MARKET WRAPS

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Trading updates from LVMH, Galp Energia

Opening Call:

European stock futures rose early Monday. Asian stock benchmarks were mixed; the dollar edged lower; oil futures fell; while gold rose.

Equities:

Stock futures point to a higher open at the start of the week in Europe, as markets look ahead to upcoming U.S. inflation data and the kickoff to the earnings season.

"From a sentiment perspective, developments in the Middle East and between Russia and Ukraine will be key drivers to start the week with two-sided risk on energy prices," said Skye Masters, head of markets research at National Australia Bank.

Forex:

Yemen's Iran-backed Houthi militants conducted a missile attack on Saudi Arabia's international airport that killed at least 12 people and injured hundreds more on Saturday.

"We expect the Houthis to continue their attacks on Saudi Arabian energy assets," CBA said. This should support gains in the dollar, the bank added.

Bonds:

The sharp move higher in French bond yields over recent months has generated discussion in markets on whether the European Central Bank could step in at some point to contain the selloff. But given past experience, current bond spreads aren't close to a level where the ECB will intervene, said Macquarie.

The ECB didn't adopt the policy when some economies' bond spreads were much higher in 2022, it noted. So far, there is little sign of contagion and the ECB may want to see fiscal consolidation in France first before stepping in, Macquarie added.

Energy:

Oil declined early Monday on hopes that Russian diesel can ease global fuel shortages. President Trump said Friday that his administration reached an agreement for Russia to supply hundreds of thousands of tons of diesel fuel. "This would mark a partial lifting of Russia's ban on diesel exports," CBA's Vivek Dhar said.

"If these exports do eventuate, it will provide some relief to a market that is facing diesel shortages, but much will likely depend on Ukraine's ongoing attacks on Russian oil infrastructure," he added.

Metals:

Gold advanced in Asia, as markets weigh a pullback in oil prices. Softer energy prices could temper inflation concerns and ease pressure on yields, providing some support to gold, Infinox's Thadeu Dos Santos said.

However, the interest-rate backdrop remains challenging and leaves the precious metal vulnerable to renewed selling pressure, he said. Investors will focus on this week's U.S. inflation data for clues on the Fed's next move. Copper prices rose in Asian trading, supported by tight mine supply and low inventories, CICC Wealth Futures Research Institute analysts said.

However, elevated prices continue to weigh on downstream demand, while spot market transactions remain subdued despite sellers lowering offers. Prices are likely to remain rangebound at high levels in the near term, with supply tightness and low inventories providing a floor, CICC added. Iron ore prices traded flat as steel mills struggle with low profitability. With 90% of Chinese steel mills operating at a loss, they remain cautious about iron ore procurement and are keeping inventories low, Tongguan Jinyuan Futures said.

Meanwhile, overseas iron ore shipments remain elevated, keeping supply abundant. Iron ore should maintain strong supply and weak demand fundamentals over the next month, with prices projected in the range of 600 yuan-735 yuan a ton.

TODAY'S TOP HEADLINES

The bull market is turning 4 years old - but yields could crash the party

U.S. stocks have spent four years charging higher on the promise of technology and artificial intelligence. Now, they need to prove they are worth more than a 5% return on one of the world's safest assets.

The S&P 500 SPX has climbed a stunning 118.4% since Oct. 12, 2022, when the large-cap index hit its bear-market closing low of 3,577. At its current level of 7,811, the index has doubled in four years, while showing few signs of slowing down.

Why Economists Think Higher Bond Yields Are Here to Stay

Some economic shocks look like bumps in the road-tariffs, to which businesses adjust, or a war with Iran that raises oil prices temporarily. But economists increasingly believe that higher U.S. interest rates will define the rest of the decade.

So concludes The Wall Street Journal's latest survey of forecasters. The surveyed analysts don't see the recent surge in long-term yields to quarter-century highs as a temporary blip that will fade as inflation cools. Instead, they expect higher long-term yields to be sustained.

Trump Pushes Russia-Ukraine Energy Ceasefire as Export Deal Draws Criticism

President Trump pushed Russia and Ukraine to agree to halt strikes on each other's energy infrastructure, as the White House continued to face bipartisan criticism over moves in recent days to ease U.S. pressure on Moscow and shift blame for the continued fighting to Kyiv.

"Effective immediately, there is an ENERGY CEASEFIRE in the War between Russia and Ukraine. Both parties have agreed," Trump posted on Truth Social on Sunday, despite Moscow's rejection of such a deal so far and no sign that there was an agreement in place.

Iran-Backed Militants Are Tightening the Screws on Saudi Arabia's Crown Prince

DUBAI-Saudi Crown Prince Mohammed bin Salman started the year on a high note. He had just visited the White House where he was embraced by President Trump. Even after the war with Iran kicked off, Saudi Arabia looked relatively well positioned. It could export oil through a pipeline that bypassed the blocked Strait of Hormuz.

But the Saudis' escalating fight with Iran-backed Houthi militants in neighboring Yemen now poses new challenges to the kingdom's security and the crown prince's ambitious but already struggling plans to transform the country's oil-dependent economy.

Why France's Debt Woes Haven't Spooked Europe

What's happening in France is staying in France bond-wise for now. That's a good thing.

The yield on French sovereign 10-year bonds has soared past those of Italy and Greece, as well as those of corporate issuers such as beauty giant L'Oréal. A divided National Assembly is deadlocked over a new budget, while student-led protests have created havoc in the streets across France.

Amazon in Talks to Buy AI Startup Decart for Around $7 Billion

Amazon.com is in talks to acquire artificial-intelligence startup Decart in a deal that could be valued at around $7 billion, according to people familiar with the matter.

San Francisco-based Decart's software makes it easier for developers to switch between different AI chips, a capability that is becoming increasingly important as companies race to secure more computing power.

America's EV Downturn Hides a Silver Lining: Charging Is Quietly Getting Better

Electric-vehicle sales in the U.S. are down by half compared with last year. The EV charging industry evidently didn't get the memo.

Charging companies in the U.S. are on track to install about as many public EV plugs this year as in 2025, the industry's record high. By adding thousands of new plugs this year, charging executives say they aim to serve longtime EV owners looking for easier road trips as well as buyers flocking to used EVs-while prepping infrastructure for a future day when EV demand might bounce back.

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Expected Major Events for Monday 04:30/NED: Aug International trade

06:00/ROM: Aug International trade

06:00/DEN: Sep CPI

07:00/CZE: Aug Import & export price indices

08:00/EU: Sep Long term interest rates statistics

08:00/BUL: Jul Trade with EU Member States - preliminary data

08:00/BUL: Aug Trade with third countries - preliminary data

09:00/CYP: Aug Foreign Trade (provisional)

09:00/MLT: Aug International Trade

23:01/UK: Sep BRC-KPMG Retail Sales Monitor

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