Stock Market Update

Equity futures point to a mixed opening this morning after the major averages finished mostly lower in yesterday's action. Tech stocks and, in particular, semiconductors pulled back after a multiple-session rally, though the DJIA notched fresh record highs amid another retreat in oil prices ahead of the U.S.-Iran signing of a memorandum of understanding to end the conflict.

Crude oil is modestly higher this morning after President Trump threatened renewed military action against Iran at the G7 conference if he does not like the agreement or if Iran "does not behave."

Meanwhile, chipmakers are poised to rebound from yesterday's weakness.

Today's session will feature the June FOMC meeting, which will be the first with new Fed Chair Kevin Warsh at the helm. While the market has not expected a move in rates at this meeting for some time, Warsh's tone at the press conference will be closely watched, especially given that the Iran war has its most tangible offramp yet.

On the data front, the weekly MBA Mortgage Applications Index decreased 3.8%, from a prior increase of 10.8%.

In corporate news:

• Intel (INTC 120.18, +313, +2.7%) began production of its most advanced 18A-P chip, according to CNBC.
• Jabil (JBL 375.00, -0.51, -0.1%) beat EPS expectations by $0.06, beat revenue expectations, and guided Q4 EPS and revenues above consensus.
• Netflix (NFLX 78.63, -0.09, -0.1%) denied reports it was interested in acquiring Lionsgate Studios (LION 15.45, -0.91, -5.6%), according to The Wrap.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region ended the midweek session on a mostly higher note with South Korea's Kospi (+1.6%) and Japan's Nikkei (+0.7%) closing at fresh records. Japan's Nikkei: +0.7%, Hong Kong's Hang Seng: -0.8%, China's Shanghai Composite: +0.4%, India's Sensex: +0.5%, South Korea's Kospi: +1.6%, Australia's ASX All Ordinaries: +0.6%.

In news:

• Japan's May exports grew at their fastest pace in more than three years. China's annual forum on national financial issues started today and will continue tomorrow.
• People's Bank of China Governor Pan said that China's low-yield environment will be addressed through adjusting overnight reverse repurchase operations.
• Reserve Bank of Australia Assistant Governor Jones said that the country's financial system needs to be prepared for potential shocks.

In economic data:

• Japan's May trade deficit JPY90 bln (expected deficit of JPY210 bln; last deficit of JPY200 bln). May Imports 12.5% yr/yr (expected 12.8%; last 9.8%) and Exports 17.0% yr/yr (expected 16.2%; last 14.8%). June Reuters Tankan Index 13 (last 8). April Core Machinery Orders 8.7% m/m (expected 1.2%; last 9.8%); 15.6% yr/yr (expected 9.3%; last 5.9%)
• Australia's May MI Leading Index 0.0% m/m (last 0.1%)
• New Zealand's Q1 Current Account deficit 3.6% of GDP (prior deficit 3.7% of GDP). Q2 Westpac Consumer Sentiment 80.4 (last 94.7)
• Singapore's May trade surplus SGD5.57 bln (last surplus of SGD13.13 bln). May non-oil exports 7.7% yr/yr (last 11.0%); 38.4% yr/yr (expected 30.0%; last 24.4%)

Major European indices trade with modest gains while the U.K.'s FTSE (-0.1%) lags, hovering near its unchanged level. STOXX Europe 600: +0.4%, Germany's DAX: +0.1%, U.K.'s FTSE 100: -0.1%, France's CAC 40: +0.3%, Italy's FTSE MIB: +0.1%, Spain's IBEX 35: +0.5%.

In news:

• The Bank of France lowered its domestic growth forecast for 2026 to 0.5% from 0.9%.
• Elsewhere, the London Times Shadow monetary policy committee voted 5-4 in favor of a rate hike from the Bank of England tomorrow, but the market does not see a high likelihood of a hike.
• BMW lowered its profit outlook for the year.

In economic data:

• Eurozone's final May CPI 0.1% m/m, as expected (last 1.0%); 3.2% yr/yr, as expected (last 3.0%). May Core CPI 0.3% m/m, as expected (last 0.9%); 2.6% yr/yr (expected 2.5%: last 2.2%)
• U.K.'s May CPI 0.2% m/m (expected 0.4%; last 0.7%); 2.8% yr/yr (expected 3.0%; last 2.8%). May Core CPI 0.3% m/m (expected 0.4%; last 0.7%); 2.6% yr/yr (expected 2.7%; last 2.5%). May Input PPI 0.2% m/m (expected 0.5%; last 2.6%) and Output PPI 0.5% m/m, as expected (last 1.5%). May House Price Index 3.8% yr/yr (expected 2.8%; last 0.0%)