Stock Market Update

Equity futures point to a higher opening this morning as investors return from the long holiday weekend to headlines of negotiation progress between the U.S. and Iran. Geopolitical volatility resulted in some choppy action last week, but stocks ultimately finished on a higher note, with the S&P 500 extending its winning streak to eight consecutive weeks and the DJIA finishing at record highs on Friday.

Axios reports that the U.S. and Iran are negotiating a 60-day memorandum of understanding that will include the reopening of the Strait of Hormuz with no tolls and a commitment from Iran to never pursue nuclear weapons and negotiations over the removal of its stockpile of highly enriched uranium. Crude oil is down $4.00 (-4.1%) to $92.60 per barrel, and Treasury yields are lower across the curve, creating a constructive backdrop for stocks this morning.

Later this morning, the market will receive the May reading of the Consumer Confidence Index (Briefing.com consensus 92.0). This week will be lighter in the total number of data releases, but Thursday will bring the Personal Income and Outlays report for April, which includes the PCE Price Index (Briefing.com consensus 0.5%), the Fed's preferred inflation gauge.

In corporate news:

• U.S. oil companies are increasing production, according to the Financial Times.
• Airlines are expecting record Memorial Day travel, according to CBS News.
• Uber (UBER 72.15, +0.33, +0.5%) is considering a higher offer for Delivery Hero (DELHY 4.09, +0.27, +7.1%) after a shareholder refused a previous offer, according to Financial Times.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended Tuesday on a mostly lower note, taking a step back after their strong showing on Monday, which followed news that the U.S. and Iran reportedly made significant progress on a deal. Japan's Nikkei: -0.3%, Hong Kong's Hang Seng: UNCH, China's Shanghai Composite: -0.2%, India's Sensex: -0.6%, South Korea's Kospi: +2.6%, Australia's ASX All Ordinaries: -0.4%.

In news:

• The situation was muddled a bit overnight after U.S. forces conducted strikes that were described as defensive.
• South Korea's Kospi (+2.6%) bucked the trend, rising to a fresh record high after being closed yesterday.
• Taiwan's equity market overtook India's as the fifth largest in the world, thanks to support from Taiwan Semiconductor Manufacturing.
• Japan's Prime Minister Takaichi confirmed plans for a JPY3 trln extra budget.
• Sri Lanka's central bank raised its policy rate by a 100 basis points to 8.75% due to hot inflation.

In economic data:

• Japan's March BoJ Core CPI 2.8% yr/yr (expected 1.7%; last 2.5%). March Leading Index 114.0 (expected 114.5; last 113.2) and Coincident Indicator 0.2% m/m (expected 0.3%; last -1.7%)
• Singapore's April Industrial Production 5.8% m/m (expected 1.5%; last 3.5%); 17.6% yr/yr (expected 12.0%; last 9.2%)

Major European indices trade on a mostly lower note while the U.K.'s FTSE (+0.4%) outperforms after being closed for Spring Bank Holiday yesterday. STOXX Europe 600: -0.2%, Germany's DAX: -0.6%, U.K.'s FTSE 100: +0.4%, France's CAC 40: -0.8%, Italy's FTSE MIB: -0.2%, Spain's IBEX 35: +0.1%.

In news:

• European Central Bank policymaker Villeroy de Galhau said that second-round effects of inflation have not appeared yet while policymaker Schnabel said that a rate hike should be made in June.
• The U.K. is reportedly looking to join EU's EUR4 bln investment fund for startups.

In economic data:

• U.K.'s May CBI Distributive Trades Survey -46 (expected -52; last -68)
• Spain's April PPI 8.3% yr/yr (last 3.4%)