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Good evening,
Risk assets rebounded and oil fell at the start of the week amid hopes that new Middle East conflict will be contained following reports that Tehran was ready to negotiate. According to Trump, Iran is losing the war, is willing to talk and would be foolish not to sign a deal, while Israel said the attacks will continue until it considers the threat is eliminated. Tel Aviv issued an evacuation order for Iran’s capital before striking the state TV building.
US stock indices rallied between 1 and 1.5% with the tech sectors, IT and Communications leading the board while energy and utilities ended marginally weaker. Crude oil reversed its conflict driven rally and finished 2% lower today, gold fell from its record high, the dollar ended muted and leading cryptos appreciated over 3%.
In single stocks, chip maker AMD rallied 9% after management presented a remarkably optimisitic outlook for the artificial intelligence processor market while unveiling a new powerful chip designed to challenge Nvidia’s dominance. The move helped other semiconductors stocks including ARM Holdings, Lam Research and Micron Technology. On the opposite side, defense names such as Lockheed Martin and Northrop Grumman were the weakest among large caps with a 4% drop. Meta gained 3% on Monday on the back of positive analysts’ coverage (Oppenheimer) and the announcement that it will begin to rollout advertising on WhatsApp, the messaging platform used by 3bn people worldwide.
Economic data: China’s retail sales in May expanded at the fastest pace since late 2023 and much better than estimates, +6.4% YoY, helped by government subsidies to promote consumption. Industrial production slowed to +5.8% YoY, mostly in line with expectations but was the slowest growth since last November.
Corporate deals: Australia’s second-largest oil and gas producer, Santos Limited (mcap $16bn) has received an improved takeover bid from a consortium led by Adnoc (Abu Dhabi National Oil Co) of the UAE for $18.7bn in cash. Shares rallied 11% and are 16% higher this year.
Also in the energy sector, Japanese conglomerate Mitsubishi Corp (mcap $77bn) is negotiating to purchase the US shale production and pipeline assets of privately-owned Aethon Energy Management for ~$8bn.
In IPOs, crypto company Tron, plans to go public in the US via reverse merger with Nasdaq-listed toy company SRM Entertainment (SRM), which currently has a market cap of $140mn and will be renamed Tron. SRM shares skyrocketed 530% today. The crypto currency TRX was launched in 2017, ranks top seven among the largest non-stable coin with a total market value of $26bn.
Week’s calendar: tomorrow we’ll learn from the Bank of Japan (unch at 0.5% exp) and retail sales in the US. On Wednesday, the Fed meets (unch at 4.25-4.50% exp, 12% cut implied by futures for the late July meeting) and inflation in the UK. On Thursday, the Bank of England holds its policy meeting (unch at 4.25% exp) as well as the Swiss National Bank (-25bp to 0.0% exp), and it’s a holiday in the US (stocks and bonds). On Friday, Japan releases the latest inflation data.
See you tomorrow.
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