Stock Market Update

Equity futures point to a lower opening this morning after stocks rallied in yesterday's session to snap the S&P 500's three-day losing streak. There was a strong rebound across semiconductor and mega-cap names, while retreating oil prices and Treasury yields provided support for the broader market.

Oil and yields are both moving higher this morning, which is somewhat attributed to a Reuters report that Iran's Supreme Leader said enriched uranium must stay in Iran. President Trump said yesterday that the U.S. and Iran were on the precipice of a breakthrough, but reports suggest the two sides remain far apart on key issues.

On the earnings front, NVIDIA (NVDA 223.88, +0.41, +0.2%) delivered another beat-and-raise earnings report, but lofty expectations coming into the print leave the stock flattish.

This morning is slightly busier on the data front, with the market set to receive April Housing Starts (Briefing.com consensus 1420K) and Building Permits (1380K) data in addition to weekly initial jobless claims (Briefing.com consensus 210K).

In corporate news:

• The Trump administration will award $2 billion in grants to quantum computing companies and take equity stakes, according to The Wall Street Journal.
• IBM (IBM 239.71, +14.71, +6.5%) and the U.S. Department of Commerce confirm America's first purpose-built quantum foundry, supported by a proposed $1 billion CHIPS award.
• NVIDIA (NVDA 223.88, +0.41, +0.2%) beat EPS expectations by $0.12, beat revenue expectations, guided Q2 revenues above consensus, increased its share repurchase authorizations by $80 billion, and increased its dividend.
• Walmart (WMT 127.30, -3.55, -2.7%) reported EPS in-line, beat revenue expectations, guided Q2 EPS below consensus, and reaffirmed FY27 EPS guidance.

Reviewing overnight developments:

Equity indices in the Asia-Pacific region had a mixed showing on Thursday with South Korea's Kospi (+8.4%) rebounding strongly after a last-minute labor agreement at Samsung Electronics averted a labor strike. Japan's Nikkei: +3.1%, Hong Kong's Hang Seng: -1.0%, China's Shanghai Composite: -2.0%, India's Sensex: -0.2%, South Korea's Kospi: +8.4%, Australia's ASX All Ordinaries: +1.4%.

In news:

• Softbank soared nearly 20% in Japan after it was reported that OpenAI will file for an IPO.
• Japan's extra budget is expected to reach JPY3 trillion, but Prime Minister Takaichi has not confirmed that amount yet.
• Australia lost jobs in April, leading the market to push out its forecast for the next rate hike from the Reserve Bank of Australia to August from June.
• Bank Indonesia raised its policy rate by 50 basis points to 5.25% against expectations for a smaller increase.

In economic data:

• Japan's flash May Manufacturing PMI 54.5, as expected (last 55.1) and flash Services PMI 50.0 (last 51.0). April trade surplus JPY240 bln (expected deficit of JPY230 bln; last surplus of JPY90 bln). April Imports 9.7% yr/yr (expected 8.3%; last 10.9%) and Exports 14.8% yr/yr (expected 9.3%; last 11.5%). March Core Machinery Orders -9.4% m/m (expected -7.7%; last 13.6%); 5.9% yr/yr (expected 4.5%; last 24.7%)
• South Korea's April PPI 2.5% m/m (last 1.7%); 6.9% yr/yr (last 4.1%)
• Hong Kong's April CPI -0.1% m/m (last 0.0%); 1.7% yr/yr (last 1.7%)
• Australia's flash May Manufacturing PMI 50.2 (last 51.3) and flash Services PMI 47.7 (last 50.7). April Employment Change -18,600 (expected 16,700; last 23,300) and full Employment Change -10,700 (last 63,400). April Unemployment Rate 4.5% (expected 4.3%; last 4.3%) and April Participation Rate 66.7% (expected 66.8%; last 66.8%). April Credit Card Spending 2.9% yr/yr (last 2.1%)
• New Zealand's April trade surplus NZD1.92 bln (expected NZD980 mln; last NZD430 mln)
• India's flash May Manufacturing PMI 54.3 (last 54.7) and flash Services PMI 58.9 (last 58.8)

Major European indices trade in the red. STOXX Europe 600: -0.3%, Germany's DAX: -0.7%, U.K.'s FTSE 100: -0.3%, France's CAC 40: -0.6%, Italy's FTSE MIB: -0.4%, Spain's IBEX 35: -0.3%.

In news:

• Flash May PMI readings from the region showed notable weakening with Germany's Manufacturing PMI (49.9), France's Manufacturing PMI (48.9), and U.K.'s Services PMI (47.9) coming in below 50.0, reflecting a contraction. The weak readings are fueling speculation about a potential contraction for Q2.
• European Central Bank policymaker Rehn said that a rate hike may be needed to preserve credibility.

In economic data:

• Eurozone's flash May Manufacturing PMI 51.4 (expected 51.7; last 52.2) and flash Services PMI 46.4 (expected 47.8; last 47.6). March Current Account surplus EUR14.9 bln (expected EUR26.3 bln; last EUR25.6 bln). Q1 Labor Cost Index 3.3% yr/yr (last 3.3%) and March Construction Output 0.78% m/m (last -0.77%)
• Germany's flash May Manufacturing PMI 49.9 (expected 51.0; last 51.4) and flash Services PMI 47.8 (expected 47.1; last 46.9)
• U.K.'s flash May Manufacturing PMI 53.7 (expected 52.9; last 53.7) and flash Services PMI 47.9 (expected 51.7; last 52.7)
• France's flash May Manufacturing PMI 48.9 (expected 52.1; last 52.8) and flash Services PMI 42.9 (expected 46.6; last 46.5)
• Swiss Q1 Industrial Production -7.1% yr/yr (expected 0.5%; last -0.4%)