Stock Market Update

The stock market is on course for a steady start with futures on the S&P 500 trading two points above fair value.

Yesterday's daylong rally on Wall Street was followed by a subdued showing from global equity markets while Japan's long-term yields climbed again after a weak 40-yr bond auction. The bond auction did not fail, which was seen as a small positive.

Economic data released this morning was limited to the weekly MBA Mortgage Index, which fell 1.2% to follow last week's 5.1% decrease.

Treasuries are facing some pressure with the 10-yr yield rising two basis points to 4.45%.

In U.S. corporate news:

• Abercrombie & Fitch (ANF 96.95, +19.80, +25.7%): beat Q1 expectations, issued below-consensus EPS guidance for Q2, and lowered its EPS guidance for FY26 while raising the high end of its revenue growth guidance.
• Box (BOX 34.69, +3.24, +10.3%): beat Q1 EPS expectations and issued above-consensus guidance for Q2 and FY26.
• Okta (OKTA 113.00, -12.50, -10.0%): beat Q1 expectations and issued above-consensus guidance for Q2 and FY26.
• Macy's (M 12.35, +0.31, +2.6%): beat Q1 expectations and reaffirmed its guidance for FY26.

Reviewing overnight developments:

• Asian markets ended mostly lower. Japan's Nikkei UNCH, Hong Kong's Hang Seng -0.5%, China's Shanghai Composite UNCH.
  • In economic data:
    • South Korea's May Manufacturing BSI Index 73 (last 68)
    • Australia's Q1 Construction Work Done 0.0% qtr/qtr (expected 0.5%; last 0.9%). April CPI Indicator 2.4% yr/yr (expected 2.3%; last 2.4%)
  • In news:
    • Japan held a weak 40-yr bond auction, but the auction did not fail.
    • Japan is reportedly willing to commit to buying JPY1 trln worth of chips as part of a potential trade deal with the U.S.
    • The Reserve Bank of New Zealand lowered its official cash rate by 25 basis points to 3.25%, as expected, though the policy statement had some hints of hawkishness.
• Major European indices trade on a mostly lower note. Germany's DAX -0.6%, U.K.'s FTSE -0.1%, France's CAC -0.1%.
  • In economic data:
    • Germany's May Unemployment Change 34,000 (expected 12,000; last 4,000) and Unemployment Rate 6.3%, as expected (last 6.3%). April Import Price Index -1.7% m/m (expected -1.4%; last -1.0%); -0.4% yr/yr (expected 0.1%; last 2.1%)
    • France's Q1 GDP 0.1% qtr/qtr, as expected (last -0.1%); 0.6% yr/yr (expected 0.8%; last 0.6%). Q1 Nonfarm Payrolls -0.1% qtr/qtr (expected 0.0%; last -0.4%). April Consumer Spending 0.3% m/m (expected 0.8%; last -1.1%). April PPI -4.3% m/m (last -0.5%); -0.8% yr/yr (last -0.2%)
    • Swiss May ZEW Expectations -22.0 (last -51.6)
  • In news:
    • There was speculation that European Central Bank President Lagarde could leave her post about a year before the end of her term to become the chair of the World Economic Forum.
    • The European Commission is urging member states to reduce their water use by 10% by 2030, according to FT.