade

07:00/SVK: Mar Foreign trade

07:30/SWE: Swedish repo rate announcement

08:00/NOR: Norges Bank monetary policy decision

08:30/UK: Apr S&P Global UK Construction PMI

08:30/UK: Apr Narrow money (Notes & Coin) and reserve balances

09:00/EU: Mar Retail trade

09:00/CYP: Apr CPI

10:00/IRL: Apr Monthly Unemployment

11:00/UKR: Apr CPI

12:30/CZE: Czech interest rate decision

23:01/UK: Apr BRC-Sensormatic IQ Footfall Monitor

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-07-26 0015ET