Stock Market Update

The stock market is on track for a higher start with futures on the S&P 500 trading 40 points above fair value.

Equity futures are recovering some of their losses from Friday after the weekend saw a continuation of the Israel-Iran conflict, but without indications of direct involvement from the U.S.

Crude oil revisited its high from Friday in overnight trade, but it currently trades with a loss in the $72/bbl area after retreating from its highest level of the night.

The market is likely to remain fixated on headlines related to the conflict in the Middle East, especially since today's economic data slate is limited to the 8:30 ET release of the Empire State Manufacturing survey for June (Briefing.com consensus -6.6; prior -9.2). There is also some potential for trade-related developments, since members of the G7 are meeting in Canada through tomorrow.

Treasuries are on track for a modestly lower start with the 10-yr yield up two basis point at 4.44% ahead of today's $13 bln 20-yr bond reopening at 13:00 ET.

In U.S. corporate news:

• AMD (AMD 118.85, +2.69, +2.3%): after announcing a collaboration with DigitalOcean (DOCN 27.18, +0.40, +1.5%).
• EchoStar (SATS 24.94, +8.10, +48.1%): after President Trump urged the FCC to make a deal with the company.
• U.S. Steel (X 54.80, +2.61, +5.0%): after President Trump approved the company's merger with Nippon Steel.

Reviewing overnight developments:

• Asian markets ended higher. Japan's Nikkei +1.3%, Hong Kong's Hang Seng +0.7%, China's Shanghai Composite +0.4%.
  • In economic data:
    • China's May Retail Sales 6.4% yr/yr (expected 4.9%; last 5.1%), Industrial Production 5.8% yr/yr (expected 5.9%; last 6.1%), Fixed Asset Investment 3.7% yr/yr (expected 4.0%; last 4.0%), House Prices -3.5% yr/yr (last -4.0%). May Unemployment Rate 5.0% (expected 5.1%; last 5.1%).
    • South Korea's May trade surplus $6.93 bln (expected surplus of $6.94 bln; last surplus of $4.88 bln). May Imports -5.3% yr/yr, as expected (last -2.7%) and Exports -1.3% yr/yr, as expected (last 3.7%).
    • India's May WPI Inflation 0.39% yr/yr (expected 0.80%; last 0.85%). May trade deficit $21.88 bln (last deficit of $26.42 bln).
  • In news:
    • An official from China's National Bureau of Statistics said that the country's economy continues facing many uncertain factors.
    • Taiwan added Huawei and SMIC to its export control list.
    • Japan's Prime Minister Ishiba is expected to meet with President Trump during the G7 meeting in Canada.
    • Japan's Prime Minister Ishiba reportedly wants to spend JPY3.5 trln on cash handouts to low earners.
    • The Bank of Japan will announce its latest policy decision overnight, but a rate hike is not expected.
• Major European indices trade in the green. Germany's DAX +0.4%, U.K.'s FTSE +0.5%, France's CAC +0.7%.
  • In economic data:
    • Eurozone's Q1 Labor Cost Index 3.4% yr/yr (expected 3.2%: last 3.8%).
    • Italy's May CPI -0.1% m/m (expected 0.0%; last 0.1%); 1.6% yr/yr (expected 1.7%; last 1.9%).
    • Swiss May PPI -0.5% m/m (expected 0.1%; last 0.1%); -0.7% yr/yr (last -0.5%).
  • In news:
    • Renault's CEO will step down next month to take over French luxury retailer Kering.
    • European Central Bank policymaker de Guindos said that the risk of undershooting the inflation target is very limited while policymaker Nagel said that the central bank should not signal its next move due to exceptional uncertainty.
    • Standard & Poor's affirmed Germany's and Sweden's AAA ratings with a Stable outlook.