June S&P 500 E-Mini futures (ESM26) are trending up +0.14% this morning as investors became more confident that the U.S. and Iran are nearing a deal.
The U.S. and Iran have reportedly reached a tentative deal to extend the ceasefire by 60 days, which would include the reciprocal reopening of the Strait of Hormuz during the first 30 days. It would mark the first phase of a multistage framework, which the U.S. hopes will result in Iran scaling back its nuclear program for decades. “We perhaps have the makings of a deal here,” Treasury Secretary Scott Bessent said on Thursday. A deal is reportedly awaiting approval from U.S. President Donald Trump. The price of WTI crude fell over -1% on Friday.
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“If a deal is agreed upon, we should see another leg higher in risky assets and lower in rates. Positioning suggests that the rates market should see a greater reaction than equities,” said Mohit Kumar at Jefferies.
In yesterday’s trading session, Wall Street’s major indices closed higher, with the S&P 500 and Nasdaq 100 notching new record highs. Chip stocks climbed, with Arm Holdings (ARM) jumping more than +10% and Advanced Micro Devices (AMD) rising over +4%. Also, Snowflake (SNOW) popped over +36% after the data warehousing company reported strong Q1 results, raised its full-year product revenue guidance, and expanded its collaboration with Amazon Web Services. In addition, Agilent Technologies (A) surged more than +16% and was among the top percentage gainers on the S&P 500 after the company posted upbeat FQ2 results and raised its full-year guidance. On the bearish side, Synopsys (SNPS) slumped more than -8% and was the top percentage loser on the S&P 500 and Nasdaq 100 as the chip-design software and hardware company’s strong results and guidance failed to impress investors.
Economic data released on Thursday were lukewarm. The U.S. core PCE price index, a key inflation gauge monitored by the Fed, rose +0.2% m/m and +3.3% y/y in April, compared to expectations of +0.3% m/m and +3.3% y/y. Also, U.S. Q1 GDP growth was revised downward to +1.6% (q/q annualized) from the initial estimate of +2.0%. In addition, U.S. April personal spending rose +0.5% m/m, in line with expectations, while personal income was unchanged m/m, weaker than expectations of +0.4% m/m. Finally, the number of Americans filing for initial jobless claims in the past week rose by +5K to 215K, compared with the 211K expected.
“The economy is still expanding, but hotter inflation limits the Fed’s flexibility and pushes rate cuts further out. This is a more difficult environment for investors because the growth story is cooling just as inflation is heating back up,” said Gina Bolvin at Bolvin Wealth Management Group.
New York Fed President John Williams said on Thursday that the central bank’s policy stance is well-positioned to respond to the economic effects of the Middle East conflict. At the same time, St. Louis Fed President Alberto Musalem said the central bank may need to raise its policy rate if inflation does not begin easing within the next six months. In addition, Minneapolis Fed President Neel Kashkari said U.S. consumer prices remain “much too high” and that lowering inflation continues to be his top priority.
Meanwhile, U.S. rate futures have priced in a 98.9% probability of no rate change and a 1.1% chance of a 25 basis point rate hike at the June FOMC meeting.
Today, investors will focus on the U.S. Chicago PMI, set to be released in a couple of hours. Economists project the May figure to be 50.6, compared to 49.2 in April.
U.S. Wholesale Inventories data will also be released today. Economists forecast the preliminary April figure at +0.6% m/m, compared to +1.3% m/m in March.
In addition, market participants will be awaiting speeches from Fed Vice Chair for Supervision Michelle Bowman, Kansas City Fed President Jeff Schmid, Philadelphia Fed President Anna Paulson, and San Francisco Fed President Mary Daly.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.45%, up +0.13%.
The Euro Stoxx 50 Index is up +0.76% this morning as optimism that the U.S. and Iran are nearing an agreement boosted investor risk appetite. Travel and luxury stocks were among the biggest gainers on Friday. Also, defense stocks, which typically gain when geopolitical tensions escalate, advanced after Romania said a Russian drone wounded two people in a southeastern city during an overnight Russian attack on Ukraine. The benchmark index is on track to end the week higher. Preliminary data from statistics agency Insee released on Friday showed that France’s annual inflation rate accelerated in May as energy prices continued to rise amid the Middle East conflict, keeping the European Central Bank on track to raise interest rates next month. Separate data showed that Italy’s annual inflation rate also picked up in May, while Spain’s inflation held steady. Meanwhile, ECB Governing Council member Fabio Panetta on Friday acknowledged the case for a rate hike while urging colleagues not to signal further tightening. “The forward-looking picture seems to call for a recalibration of the monetary policy stance to counter the risk of persistent inflationary tensions,” Panetta said, while warning that “not being tied to a predetermined path remains essential.” In other news, ECB research showed that Eurozone consumers have adjusted their attitudes more rapidly in response to the upheaval caused by the Iran war. In corporate news, CTS Eventim (EVD.D.DX) rose over +10% after the German ticket firm posted better-than-expected Q1 revenue.
France’s CPI (preliminary), France’s GDP, Spain’s CPI (preliminary), Italy’s CPI (preliminary), Germany’s Unemployment Change, and Germany’s Unemployment Rate were released today.
