Stock Market Update

The stock market is on course for a flat start after a subdued night in global equity markets with futures on the S&P 500 trading in line with fair value.

Asian stocks had a decent showing with South Korea leading the way while Japan saw gains in its JGBs even though today's 30-yr bond auction met soft demand.

Elsewhere, the European Central Bank is likely to announce a rate cut at 8:15 ET, and there is speculation that ECB President Lagarde could hint at a pause in the cycle during her press conference.

In the U.S., there is a continued focus on trade policy with participants wondering when President Trump will speak with China's President Xi.

Treasuries hold modest gains with longer tenors showing some relative strength. The 10-yr yield is down three basis points at 4.34% while the 2-yr yield is down one basis point at 3.87%.

In U.S. corporate news:

• Ciena (CIEN 79.00, -4.89, -5.8%): missed Q2 EPS expectations on above-consensus revenue.
• Five Below (FIVE 129.50, +8.26, +6.8%): beat Q1 EPS expectations, issued above-consensus guidance for Q2, issued in-line guidance for FY26, and announced the departure of its CFO. 
• MongoDB (MDB 232.80, +33.07, +16.6%): beat Q1 expectations, issued above-consensus EPS guidance for Q2, issued above-consensus EPS guidance for FY26, and announced an $800 mln buyback.
• PVH (PVH 73.76, -7.05, -8.7%): beat Q1 expectations, issued below-consensus guidance for Q2, and issued mixed guidance for FY26.
• Winnebago (WGO 32.00, -2.92, -8.4%): issued below-consensus EPS guidance for Q3.

Reviewing overnight developments:

• Asian markets ended mostly higher. Japan's Nikkei -0.5%, Hong Kong's Hang Seng +1.1%, China's Shanghai Composite +0.2%.
  • In economic data:
    • China's May Caixin Services PMI 51.1 (expected 51.0; last 50.7).
    • Japan's April Overall Wage Income 2.3% yr/yr (expected 2.6%; last 2.3%).
    • South Korea's Q1 GDP -0.2% qtr/qtr, as expected (last -0.2%); 0.0% yr/yr (expected -0.1%; last 1.2%).
    • Singapore's April Retail Sales 0.3% m/m (last -2.7%); 0.3% yr/yr (last 1.3%).
    • Australia's April trade surplus AUD5.41 bln (expected surplus of AUD5.96 bln; last surplus of AUD6.89 bln). April Imports 1.1% m/m (last -2.4%) and Exports -2.4% m/m (last 7.2%).
  • In news:
    • Japanese government debt climbed with the long end leading the way despite soft demand for new 30-yr paper.
    • Suzuki has had to pause production of one of its vehicles after China imposed restrictions on sales of rare earth elements.
    • A massive iron deposit was discovered in West Australia with the value estimated around $6 trillion.
• Major European indices trade modestly higher. Germany's DAX +0.3%, U.K.'s FTSE +0.1%, France's CAC +0.2%.
  • In economic data:
    • Eurozone's April PPI -2.2% m/m (expected -1.8%; last -1.7%); 0.7% yr/yr (expected 1.2%; last 1.9%).
    • Germany's April Factory Orders 0.6% m/m (expected -1.5%; last 3.4%).
    • Italy's April Retail Sales 0.7% m/m (expected 0.4%; last -0.4%); 3.7% yr/yr (last -2.7%).
    • Swiss May Unemployment Rate 2.9% (expected 2.8%; last 2.8%).
  • In news:
    • The European Central Bank is expected to announce a 25-basis point rate cut at 8:15 ET, making for its eighth reduction in the easing cycle.
    • EU Trade Commissioner Sefcovic said that the World Trade Organization needs deep reform.
    • The Bank of England's Decision Maker Panel survey for May found little impact from U.S. trade policy.