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U.K. money and credit; trading updates from UBS, Deutsche Bank, Standard Chartered, BASF, Danone, Glencore, Airbus, Telefonica, Eni, CaixaBank, Electrolux, Vinci, Hermes, Aberdeen Group, Reckitt Benckiser, Pirelli

Opening Call:

European stock futures were tracking lower with sentiment largely negative in Asian equities. U.S. Treasurys yields edged higher, the dollar weakened. Oil gained and gold fell.

Equities:

Stock futures are lower in Europe early Wednesday following Iran's surprise missile attack on U.S. forces and as tech stocks continue to face pressure.

The U.S. military said Iran launched a ballistic-missile attack on American forces in the Middle East, marking a sudden escalation after four days without strikes from either side. The unexpected action adds new pressure on President Trump to resume military operations after he paused airstrikes on Friday to facilitate peace negotiations.

Iran on Tuesday rejected Oman's plan for resuming traffic in the Strait of Hormuz, presenting its own proposal that would give Tehran more control over shipping.

Meanwhile, the latest bout of semiconductor volatility triggered partly by fears about Chinese competition continues to affect market confidence. "There are too many questions and not enough answers related to the AI buildout. The ROI from hyperscalers' investments and the scale of AI value creation are still open questions," said Dennis DeBusschere, chief market strategist at 22V Research.

Forex:

The dollar could be supported if the FOMC delivers a hawkish hold at its rate decision later in the day, MUFG Bank's Lloyd Chan said. "Our base case is for a hawkish hold, with the Fed likely to keep rates unchanged and emphasize that inflation risks remain high," the senior currency analyst said.

"This could keep U.S. yields and the dollar supported, in turn weighing on Asia FX broadly," Chan said. "The balance of risks remains tilted toward USD resilience should the Fed continue to emphasize its high-for-longer policy stance."

Bonds:

U.S. Treasury yields edged higher ahead of the Fed rate decision. Odds of a Fed hold are priced at 69%, according to CME, with nearly one in three investors betting on a hike. A Fed rate hold is expected to keep Treasury yields supported.

Energy:

Oil rose on renewed concerns of supply disruptions in the Middle East following Iran's surprise missile attack on U.S. forces. "Efforts to reopen the Strait of Hormuz have failed," ANZ Research analysts said.

"Shipping traffic through [the Strait of] Hormuz remained muted on Tuesday," the analysts noted.

Metals:

Gold prices declined. The precious metal continues to be pressured by a hawkish monetary policy backdrop ahead of the Federal Reserve's interest-rate decision, said Critical Metals' Tony Sage.

Markets are pricing in two interest rate hikes this year, which could keep bond yields supported and limit gold's appeal. Other major central banks such as the Bank of Japan and Bank of England are also expected to raise their rates this year, he said.

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Copper fell. Investors remain concerned about tighter monetary policy, ANZ Research said. Sentiment has also been weighed by the selloff in AI-related stocks, as spending by tech companies on infrastructure has been a key driver of demand for copper, helping to offset signs of rising supply-side issues.

Spot prices have jumped above later-dated futures in recent sessions, indicating a tight physical market, it added.

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Iron ore futures rose. Growing disruptions to diesel and gas supplies have raised concerns of tighter supply from iron ore mines in Australia and Brazil, ANZ Research strategists said. Iron ore exports from these two major exporting countries have fallen recently, they added.

TODAY'S TOP HEADLINES

Iran Launches Surprise Missile Attack on U.S. Forces

Iran launched a surprise ballistic-missile attack on American forces in Jordan, a U.S. official said, a violent escalation that piles new pressure on President Trump to renew the war in earnest.

The missiles were all successfully intercepted, the U.S. military said. But the assault raised the prospect that American forces would have to respond, just as negotiations to reopen the Strait of Hormuz and eventually jump-start broader peace talks were picking up speed.

What to Watch for at the Fed Meeting

By the time the Federal Reserve meets, Wall Street usually already knows the outcome. Not this time.

Two weeks ago, the picture pointed toward the central bank extending its hold on interest rates, currently between 3.5% and 3.75%. Remarks from senior officials who have often helped shape expectations had laid out what would push them to raise rates-and June's cooler inflation readings came in below that bar, shifting the debate over a possible rate increase to September.

Nasdaq-100 is on the edge of correction territory as semiconductor stocks take another beating

After helping to drive major indexes such as the S&P 500 and Nasdaq Composite to record highs during the second quarter, semiconductor stocks took another beating on Tuesday.

Chip stocks have endured large selloffs before - the DeepSeek-inspired selloff in January 2025, which prompted a major wipeout for Nvidia shares NVDA, was one notable example. But as semis have continued to move lower in July, this latest challenge is proving to be even more enduring. The PHLX Semiconductor Index SOX, a popular index of U.S.-traded semiconductor names, entered bear-market territory earlier this month, and has continued to move lower since. As of Tuesday, the index was off 24.5% from its late June record high.

Why Europe's Wildfires Are So Intense This Year

Some of the largest wildfires to sweep through Europe since World War II had an unusual spark: an exceptionally wet winter. That turbocharged vegetation growth, which then collided with some of the driest, hottest weather on record.

The result was a massive tinderbox.

Morgan Stanley Bankers Were Pressured to Approve Mortgages for Wealthy Clients

Inside Morgan Stanley's private bank for the ultrawealthy over the past year, an employee in the mortgage-lending department tried to question how a client kept applying for new home loans claiming he would be living in the residences.

The client had already received several owner-occupied loans in just a few years, and the banker was objecting to a new one, people familiar with the matter said. Those mortgages often come with lower interest rates and require smaller down payments for the borrower than second homes or investment properties would, and seeking the wrong type of loan can be considered fraud.

Mark Zuckerberg Says U.S. Should Accelerate AI Development, Not Restrict It

Mark Zuckerberg thinks artificial intelligence is working out great for humanity. His fear: that the people who think otherwise will influence who has access to the fast-evolving technology.

Optimism about AI's impact on the world "should empirically be the default assumption of how this is going to play out," the Meta Platforms chief executive said in an interview. He cited historical analogues, recent jobs data and his own personal use of AI for parenting and fitness as informing his positive outlook on the technology.

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Expected Major Events for Wednesday

06:00/NOR: Jun Retail Sales

06:00/SWE: 2Q Flash GDP

06:00/EU: 2Q New Commercial Vehicle Registrations in Europe statistics (EU27 + EFTA3)

06:00/GER: Jun Foreign trade price indices

08:00/AUT: Jul Austria Manufacturing PMI

08:00/ITA: May Industrial turnover

08:30/UK: Jun Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit

08:30/UK: Jun Monetary & Financial Statistics

08:30/UK: Jun Bank of England effective interest rates

09:00/BEL: 2Q Preliminary GDP

09:00/CRO: Jun Industrial Production Volume Index

09:00/GRE: Jun Labour Force Survey

10:00/IRL: 2Q Preliminary GDP Estimate

23:01/UK: Jun UK monthly automotive manufacturing figures

23:01/UK: Jun Zoopla House Price Index

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