MARKET WRAPS

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EU CPI; U.K. PPI, CPI; trading updates from Carlsberg, ASR Nederland

Opening Call:

European stock futures were lower early Wednesday, matching broad declines among Asian stock benchmarks. The dollar weakened slightly; Treasury yields edged lower; oil futures gained; while gold declined.

Equities:

Stock futures in Europe were lower, tracking Tuesday's declines in U.S. stocks as a worldwide bond selloff pushed long-term yields to their highest levels in years. Chip stocks came under heavy pressure and the expiration of a U.S.-Iran ceasefire rekindled fears of renewed Middle East escalation.

The 60-day U.S.-Iran truce expired Monday with little progress toward a permanent deal. President Trump said Tuesday that no talks with Iran are planned. He also posted an image of the Strait of Hormuz to Truth Social, labeling it "New U.S. Territory."

"Equity investors have finally started to respond by going a bit defensive," FOREX.com's Fawad Razaqzada said. "The overcrowded AI trade is losing momentum as yields press higher," the market analyst added.

Looking ahead, the Fed releases minutes from its July meeting later in the day. investors are hoping the minutes will shed light on the Fed's thinking about the outlook for interest rates.

Forex:

The U.S. dollar weakened amid continuing Middle East risks. There are "renewed uncertainties over the Strait of Hormuz," DBS Group Research's Chang Wei Liang said.

President Trump has confirmed that there are no further talks scheduled with Iran, and strongly expressed displeasure at Oman over aspects of its deal with Iran to manage the Strait, the FX & credit strategist noted.

Bonds:

Treasury yields lost some momentum ahead of Fed minutes later in the day. Tuesday's bond selloff, analysts said, reflected a confluence of forces: inflation fears stoked by rising energy prices, growing government deficits and the artificial intelligence industry's voracious appetite for debt.

"The change this year has been the scale and maturity of AI-related corporate borrowing," Barclays said.

Big technology companies have been issuing vast quantities of long-dated bonds to fund data centers and chip purchases, putting them in direct competition with government borrowers for investor dollars.

Energy:

Oil rose amid growing concerns over supply disruptions. Iran fired two ballistic missiles toward the Strait of Hormuz on Tuesday, triggering air defenses in the U.A.E, according to that country's Ministry of Defense, which said the missiles targeted maritime traffic but eventually dropped into the sea.

Also on Tuesday, an Iranian attack hit the engine room of a bulk carrier in the strait east of Oman. "Renewed attacks in the Middle East raise the prospect of ongoing disruptions to supply," ANZ Research analysts said.

Metals:

Gold declined, pressured by higher oil prices and U.S. Treasury yields. The precious metal's moved towards $4,400 a troy ounce as weaker labor data and a softer inflation print helped ease expectations for rate increases by the Federal Reserve, said ANZ Research analysts.

Physical demand, particularly from China, together with steady central bank buying, continues to underpin the market, they added.

Copper edged lower. A sudden influx of metal into warehouses likely eased concerns of physical tightness, ANZ Research analysts said. They cited the London Metal Exchange's global warehouse network posting the biggest increase in readily-available copper inventories since April.

Traders have been tracking the base metal as a surge in shipments to the U.S.--spurred by the prospect of U.S. import tariffs--has reduced stockpiles underpinning the global benchmark contracts, the analysts said.

Iron ore futures were higher following their recent correction. The ferrous metal continues to be constrained by weak China demand, said ANZ Research analysts.

They point to deteriorating steel margins weighing on production and subdued property indicators keeping steel consumption soft. However, seasonally strong steel exports are helping offset some domestic weakness, they added.

TODAY'S TOP HEADLINES

Trump Pauses 50% Tariff On Some Canadian Products

President Trump said he would pause a 50% tariff on certain goods from Canada for three days while the two countries seek to finalize an agreement.

"I have paused the 50% Tariffs against Canada, that were scheduled to kick in tomorrow morning for a three-day period, based on the fact that Canada and the U.S.A., subject to the finalization of documents, have a DEAL!" Trump said on social media Tuesday night.

Iran's Attacks on Ships in Hormuz Mount, Testing U.S. Military Restraint

DUBAI-Iranian attacks on shipping in the Strait of Hormuz are piling up without an American military response, raising the risks of crossing the strategic waterway and frustrating some Arab allies who worry the U.S. doesn't have a strategy to wind down the conflict.

Iran fired two ballistic missiles toward the strait on Tuesday, triggering air defenses in the United Arab Emirates, according to that country's Ministry of Defense, which said the missiles were targeting maritime traffic but ultimately fell into the sea.

Bonds Are Getting Hammered, and Wall Street Says the Rout Won't End Anytime Soon

A selloff in global bonds is driving up borrowing costs for governments, businesses and families across the developed world. Wall Street sees no end in sight.

Bond yields are at 19-year highs, and investors are blaming the rout on everything from the continuing U.S.-Iran conflict, which has stoked inflation worries, to the deluge of tech-company bonds vying for debt funds' cash. They are also anxious about budget deficits and a lack of clarity from a new Federal Reserve chairman.

Apple to Change Terms for App Developers to Appease EU's Antitrust Officials

Apple plans to change its terms for app developers in the European Union, seeking an end to a yearslong antitrust dispute over how the tech company manages its devices and App Store that included a 500 million-euro ($579 million) fine.

The U.S. company said changes include placing developers under a single set of business terms and adjust its commission fees. Apple also said it would put in place additional protections for younger users, including by not allowing apps to link away from the app store for payments if a user is under 13.

Inside Big Tech's Frantic Race to Quell the Growing Backlash to AI

In July, about 1,000 Georgia residents gathered at the Effingham County College & Career Academy to hear about what OpenAI could do for them.

A day earlier, the artificial-intelligence company had announced plans to build a new data center in the area near Savannah. The event was billed as an open house where concerned locals could get their questions answered.

OpenAI's Second-Quarter Sales Show Tepid Growth Compared With Anthropic

OpenAI told investors its revenue grew by 18% from the first to the second quarter, while its losses deepened, results that disappointed some shareholders who had hoped the startup would show more progress catching up to rival Anthropic.

The company said its revenue grew to $6.7 billion in the three months ended in June, up from $5.7 billion in the first quarter. Meanwhile, its operating margin sank further into the red, pushing the company farther away from profitability ahead of a much-anticipated initial public offering, people familiar with the matter said.

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Expected Major Events for Wednesday 06:00/UK: Jul Producer Price Index

06:00/UK: Jul CPI

06:30/SWI: 2Q Industrial production

07:00/SVK: Jul Harmonized CPI

07:00/AUT: Jul CPI

07:30/POR: Jun Balance of Payments

08:00/EU: Jun Euro area balance of payments

08:30/UK: Jun UK House Price Index

09:00/ITA: Jun Balance of Payments

09:00/CYP: Jul Harmonised CPI

09:00/EU: Jul Harmonised CPI

09:00/MLT: Jul Harmonised CPI

15:59/UKR: Jun POSTPONED: Trade

23:01/UK: BRC Consumer Sentiment Monitor

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