MARKET WRAPS
Watch For:
Manufacturing PMI data for EU, U.K., Germany, France, Italy; U.K. Nationwide house price index, money and credit; no major corporate trading updates expected
Opening Call:
European stock futures were broadly lower early Monday on a negative lead from Asian equities amid tariffs concerns; the dollar weakened; Treasury yields were little changed; oil futures and gold advanced.
Equities:
Stock futures were broadly lower to kick off June after President Donald Trump on Friday announced plans to double tariffs on steel and aluminum up to 50%, starting Wednesday.
Concerns about how companies might manage tariff costs will keep investors glued to Friday’s U.S. monthly jobs report for May. “Everyone is waiting to see how this settles out,” said Brent Schutte, chief investment officer, Northwestern Mutual Wealth Management Company.
He sees something akin to a “yo-yo” economy playing out over a few months, given the zig-zag on tariffs and extreme front-loading of inventory by companies and consumers hoping to avoid the worst of them.
A similar theme could also play out in stocks. “We don’t know a lot more than we knew two months ago,” Schutte said.
The European Central Bank’s meeting will also be this week’s highlight. Markets are fully pricing in a 25-basis-point interest-rate cut to lower the deposit rate to 2%.
Forex:
The dollar weakened early Monday and may be weighed by President Trump’s announcement to double U.S. tariffs on imports of steel and aluminum to 50% from June 4.
“The USD is at the lower end of fair value, according to our metrics,” CBA’s Global Economic & Markets Research said. “The risk is U.S. trade policy changes pull the USD below the fair value range,” it added.
Bonds:
JPMorgan Chase CEO Jamie Dimon warned of a crack in the bond market at an economic forum on Friday.
“You are going to see a crack in the bond market,” Dimon said. “It is going to happen. And I tell this to my regulators, some of you who are in this room, I’m telling you it’s going to happen, and you’re going to panic.”
Government debt has been in focus after the U.S. lost its last perfect Aaa rating in May when Moody’s downgraded U.S. sovereign debt to AA+.
Energy:
Oil rose amid geopolitical tensions. Ukraine launched drone attacks on four military airports inside Russia, destroying more than 40 warplanes. The International Atomic Energy Agency said in a confidential report viewed by The Wall Street Journal that Iran has continued to produce highly enriched uranium over the past three months despite talks with Washington on a new nuclear deal.
“On geopolitics, risks continue to provide a bullish support to oil prices against an otherwise softening physical backdrop,” Citi Research’s strategist Francesco Martoccia said.
The gain in oil prices came despite OPEC+ agreeing over the weekend to sharply increase crude production for the third month in a row. OPEC+ will meet on July 6 to decide on its August production levels.
Metals:
Gold advanced after President Trump on Friday threatened to double tariffs on imports of steel and aluminum. The move could enhance the safe-haven appeal of the precious metal.
Gold’s outlook remains volatile, and future movements will mostly depend on the evolution of U.S. trade policy and signals from the Fed, said Antonio Di Giacomo, financial markets analyst for LATAM at XS.com.
—
Copper gained amid signs of stronger China demand. China faces another summer of extreme heat that may put its electricity network under immense pressure and could have important implications for the commodity markets, ANZ Research commodity strategists said.
The higher-than-normal temperatures were driving more sales of air conditioning units, an important driver of copper demand. Strong electricity demand was also boosting investment in grid infrastructure, which accounts for a third of China’s total copper consumption, ANZ added.
TODAY’S TOP HEADLINES
Fed’s Waller Highlights a Path to 2025 Rate Cuts
A short-lived bump in tariff-driven inflation could pass quickly enough to allow U.S. interest-rate cuts later this year, especially if tariffs themselves ease, Federal Reserve governor Christopher Waller said.
New trade barriers are likely to push up prices in the short term, Waller said in a speech at a conference in Seoul, South Korea, on Monday morning local time. But the inflation probably won’t stick around as stubbornly as it did in the early 2020s, in part because labor-market tightness and government stimulus are no longer pushing the economy to its limits, Waller said.
