Stock Market Update

Equity futures point to a lower opening this morning to kick off the second half of 2026. Yesterday's action saw the second quarter end in a fitting way as strong gains across semiconductor names drove the major averages higher. Monday's action progressed in a similar fashion, and the S&P 500 and Nasdaq Composite have now reclaimed almost all of last week's losses.

After a strong start to the week, this morning's weakness appears to be more tied to mechanics than a specific catalyst.

Oil prices remain stable around the $70 per barrel mark as reports suggest the U.S. and Iran remain on a diplomatic course.

On the policy front, the market will hear from Fed Chair Kevin Warsh today as he speaks at the European Central Bank Forum on Central Banking in Sintra, Portugal. Mr. Warsh's address comes after Cleveland Fed President Beth Hammack told CNBC yesterday that higher rates may be needed if inflation continues to move higher.

Investors will have a few economic data releases to assess this morning, including the ISM Manufacturing Index for June (Briefing.com consensus 53.8%).

The MBA Mortgage Applications Index for the week ended June 27 was flat, from a previous increase of 1.0%.

In corporate news:

• General Mills (GIS 36.32, +1.52, +4.4%) beat EPS expectations by $0.15, reported revenues in-line, and guided FY27 EPS in-line. The company is targeting $3 billion in cost savings by FY30.
• Microsoft (MSFT 379.42, +6.40, +1.7%) is planning to eliminate additional jobs, according to Business Insider.
• Nike (NKE 40.00, -1.05, -2.6%) beat EPS expectations by $0.08 and beat revenue expectations.

Equity indices in the Asia-Pacific region ended the midweek session on a mixed note while Hong Kong's Hang Seng was closed for a holiday. Japan's Nikkei: +0.6%, Hong Kong's Hang Seng: CLOSED, China's Shanghai Composite: +0.4%, India's Sensex: +0.6%, South Korea's Kospi: -2.0%, Australia's ASX All Ordinaries: -0.6%.

In news:

• Japan's Q2 Tankan survey was strong in general even though responses were collected before the U.S.-Iran peace deal was announced.
• World Bank will reportedly stop lending to China by 2031.
• Japan's Economy Minister Kiuchi said that he hopes that the Bank of Japan works closely with the government to achieve its target amid recent speculation that the Japanese government is pressuring the BoJ to slow the pace of tightening.

In economic data:

• China's June RatingDog Manufacturing PMI 51.7 (expected 51.9; last 51.8)
• Japan's June Manufacturing PMI 54.8 (expected 54.9; last 54.5). Q2 All Big Industry CAPEX 11.5% (last 3.3%) and All Small Industry CAPEX -8.3% (last -8.1%). Q2 Tankan Large Manufacturers Index 22 (expected 16; last 17) and Large Non-Manufacturers Index 17 (expected 13; last 14). June Household Confidence 33.8 (expected 34.1; last 33.6)
• South Korea's June Manufacturing PMI 52.1 (last 54.8). June trade surplus $36.15 bln (last surplus of $27.04 bln). June Imports 30.1% yr/yr (last 20.7%) and June Exports 70.9% yr/yr (last 53.4%)
• Australia's June Manufacturing PMI 51.5 (expected 51.2; last 50.7). June AIG Construction Index -38.1 (last -11.2) and AIG Manufacturing Index -16.8 (last -21.3). May Building Approvals -1.1% m/m (expected 0.5%; last -0.2%); 5.3% yr/yr (last 10.9%). May Private House Approvals 2.8% m/m (last -1.0%). June Commodity Prices 16.9% yr/yr (last 16.8%)
• India's June Manufacturing PMI 54.2 (expected 54.5; last 55.0)
• Singapore's May Bank Lending SGD917.7 bln (last SGD908.4 bln)

Major European indices trade on a mostly lower note while Germany's DAX (+0.3%) outperforms with Rheinmetall leading the advance after Ukraine ordered artillery shells. STOXX Europe 600: -0.3%, Germany's DAX: +0.3%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.7%, Italy's FTSE MIB: -0.3%, Spain's IBEX 35: -0.7%.

In news:

• Fed Chairman Warsh will appear at the European Central Bank's policy forum in Portugal alongside European Central Bank President Lagarde later this morning.
• The eurozone's final Manufacturing PMI for June (51.4; expected 51.3) was just above expectations thanks to upside surprises from France and Germany.
• The European Central Bank could double minimum reserve requirements for banks to 2% later this year.

In economic data:

• Eurozone's flash June CPI -0.1% m/m (last 0.1%); 2.8% yr/yr (expected 3.0%; last 3.2%). Flash June Core CPI 0.2% m/m (last 0.3%); 2.4% yr/yr (expected 2.5%; last 2.6%). June Manufacturing PMI 51.4 (expected 51.3; last 51.6)
• Germany's June Manufacturing PMI 50.3 (expected 50.0; last 50.1)
• U.K.'s June Nationwide HPI 0.0% m/m (expected 0.1%; last -0.6%); 2.2% yr/yr (expected 2.4%; last 1.7%). June Manufacturing PMI 52.5 (expected 53.1; last 53.9)
• France's June Manufacturing PMI 51.2 (expected 50.7; last 49.7)
• Italy's June Manufacturing PMI 52.2 (expected 52.4; last 52.9). Q1 Public Deficit 7.8% (last -1.4%)
• Spain's June Manufacturing PMI 49.7 (expected 51.0; last 51.2)
• Swiss May Retail Sales 3.5% yr/yr (expected 1.8%; last 1.7%). June Manufacturing PMI 54.3 (expected 56.4; last 57.3)