Stock Market Update

The S&P 500 futures trade seven points below fair value.

Equity indices in the Asia-Pacific region had a mostly positive showing on Tuesday while South Korea's KOSPI was closed for a holiday. 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. China's Caixin Manufacturing PMI for May (48.3) showed the first contractionary reading in eight months. 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.

• 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%)

---Equity Markets---

• Japan's Nikkei: -0.1%
• Hong Kong's Hang Seng: +1.5%
• China's Shanghai Composite: +0.4%
• India's Sensex: -0.8%
• South Korea's Kospi: HOLIDAY
• Australia's ASX All Ordinaries: +0.6%

Major European indices trade near their flat lines while Spain's IBEX (-0.7%) lags. Eurozone's flash CPI reading for May decelerated to 1.9% yr/yr from 2.2% while Core CPI growth slowed to 2.3% yr/yr from 2.7% in April, solidifying expectations for a rate cut announcement from the European Central Bank on Thursday. 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.

• 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%)

---Equity Markets---

• STOXX Europe 600: -0.1%
• Germany's DAX: +0.2%
• U.K.'s FTSE 100: +0.1%
• France's CAC 40: -0.2%
• Italy's FTSE MIB: -0.1%
• Spain's IBEX 35: -0.7%