Stock Market Update

The S&P 500 futures currently trade 101 points above fair value.

Equity indices in the Asia-Pacific region had a solid start to the week with Japan's Nikkei (+5.0%) reaching a fresh record while South Korea's Kospi (+5.2%) finished just shy of a new record of its own. China Securities Journal reported that the Chinese government will accelerate IPOs for technology companies. Japanese debt advanced, sending Japan's 10-yr yield back to its 50-day moving average (2.545%) even though the market expects the Bank of Japan to announce a 25-basis point rate hike overnight. The Reserve Bank of Australia will also meet, but a rate change is not expected. NZIER lowered its forecast for New Zealand's 2026 growth to 0.6% from 0.8% while the outlook for 2027 was lowered to 1.6% from 3.0%.

• In economic data:
  • Japan's April Tertiary Industry Activity -10.6 (last 16.0)
  • South Korea's May trade surplus $27.04 bln (expected surplus of $26.95 bln; last surplus of $23.76 bln). May Imports 20.7% yr/yr (expected 20.8%; last 16.7%) and Exports 53.4% (expected 53.2%; last 48.0%)
  • India's May WPI Inflation 9.68% yr/yr (expected 9.10%; last 8.26%). May trade deficit $28.21 bln (last deficit of $28.38 bln)
  • New Zealand's May Electronic Card Sales Retail Sales 1.7% m/m (last -1.2%); 3.3% yr/yr (last 2.0%)
  • Singapore's Q1 Unemployment Rate 2.0% (expected 2.1%; last 2.0%)

---Equity Markets---

• Japan's Nikkei: +5.0%
• Hong Kong's Hang Seng: +0.5%
• China's Shanghai Composite: +1.6%
• India's Sensex: +1.0%
• South Korea's Kospi: +5.2%
• Australia's ASX All Ordinaries: +1.4%

Major European indices are off to a higher start to the week amid optimism surrounding the signing of a U.S.-Iran peace deal in Switzerland, which is being planned for Friday. The market has curtailed its rate hike expectations for the U.K., now pricing in just one rate hike before the end of the year. The U.K. will hold another by-election on Thursday, which could trigger a leadership challenge to Prime Minister Starmer. President Trump said that France has to rescind its tech sales tax or face a 100% tariff on wine imports to the U.S.

• In economic data:
  • Eurozone's April Industrial Production 0.1% m/m (expected 0.2%; last 0.4%); 0.3% yr/yr (last -2.8%)
  • Germany's May WPI -0.6% m/m (expected 0.8%; last 2.0%); 5.9% yr/yr (last 6.3%)
  • Italy's April trade surplus EUR4.293 bln (expected surplus of EUR5.190 bln; last surplus of EUR4.709 bln)
  • Swiss May PPI -0.4% m/m (expected 0.4%; last 0.8%); -1.8% yr/yr (last -2.0%). May SECO Consumer Climate -38, as expected (last -40)

---Equity Markets---

• STOXX Europe 600: +0.7%
• Germany's DAX: +1.5%
• U.K.'s FTSE 100: +0.1%
• France's CAC 40: +1.1%
• Italy's FTSE MIB: +1.1%
• Spain's IBEX 35: +1.5%