The French May CPI rose +0.1% m/m and +2.4% y/y, weaker than expectations of +0.2% m/m and +2.5% y/y.
The French GDP fell -0.1% q/q and rose +0.9% y/y, weaker than expectations of no change q/q and +1.1% y/y.
The Spanish May CPI rose +0.1% m/m and +3.2% y/y, weaker than expectations of +0.2% m/m and +3.3% y/y.
The Italian May CPI rose +0.4% m/m and +3.2% y/y, compared to expectations of +0.1% m/m and +3.2% y/y.
The German May Unemployment Change stood at -12K, stronger than expectations of 11K.
The German May Unemployment Rate was 6.3%, stronger than expectations of no change at 6.4%.
Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed down -0.73%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +2.53%.
China’s Shanghai Composite Index closed lower today, dragged down by weakness in the technology sector. Semiconductor stocks slumped on Friday as investors locked in some profits following a recent rally. Limiting losses, traditional sectors such as real estate and liquor outperformed. The benchmark index posted weekly and monthly losses. Analysts said funds are beginning to rotate from hot sectors into underperforming ones, and the market is likely to continue to fluctuate. “We expect market dynamics to turn clearer and smoother around or after the summer, though near-term volatility is likely to persist,” according to Morgan Stanley analysts. Investors also continued to monitor developments in the Middle East. U.S. Treasury Secretary Scott Bessent said on Thursday that an agreement to end the war was within reach, though President Trump has yet to approve any deal. In other news, Beijing has warned it could launch trade investigations against the European Union if the bloc moves forward with a proposal to curb imports of heavily subsidized foreign goods. In corporate news, Pop Mart International climbed over +7% in Hong Kong after CEO and founder Wang Ning outlined overseas expansion plans at a state-organized event, signaling China’s backing for the Labubu maker. Investor focus now shifts to China’s PMI data for May, scheduled for release over the weekend, which will provide clues on whether the earlier softening in the economy is persisting.
Japan’s Nikkei 225 Stock Index closed sharply higher and hit a record high today, buoyed by optimism over a potential U.S.-Iran agreement and enthusiasm for the AI trade following strong earnings from Dell Technologies. Bloomberg reported that the U.S. and Iran have reached a provisional agreement to extend a ceasefire by 60 days and begin further talks on Tehran’s nuclear program, though U.S. President Trump has yet to approve it. Technology stocks surged on Friday after U.S. computer hardware maker Dell posted blistering growth in AI servers for data centers. “Dell Technologies commented that there is no sign of a slowdown in AI demand,” which drove a rally in Japanese AI-related stocks such as SoftBank Group, according to Wataru Akiyama at Nomura Securities. The benchmark index notched strong weekly and monthly gains. Government data released on Friday showed that annual core inflation in Tokyo remained below the Bank of Japan’s 2% target for a fourth consecutive month in May, as fuel and tuition subsidies offset higher raw material costs stemming from the Middle East conflict. Separate data showed that Japan’s industrial production unexpectedly rebounded in April, while retail sales grew at the fastest pace in a year. Marcel Thieliant, head of Asia-Pacific at Capital Economics, said, “The April activity data show that Japan’s economy is shrugging off the energy cost shock and cement the case for a BOJ rate hike next month.” Elsewhere, Japanese Finance Minister Satsuki Katayama said on Friday that decisive steps can be taken to address foreign exchange volatility, reiterating the government’s readiness to intervene in the market. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -3.38% to 26.04.
The Japanese May Tokyo Core CPI rose +1.3% y/y, weaker than expectations of +1.5% y/y.
The Japanese April Industrial Production (preliminary) unexpectedly rose +0.8% m/m, stronger than expectations of -0.4% m/m.
The Japanese April Retail Sales rose +2.1% y/y, stronger than expectations of +1.4% y/y.
The Japanese April Unemployment Rate was 2.5%, stronger than expectations of 2.7%.
Pre-Market U.S. Stock Movers
Dell Technologies (DELL) popped over +37% in pre-market trading after the hardware maker posted upbeat Q1 results and raised its full-year revenue guidance amid surging demand for servers that power AI workloads.
Other PC and server stocks jumped in pre-market trading following Dell’s blowout results, with Hewlett Packard Enterprise (HPE) surging more than +17% and Super Micro Computer (SMCI) climbing about +10%.
Okta (OKTA) climbed more than +7% in pre-market trading after the company posted stronger-than-expected Q1 results and raised its full-year guidance.
MongoDB (MDB) gained over +4% in pre-market trading after the document database company reported better-than-expected Q1 results and boosted its annual guidance.
Space-related stocks retreated in pre-market trading after Bloomberg reported that SpaceX lowered its valuation target to at least $1.8 trillion, with AST SpaceMobile (ASTS) plunging over -12% and Rocket Lab (RKLB) sliding more than -5%.
You can see more pre-market stock movers here
Today’s U.S. Earnings Spotlight: Friday - May 29th
The Buckle (BKE), The Elmet Group Co. (ELMT), Genesco (GCO).
On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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