Stock Market Update

The S&P 500 futures currently trade 32 points below fair value. 

Equity indices in the Asia-Pacific region were mostly lower, pressured once again by the extreme volatility of South Korea's Kospi (-6.4%) that cut risk appetite. That move occurred alongside the Bank of Korea's first rate hike in 3 1/2 years (+25 bps to 2.75%, as expected) and the Financial Services Commission's proclamation that it is meeting emergently to discuss the volatility and will soon have an announcement with respect to single, leveraged ETFs. The Kospi's weakness was paced by an 11% drop in SK Hynix that set a nervous tone for semiconductor stocks elsewhere. Taiwan Semi (TSM) posted better-than-expected Q2 results and Q3 guidance but is still down more than 4.0% ahead of the U.S. open. Japan's Nikkei (-2.8%) was another notable loser despite several key product announcements between NVIDIA (NVDA) and Japanese companies. Higher JGB yields pressured the Nikkei, yet the country's finance minister aimed to stem the rise with a claim that efforts will be made to improve the attractiveness of JGBs for individuals. Separately, China's AI Conference begins Friday with a keynote address from President Xi.

• In economic data:
  • Australia's July MI Inflation Expectations 4.7% (prior 5.5%)

---Equity Markets---

• Japan's Nikkei: -2.8%
• Hong Kong's Hang Seng: +1.3%
• China's Shanghai Composite: -1.9%
• India's Sensex: flat
• South Korea's Kospi: -6.4%
• Australia's ASX All Ordinaries: flat

Major European indices are modestly lower with risk sentiment being held in check by rising bond yields, ongoing geopolitical tension, and the high volatility of the semiconductor stocks that had a downside bias in Asian trading. The UK released a large batch of economic data, including Q2 GDP that slightly exceeded the month-over-month expectation and industrial production for May that was weaker than expected. The corporate news flow is relatively light, as macro conditions have been a focal point; however, Uber's (UBER) $14.8 billion cash acquisition of Delivery Hero is drawing some special attention. Separately, reports indicate the ECB is expected to sit tight with its policy rate settings at next week's meeting.

• In economic data:
  • Eurozone's May Trade Balance EUR -7.8 bln (EUR2.8 bln expected; prior EUR -1.2 bln)
  • UK's May GDP 0.1% m/m (0.0% expected; prior -0.1%) and 1.3% yr/yr (1.4% expected; prior 1.1%); May Trade Balance GBP -18.66 bln (GBP -23.10 bln expected; prior GBP -24.58 bln); May Industrial Production -0.5% m/m (-0.1% expected; prior 0.2%); May Construction Output -0.8% m/m (-0.3% expected; prior -0.1%)
  • Italy's June CPI 0.0% m/m (0.0% expected; prior 0.4%) and 3.0% yr/yr (3.0% expected; prior 3.2%)

---Equity Markets---

• STOXX Europe 600: -0.7%
• Germany's DAX: -1.1%
• U.K.'s FTSE 100: -0.6%
• France's CAC 40: -1.0%
• Italy's FTSE MIB: -0.9%
• Spain's IBEX 35: -0.8%