Stock Market Update

The stock market is on course for a lower start with futures on the S&P 500 trading 29 points below fair value.

Investor sentiment has faced some pressure this morning after President Trump left the G7 summit early and called on residents of Tehran to evacuate the city, leading to renewed concerns that the U.S. could get involved in the Israel-Iran conflict.

Crude oil has rallied in response, climbing back above $73/bbl, while Treasury futures have advanced, sending the 10-yr yield lower by four basis points to 4.41%.

In U.S. corporate news:

• Lennar (LEN 112.00, +2.51, +2.3%): missed Q2 EPS expectations on above-consensus revenue.
• First Solar (FSLR 151.70, -23.55, -13.4%): Senate tax committee proposed full phase-out of solar and wind energy tax credits, according to Reuters.
• Eli Lilly (LLY 801.15, -6.43, -0.8%): agreed to acquire Verve Therapeutics (VERV 11.00, +4.73, +75.4%) for approximately $1 billion.
• Microsoft (MSFT 474.75, -4.39, -0.9%): tensions with OpenAI are reaching a boiling point, according to The Wall Street Journal.

Reviewing overnight developments:

• Asian markets ended mixed. Japan's Nikkei +0.6%, Hong Kong's Hang Seng -0.3%, China's Shanghai Composite UNCH.
  • In economic data:
    • South Korea's May Import Price Index -5.0% yr/yr (last -2.6%) and Export Price Index -2.4% yr/yr (last 0.4%)
    • Hong Kong's May Unemployment Rate 3.5% (last 3.4%)
    • Singapore's May trade surplus SGD7.24 bln (last surplus of SGD14.22 bln). May non-oil exports -12.0% m/m (last 10.4%); -3.5% yr/yr (expected 8.0%; last12.4%)
    • New Zealand's May FPI 0.5% m/m (last 0.8%)
  • In news:
    • The Bank of Japan left its policy rate at 0.50%, as expected, and voted to slow JGB purchases by JPY200 bln per quarter, starting April 2026.
    • BNP Paribas speculated that the People's Bank of China could announce its next rate cut in August.
• Major European indices trade in the red. Germany's DAX -0.8%, U.K.'s FTSE -0.3%, France's CAC -0.6%.
  • In economic data:
    • Eurozone's June ZEW Economic Sentiment 35.3 (expected 23.5; last 11.6)
    • Germany's June ZEW Economic Sentiment 47.5 (expected 34.8; last 25.2) and ZEW Current Conditions -72.0 (expected -74.0; last -82.0)
  • In news:
    • European Commission President von der Leyen said at the G7 summit that EU countries should have a unified approach to challenging China's trade practices.
    • The U.S.-U.K. trade deal has been signed, lowering the U.K.'s average tariff on U.S. imports to 1.8% from 5.1%.