Stock Market Update

The S&P 500 futures trade 42 points above fair value.

Equity indices in the Asia-Pacific region began the week on a higher note with Japan's Nikkei (+1.3%) and South Korea's Kospi (+1.8%) showing relative strength. China reported stronger-than-expected Retail Sales growth for May (6.4%; expected 4.9%), but Industrial Production growth (5.8%; expected 5.9%) was shy of estimates. An official from China's National Bureau of Statistics said that the country's economy continues facing many uncertain factors. Taiwan added Huawei and SMIC to its export control list. Japan's Prime Minister Ishiba is expected to meet with President Trump during the G7 meeting in Canada. Separately, Japan's Prime Minister reportedly wants to spend JPY3.5 trln on cash handouts to low earners. The Bank of Japan will announce its latest policy decision overnight, but a rate hike is not expected.

• In economic data:
  • China's May Retail Sales 6.4% yr/yr (expected 4.9%; last 5.1%), Industrial Production 5.8% yr/yr (expected 5.9%; last 6.1%), Fixed Asset Investment 3.7% yr/yr (expected 4.0%; last 4.0%), House Prices -3.5% yr/yr (last -4.0%). May Unemployment Rate 5.0% (expected 5.1%; last 5.1%)
  • South Korea's May trade surplus $6.93 bln (expected surplus of $6.94 bln; last surplus of $4.88 bln). May Imports -5.3% yr/yr, as expected (last -2.7%) and Exports -1.3% yr/yr, as expected (last 3.7%)
  • India's May WPI Inflation 0.39% yr/yr (expected 0.80%; last 0.85%). May trade deficit $21.88 bln (last deficit of $26.42 bln)

---Equity Markets---

• Japan's Nikkei: +1.3%
• Hong Kong's Hang Seng: +0.7%
• China's Shanghai Composite: +0.4%
• India's Sensex: +0.8%
• South Korea's Kospi: +1.8%
• Australia's ASX All Ordinaries: +0.1%

Major European indices trade in the green. Investor focus remains on the conflict between Iran and Israel, which is keeping risk appetite in check, although a dip in oil prices this morning is providing some relief to the broader market. Renault's CEO will step down next month to take over French luxury retailer Kering. European Central Bank policymaker de Guindos said that the risk of undershooting the inflation target is very limited while policymaker Nagel said that the central bank should not signal its next move due to exceptional uncertainty. Standard & Poor's affirmed Germany's and Sweden's AAA ratings with a Stable outlook.

• In economic data:
  • Eurozone's Q1 Labor Cost Index 3.4% yr/yr (expected 3.2%: last 3.8%)
  • Italy's May CPI -0.1% m/m (expected 0.0%; last 0.1%); 1.6% yr/yr (expected 1.7%; last 1.9%)
  • Swiss May PPI -0.5% m/m (expected 0.1%; last 0.1%); -0.7% yr/yr (last -0.5%)

---Equity Markets---

• STOXX Europe 600: +0.5%
• Germany's DAX: +0.5%
• U.K.'s FTSE 100: +0.4%
• France's CAC 40: +0.9%
• Italy's FTSE MIB: +1.0%
• Spain's IBEX 35: +1.2%