Stock Market Update

The stock market is on course to see some early pressure with futures on the S&P 500 trading ten points below fair value.

The early weakness follows yesterday's intraday recovery effort that returned the S&P 500 to its best levels from May. Bloomberg reported shortly after yesterday's close that the Trump administration is extending the tariff pause on some Chinese goods until the end of August.

Economic data released overnight showed the first contractionary reading of China's Caixin Manufacturing PMI (48.3) in eight months while eurozone's CPI decelerated to 1.9% in the flash reading for May, solidifying expectations for a Thursday rate cut from the European Central Bank.

The OECD lowered its global growth forecast for 2025 to 2.9% from 3.1%, cutting the outlook for the U.S. to 1.6% from 2.2%. The global outlook for 2026 was lowered to 2.9% from 3.0% with the U.S. outlook reduced to 1.5% from 1.6%.

Today's economic data will be limited to the 10:00 ET release of April Factory Orders (Briefing.com consensus -3.1%; prior 4.3%) and April job openings (prior 7.192 mln). Treasuries hold modest gains with the 10-yr yield down four basis points at 4.42%.

In U.S. corporate news:

• Dollar General (DG 107.70, +10.53, +10.8%): beat Q1 expectations and issued in-line guidance for FY26.
• Signet Jewelers (SIG 75.50, +8.69, +13.0%): beat Q1 expectations and raised its guidance for FY26.

Reviewing overnight developments:

• Asian markets ended mostly higher. Japan's Nikkei -0.1%, Hong Kong's Hang Seng +1.5%, China's Shanghai Composite +0.4%.
  • In economic data:
    • China's May Caixin Manufacturing PMI 48.3 (expected 50.7; last 50.4)
    • Australia's Q1 Business Inventories 0.8% qtr/qtr (expected 0.2%; last 0.2%), Q1 Company Gross Operating Profits -0.5% qtr/qtr (expected 1.2%; last 6.0%). Q1 Current Account deficit AUD14.7 bln (expected deficit of AUD12.4 bln; last deficit of AUD16.3 bln)
    • New Zealand's Q1 Terms of Trade Index 1.9% qtr/qtr (expected 3.6%; last 3.2%)
  • In news:
    • Bloomberg reported that the Trump administration is extending the tariff pause on some Chinese imports until August 31.
    • Japan's 10-yr yield dipped after a decent auction. The Ministry of Finance will sell 30-yr bonds on Thursday.
    • Japan's Prime Minister Ishiba is expected to dissolve parliament and call an election if the opposition party submits a no-confidence motion against him.
• Major European indices trade near their flat lines. Germany's DAX +0.1%, U.K.'s FTSE +0.1%, France's CAC -0.3%.
  • In economic data:
    • Eurozone's flash May CPI 0.0% m/m (last 0.6%); 1.9% yr/yr (expected 2.0%; last 2.2%). Flash May Core CPI 0.0% m/m (last 1.0%); 2.3% yr/yr (expected 2.4%; last 2.7%). April Unemployment Rate 6.2%, as expected (last 6.3%)
    • France's April budget deficit EUR69.3 bln (last deficit of EUR47.0 bln)
    • Italy's May Unemployment Rate 5.9% (expected 6.1%; last 6.1%)
    • Spain's May Unemployment Change -57,800 (expected -68,500; last -67,400)
    • Swiss May CPI 0.1% m/m, as expected (last 0.0%); -0.1% yr/yr, as expected (last 0.0%)
  • In news:
    • The OECD lowered its global growth forecast for 2025 to 2.9% from 3.1% but left the eurozone growth outlook unchanged at 1.0%.
    • Bank of England policymaker Dhingra spoke in favor of looser policy during a parliamentary testimony.