Morning Wrap: ASX 200 futures flat, S&P 500 and Nasdaq notch fresh record high

In a nutshell:

• S&P 500 and Nasdaq hit record closes, though Dow lagged (-0.23%) as sectors like Healthcare, Staples and Energy underperformed

• Micron surged 19% to crack the US$1 trillion market cap club after UBS nearly tripled its price target to $1,625

• 10-year Treasury yield fell 6 bps to 4.49%, Trump says US-Iran deal isn't fully negotiated while US fired "self-defence" strikes against Iran

Let's dive in.

• Major US benchmarks mostly higher, closed near best levels with the S&P 500 and Nasdaq at fresh all-time highs

• Russell 2000 topped 2,900 for the first time ever, with small caps outperforming on the prospect of easing inflation pressures and lower rates

• Equal-weight S&P 500 (+0.51%) also closed at record levels despite softness from Energy and some value-oriented pockets of the market

• US 10-year yield fell 7 bps to 4.49%, now down 17 bps in the last four sessions as concerns over a flare-up in inflation eased and traders pared bets on near-term Fed hikes

• A semis/memory led session, with Micron (+19.2%) surging after UBS tripled its price target, along with gains from high-beta, small caps and retail-investor favourites

• Wall Street saw "changing of the guard in AI" with chipmakers leading, as software and broader tech rallied on memory and AI infrastructure demand (BBG)

• Bessent facing what may become his biggest market test yet, with limited options to halt the steady climb in benchmark Treasury yields (BBG)

• Gap between S&P 500's earnings yield and 10-year yield shrinks to almost zero, underlining equity market valuation concerns (WSJ)

• JPMorgan says market overpricing rate hike risk, sees opportunity in low-volatility plays like staples and utilities (BBG)

• Treasury 5-30 year yield spread narrows to slimmest since May 2025 as markets price in hawkish Fed (BBG)

• Taiwan's stock market now fifth largest in world after overtaking India, driven largely by TSMC (BBG)

• IRGC said it "downed" a US MQ-9 Reaper drone that entered its airspace as tensions rose during peace negotiations (AJ)

• US Central Command conducted "self-defence" strikes on missile launch sites and mine-laying vessels in southern Iran, with Iran's Foreign Ministry accusing Washington of a "flagrant violation" of the April 8 ceasefire (BBG)

• Israel intensified attacks in southern Lebanon against Iran-backed Hezbollah, with strikes reported in al-Hosh near the coastal city of Tyre, complicating peace prospects (BBG)

• US and Iran continue discussing a framework that would extend the ceasefire for ~60 days, with Washington lifting its naval blockade in exchange for Iran reopening the Strait of Hormuz (CNN)

• A cargo of crude oil from the US Strategic Petroleum Reserve is heading to the Philippines, the first shipment of US emergency reserve oil to Asia since November 2022, ship tracking data showed (BBG)

• Micron surged 19% to cross US$1 trillion market cap for the first time after UBS nearly tripled its price target to $1,625 from $535, citing AI memory demand and long-term agreements (CNBC)

• Eli Lilly acquiring three vaccine developers (Curevo for $1.5bn, Vaccine Company for $1.55bn, LimmaTech Biologics for up to $780m) for nearly $4bn combined, expanding into infectious disease prevention (RT)

• Ferrari shares slide after it unveils its first all-electric car, the Luce, designed with Jony Ive (CNBC)

• Quad foreign ministers (US, Australia, India, Japan) met in New Delhi to discuss the Iran conflict and threats to energy shipments through the Strait of Hormuz, with Australia's Penny Wong rejecting Iran's plan to charge tolls on transiting ships (FN)

• ECB's Schnabel signals June rate hike needed despite possible Iran ceasefire (RT)

• ECB's Villeroy says no signs spike in energy costs has created second-round effects (BBG)

• BoJ Himino says central bank will consider timing and pace of rate hikes, noting the baseline scenario "could change sharply" (RT)

• UK shop price inflation rises to 1.2% in May due to supply disruptions and higher energy costs (RT)

• Japan's core inflation exceeds 2% in April, strengthening the case for potential BOJ interest rate hike (RT)

• Experience Co notes Q3 EBITDA down 3% to $5.1m, flags “challenging operating environment” including significant weather events in Queensland and NZ, inflationary pressures on cost base and declining consumer sentiment, April Skydive Australia volumes down 17% on pcp (EXP)

• Nufarm reports 1H26 underlying EBITDA of $243m vs. $239-244m guidance, reaffirms FY26 guidance (NUF)

• Peninsula Energy holding Washington H Soul Pattinson discloses 7.54% stake (PEN)

• Web Travel Group reports FY26 revenue up 20% to $394m, underlying NPAT of $85.9m vs. $85.7m ests, first 8 weeks of FY27 bookings up 6%, Americas and Europe continued to deliver growth but conflict continues to have a material impact on MEA and APAC regions (WEB)

• Westpac ordered to pay $26m in civil penalties for failing to respond to consumers who were facing financial hardship (WBC)

• Not a whole lot: The US market was closed on Monday, so a fair bit for the overnight session to digest. Overnight ETF watchlist massively positive as things were mostly a net positive over the last two sessions (e.g. copper prices rallied 1.4% on Monday, down 0.7% on Tuesday but Global X Copper Miners ETF still rallied 4.99%). The ASX is taking the lead today, which likely explains why futures are sitting flat.

• Fisher & Paykel upgraded to Positive from Neutral; target up to $36.01 from $31.95 (E&P)

• Goodman Group initiated Positive with $36.50 target (E&P)

Stocks trading ex-dividend: 

• Wed 27 May: Amcor (AMC) – $0.91, Morphic Ethical Equities Fund (MEC) – $0.01, Webjet Group (WJL) – $0.02

• Thu 28 May: 360 Capital Mortgage REIT (TCF) – $0.05, Technology One (TNE) – $0.08

• Fri 29 May: Metrics Income Opportunities Trust (MOT) – $0.012, Metrics Master Income Trust (MXT) – $0.015, Pengana International Equities (PIA) – $0.014
  

Other ASX corporate actions today: 

• Dividends paid: Bank of Queensland (BOQ)

• Earnings: Champion Iron (CIA), Nufarm (NUF), Web Travel Group (WEB)

• IPOs: None

• AGMs: Eagers Automotive (APE)

Economic calendar (AEST):

• 10:30 pm: US Core PCE Price Index

• 10:30 pm: US Durable Goods Orders

• 10:30 pm: US Q2 GDP