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Good morning. Crude oil extended gains overnight on Iran tensions, Europe’s bracing for a heatwave as political uncertainty flares up, a new U.K. prime minister is on the way, and it’s a bumper week for corporate earnings. Here’s what’s moving markets.

Iran Spikes Oil

Crude futures spiked late on Friday after news that Iran had seized a British oil tanker in the Strait of Hormuz, an incident that increased friction in one of the world’s critical energy chokepoints. The British government threatened Iran with “serious consequences” and advised U.K. ships to avoid the area, but ministers on Sunday sought to dial down the rhetoric. Here’s a history of U.K.-Iran tensions. Keep an eye on energy companies’ shares this morning, with oil up again overnight.

Hotting Up

Europe’s bracing for a heatwave, and politics in the region are looking just as fiery. In Italy, Deputy Prime Minister Matteo Salvini accused France and Germany of snubbing the nation amid its attempt to stem migration, highlighting further divisions within the EU, while he weighs whether to seek a snap election. Meanwhile, Spain’s Socialists on Sunday were still locked in talks with their potential allies hours before a confidence vote scheduled to begin today. Here’s what acting Prime Minister Pedro Sanchez needs. 

Nearly Boris Time

It’s the day before Boris Johnson is probably named U.K. prime minister, according to bookmakers, and a high-profile exit from the government is already on the cards. Chancellor of the Exchequer Philip Hammond said he plans to quit his post if Johnson beats Foreign Secretary Jeremy Hunt to Number 10. He cited the former London mayor’s demand that members of his government should accept the chance of a no-deal Brexit on Oct. 31. Johnson’s one-time nemesis Michael Gove is reported to be set for a promotion.

Caution in Equities

Asia stocks were declined as traders pared bets the U.S. Federal Reserve will slash rates by a half-point this month, while tensions on the streets of Hong Kong flared up again. One plus for the region was that China’s new stock venue for technology startups got off to a positive start as all 25 stocks rose on their debut. Meanwhile, China’s agricultural sector offered an indication that trade talks with the U.S. will resume soon. 

Coming Up...

It’s a big earnings week on both sides of the Atlantic, with names from most major sectors providing updates. Dutch health tech giant Royal Philips NV and Swiss wealth manager Julius Baer Group Ltd. kicked things off this morning, with both reporting earnings that beat analysts’ estimates. Here’s a handy guide to the U.S. companies out with numbers over the next five days. 

What We’ve Been Reading

This is what’s caught our eye over the weekend.

  • Teenage journalist behind Darroch leak denies link to Brexit.
  • Siemens CEO calls Trump the face of racism. 
  • 10 juicy secrets I learned working at Nobu. 
  • Grandson of prince who plotted to kill Hitler wants his family's land back.
  • Irishman Shane Lowry wins golf’s oldest tournament.
  • The mangoes are ripe in Caracas. And all gone.
  • Trump tries to help jailed rapper A$AP Rocky.

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To contact the author of this story: Joe Easton in London at jeaston7@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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