Stock Market Update

The stock market is on track for a higher opening with S&P 500 futures trading 25 points above fair value.

The market looks to expand on Friday's gains which saw the S&P 500 eclipse and close at new all-time high levels. The Washington Post reports that the Senate is set to vote on the large reconciliation bill today, but there is still some inter-party disagreement on the bill, so immediate passage is not yet certain.

Additionally, Canada has rescinded the Digital Services Tax in hopes of resuming trade negotiations with the U.S.

The Federal Reserve announced that all 22 banks that were subject to its stress test passed the exercise. This is likely to result in some early strength in the financials sector.

Today's economic data will be limited to the 9:45 ET release of the Chicago PMI for June (Briefing.com consensus 43.4; prior 40.5).

Treasuries hold modest gains with the 10-yr yield down three basis points at 4.25%.

In U.S. corporate news:

• Juniper Networks (JNPR 39.92, +3.10, +8.4%): company and HP Enterprise (HPE 20.74, +2.33, +12.7%) reached a settlement with the Department of Justice.
• Meta Platforms (META 747.85, +14.22, +1.9%): Canada rescinded its Digital Services Tax.
• Fortive (FTV 53.45, -0.49, -0.9%): completed the separation of Ralliant Corporation and appointed a new CEO/Director.

Reviewing overnight developments:

• Asian markets ended on a mostly higher note. Japan's Nikkei +0.8%, Hong Kong's Hang Seng -0.9%, China's Shanghai Composite +0.6%
  • In economic data:
    • China's June Manufacturing PMI 49.7 (expected 49.6; last 49.5) and Non-Manufacturing PMI 50.5 (expected 50.3; last 50.3)
    • Japan's May Housing Starts -34.4% yr/yr (expected -15.0%; last -26.6%) and Construction Orders 14.0% yr/yr (last 52.7%)
    • South Korea's May Industrial Production -2.9% m/m (expected -0.1%; last -0.6%); 0.2% yr/yr (expected 2.6%; last 5.1%). May Retail Sales 0.0% m/m (expected- 0.1%; last -0.9%)
    • India's May Industrial Production 1.2% yr/yr (expected 2.4%; last 2.7%) and May Manufacturing Output 2.6% m/m (last 3.4%)
    • Australia's June MI Inflation Gauge 0.1% m/m (last -0.4%). May Private Sector Credit 0.5% m/m (expected 0.7%; last 0.7%) and May Housing Credit 0.5% m/m (last 0.5%)
    • New Zealand's June ANZ Business Confidence 46.3 (last 36.6)
  • In news:
    • The People's Bank of China will reportedly signal reduced urgency to cut the reserve requirement ratio
    • Nikkei reported that President Trump is determined to maintain the 25% tariff on auto imports from Japan
    • South Korea's President Lee is expected to visit the U.S. in late July
• Major European indices trade little changed. Germany's DAX -0.1%, U.K.'s FTSE -0.1%, France's CAC UNCH
  • In economic data:
    • Eurozone's May Import Price Index -0.7% m/m (expected -0.3%; last -1.7%); -1.1% yr/yr (expected -0.8%; last -0.4%). May Retail Sales -1.6% m/m (expected 0.5%; last -0.6%); 1.6% yr/yr (expected 3.3%; last 4.6%)
    • U.K.'s Q1 GDP 0.7% qtr/qtr, as expected (last 0.1%); 1.3% yr/yr, as expected (last 1.5%). Q1 Business Investment 3.9% qtr/qtr (expected 5.9%; last -1.9%); 6.1% yr/yr (expected 8.1%; last 1.8%). Q1 Current Account deficit GBP23.5 bln (expected deficit of GBP19.7 bln; last deficit of GBP21.0 bln). May Mortgage Lending GBP2.05 bln (expected GBP2.50 bln; last -GBP780 mln)
    • Italy's Q1 Public Deficit 8.5% (last -0.3%). June CPI 0.2% m/m (expected 0.1%; last -0.1%); 1.7% yr/yr, as expected (last 1.6%). Non-EU trade surplus EUR5.26 bln (last surplus of EUR2.32 bln)
    • Spain's April Current Account surplus EUR1.36 bln (last surplus of EUR1.42 bln)
    • Swiss June KOF Leading Indicators 96.1 (expected 99.3; last 98.6)
  • In news:
    • FT reported that major European ports are experiencing highest congestion since the coronavirus pandemic due to low river levels and the impact of tariffs.
    • There is some ongoing hope for an EU-U.S. trade deal to be reached by July 9.
    • European Central Bank policymaker de Guindos said that growth in Q2 and Q3 is expected to be almost flat due to weak consumption.