Why the U.S. Economy Will Muddle Through Trump’s Tariffs. Probably.
Economic data is finally coming in better than expected-but under the surface a puzzle remains, and how it works out matters hugely to investors.
“Soft” survey data is still weakening, and we’re getting good surprises only because expectations have plummeted. Meanwhile, the hard data on spending has been fine.
Oil prices jump despite OPEC+ announcing another sharp production hike
The largest group of oil-producing nations agreed over the weekend to sharply increase crude production for the third month in a row, a move intended to reassert control over the market by driving oil prices lower.
OPEC+ – the Organization of the Petroleum Exporting Countries and its allies – announced Saturday that it will increase production by 411,000 barrels a day in July, following similar hikes in May and June, in a move to punish countries that are over-producing oil, such as Iraq and Kazakhstan, and for oil-producing nations like Saudi Arabia to win back market share from U.S. shale drillers.
Poland Presidential Exit Polls Show Conservative Historian in Lead
WARSAW-Exit polls in Poland’s presidential election predicted a slim victory for a conservative historian who had been given a nod of support by President Trump and is a backer of the former ruling Law and Justice party, in results that were too close to call Sunday evening.
In an election that drew the highest voter turnout in a presidential election since Poles cast off Communism in 1989, an exit poll indicated that Karol Nawrocki, 42 years old, would likely win by 3 percentage points, but didn’t indicate the tally of expected votes.
Chinese EV Makers Pull Away From Tesla With Sales Gains
Chinese electric vehicle makers posted another strong month of growth in May as Tesla sales continue to flag. Investors, however, haven’t been worried about Tesla’s car sales lately.
Several Chinese carmakers report monthly sales on the first day of a new month. For May, Li Auto delivered 40,856 vehicles, up 17% from a year ago. XPeng delivered 33,525 vehicles in May, up 230% from last year. NIO delivered 23,231 vehicles in May, up 13%.
Trump Administration Targets Tech Firms as It Cuts More Contracts
The government’s monthslong quest to wring savings from federal contractors is widening beyond consulting firms and entering a new phase focused on tech companies.
The Trump administration is moving its spending review beyond consulting firms, such as Accenture and Deloitte, to now scrutinize contracts at a collection of companies providing sometimes obscure technology services to federal agencies.
Write to [email protected]
Expected Major Events for Monday
04:30/NED: Apr Retail turnover
05:00/NED: May Netherlands Manufacturing PMI
06:00/NOR: 1Q Credit Indicator C3
06:00/UK: May Nationwide House Price Index
06:30/SWI: Apr Retail Sales
07:00/SWI: 1Q GDP
07:00/TUR: May Turkey Manufacturing PMI
07:00/POL: May Poland Manufacturing PMI
07:15/SPN: May Spain Manufacturing PMI
07:30/CZE: May Czech Republic Manufacturing PMI
07:30/SWI: May procure.ch Purchasing Managers’ Index
07:45/ITA: May Italy Manufacturing PMI
07:50/FRA: May France Manufacturing PMI
07:55/GER: May Germany Manufacturing PMI
08:00/POL: 1Q GDP
08:00/GRE: May Greece Manufacturing PMI
08:00/EU: May Eurozone Manufacturing PMI
08:30/UK: Apr Money and Credit – Lending to Individuals, Lending to Businesses, Broad Money and Credit
08:30/UK: Apr Bank of England effective interest rates
08:30/UK: Apr Monetary & Financial Statistics
08:30/UK: May S&P Global UK Manufacturing PMI
08:30/UK: 1Q Household Finance Review
09:00/CYP: 1Q GDP
09:00/CYP: Apr Retail trade
10:00/POR: Apr Retail trade
10:00/POR: Apr Industrial production index
15:59/UKR: Apr Industrial Production
16:59/AUT: May Unemployment figures
All times in GMT. Powered by Onclusive and Dow Jones.
Write to us at [email protected]
We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
06-02-25 0015ET
