EMEA Morning Briefing : Trump Unlikely to Extend Cease-Fire

MARKET WRAPS

Watch For:

U.K. unemployment; Germany ZEW indicator of economic sentiment; trading updates from SKF, Atos, Thales, Beiersdorf, British Land, ASM, Moncler

Opening Call:

European stock futures were higher in tandem with broad gains among Asian stock benchmarks. U.S. Treasurys and the dollar were little changed. Gold and oil were lower.

Equities:

Stock futures in Europe were tracking higher early Tuesday amid hopes for further U.S.-Iran talks in Islamabad this week. Trump has warned that if Iran doesn't make a deal, it would face strikes that knock out all of its bridges and power plants. The Wall Street Journal reported that President Trump isn't inclined to extend the deadline past Wednesday evening, when it expires, according to a White House official.

Iran told regional mediators that it would send a negotiating team to Pakistan on Tuesday for the second round of peace talks with the U.S., the WSJ reported, citing people familiar with the matter.

"Brinkmanship has returned, but markets are not panicking. A messy deal remains the most likely outcome," FX strategists at OCBC Group Research said. "Geopolitical developments remain fluid, implying two-way risks is still warranted even as markets are trading on hopes of an end to the conflict," leaving room for disappointment if a deal is not reached, they said.

Forex:

The U.S. dollar was little changed. Markets have been in a cautious mood amid the fluid situation in the Strait of Hormuz and the geopolitical developments recently, Commerzbank Research analysts said.

They note President Trump's remarks on Monday that the two-week cease-fire between the U.S. and Iran will expire on Wednesday evening, Washington time. The analysts also note Trump saying that the U.S. blockade of the Strait of Hormuz would remain for now and that he's "not opening it until a deal is signed."

Bonds:

TS Lombard economists envision a definitive U.S.-Iran deal to be finalized within roughly three months. If the timeline pans out, "bonds and equities will gain more ground as central banks are unlikely to satisfy market bets on swift rate hikes," they said.

Valuations limit upside for stocks, so they rotate into high-yield bonds, EM sovereign credit, and emerging markets' local-currency debt.

Also in focus Tuesday are the March U.S. retail sales and Kevin Warsh's Fed nomination hearing.

Energy:

Oil fell amid prospects of U.S.-Iran talks that could lead to reduced supply disruptions. "There is scope for deeper [oil-price] declines, as both sides have strong incentives to end the conflict," said Nikos Tzabouras, senior market analyst at Tradu.

Metals:

Gold declined as traders weighed possible U.S.-Iran talks and the looming end of the cease-fire. "Gold's trajectory will remain closely tied to the developments in the Middle East and their impact on energy markets and inflation expectations," said Konstantinos Chrysikos, head of Customer Relationship Management at Kudotrade.

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Copper edged lower. The prospect of U.S.-Iran negotiations remains uncertain, Galaxy Futures said, adding that prolonged closure of the Strait of Hormuz may affect copper production.

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Iron ore gained amid restocking in China ahead of the May Labor Day holiday, ANZ Research analysts said. Supply concerns are also emerging, with fuel shortages affecting mining activity in Australia and Brazil, they added.

TODAY'S TOP HEADLINES

Iran to Attend Pakistan Peace Talks

Iran told regional mediators that it would send a negotiating team to Pakistan on Tuesday for the second round of peace talks with the U.S., said people familiar with the matter, as the end of a two-week cease-fire looms and President Trump levied fresh threats on Iranian infrastructure.

Tehran hadn't publicly confirmed that it would send representatives to the meetings in Islamabad, and confusion about its participation in the talks grew after Iran's Foreign Ministry representative, Esmaeil Baqaei, said Monday that there was no plan for a second round of negotiations in the Pakistani capital.

Warsh Embarks on High-Wire Act of Convincing Investors Without Angering Trump

Wall Street and Washington will be watching Kevin Warsh on Tuesday for any sign he has an understanding with President Trump to cut interest rates if installed as chair of the Federal Reserve. Trump will be watching for any sign he doesn't.

The high-wire act starts before Warsh even has the job. Warsh secured the nomination by convincing Trump he shares the president's view that the Fed should be cutting rates. At his Senate confirmation hearing Tuesday, he can reaffirm that case-at a moment when the Iran war has turned economic conditions against it-or begin, carefully, to distance himself from it.

Widespread Drought Adds to Stresses for U.S. Farmers. Food Prices Are a Focus.

Drought conditions in many of the nation's growing regions are adding to the stresses of U.S. farmers and raising concerns that they could drive food prices even higher.

Just in time for the start of the growing season, the National Drought Mitigation Center's latest U.S. Drought Monitor from April 14 says that 51% of U.S. states and Puerto Rico are in moderate drought or worse, up from 50.2% the previous week.

Rio Tinto's Iron Ore, Copper Production Rose in First Quarter

Rio Tinto said it produced more iron ore, copper and aluminum in the first quarter of the year, while reassuring investors of limited impacts to date from the conflict in the Middle East.

The world's second-biggest miner by market value reported a 13% year-over-year increase in production from its lucrative Pilbara iron-ore operations and a 9% rise in copper production. Aluminum output was 1% higher than a year earlier.

Anthropic, Amazon Tighten Bond in $5 Billion Investment and Computing Deal

Amazon said Monday that it would invest an additional $5 billion in Anthropic, part of a broadening partnership that will see the two tech companies collaborate more closely.

Amazon said its total investment could be as high as $25 billion if the partnership hits certain commercial milestones. As part of the agreement, Anthropic, which has increasingly been hampered by a shortage of the computing power needed to serve its popular artificial intelligence models, agreed to purchase more than $100 billion of Amazon's cloud services. Anthropic said it would make use of 5 gigawatts' worth of Amazon's AI chips as part of the agreement.

Tim Cook to Step Down as Apple Names New CEO

Tim Cook, the longtime leader of Apple, is stepping down after transforming the iPhone maker into a titan of the technology industry, handing the reins to a veteran engineer.

Apple said John Ternus, the affable head of its hardware division, will take over as chief executive.

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Expected Major Events for Tuesday

06:00/UK: Mar UK monthly unemployment figures

06:00/SWI: Mar Trade Balance

07:00/SPN: Feb Trade Balance

08:00/POL: Mar Average gross wages

08:00/POL: Mar PPI

08:00/POL: Mar Industrial Production Index

09:00/MLT: Mar RPI

09:05/GER: Apr ZEW Indicator of Economic Sentiment

17:59/POR: Feb ICSG Copper Report

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

(END) Dow Jones Newswires

04-21-26 0015ET