Morning Wrap: ASX 200 futures flat, S&P 500 logs best monthly gain since 2023

ASX 200 futures are up 8pts (+0.09%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished relatively flat overnight, but the S&P 500 and Nasdaq logged their best monthly gains in over a year

• Tariff talks are beginning to stall, with US and China ramping up restrictions

• Soul Patts is set to merge with Brickworks, Perenti wins another $1bn contract

Let's dive in.

S&P 500 SESSION CHART

Mid-session rally brings the S&P 500 back up to breakeven (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished mostly lower but off worst levels

• US weekly recap: Nasdaq (+2.01%), S&P 500 (+1.88%), Dow (+1.60%) and Russell 2000 (+1.30%)

• US monthly recap: Nasdaq (+9.56%), S&P 500 (+6.15%), Russell 2000 (+5.20%), Dow (+3.94%)

• S&P 500 and Nasdaq logged their best months since November 2023, largely driven by the de-escalation of tariffs between China and the US

• Last month’s standout performers include Nvidia (+24.1%) and Tesla (+22.8%) 

• Wall Street execs privately warning Trump that deficit concerns regarding reconciliation bill could rattle bond market (WP)

• Section 899 'revenge tax' won't impact Treasuries, but still represents another threat to broader US exceptionalism trade narrative (WSJ)

• There will eventually be a 'crack' in bond market over national debt, says JPMorgan CEO Dimon (FT)

• Correlation between US dollar and US Treasury yields has broken down as policy uncertainty dampens demand for US assets (FT)

• US dollar set for fifth monthly decline as trade and fiscal uncertainty rattle markets (RT)

• EU stocks log biggest monthly gain since January as trade optimism lifts pan-European Stoxx 600 (BBG)

• OPEC+ agrees to third straight monthly output increase by 411,000 barrels a day in July, marking a historic policy shift to drive prices lower (BBG)

STOCKS

• Dell upgrades profit guidance on soaring AI server demand, expects record revenue as backlog grows (RT)

• Costco tops Q3 earning estimates, absorbs tariff pressures to keep prices low and membership value high (WSJ)

• Zscaler shares jump on quarterly earnings beat, driven by AI and widespread adoption of its zero-trust security platform (CNBC)

• Gap's Q1 earnings beat overshadowed by tariff hit, shares plunge as trade war could cost between $100-300 million (CNBC)

• Ford says Michigan EV battery plant at risk, with 1,700 jobs "imperiled" if Congress cuts clean energy tax credits (BBG)

CENTRAL BANKS

• Dallas Fed Logan and San Francisco Daly say policy in good place, "can be patient" (BBG)

• ECB forecast to cut rates twice more in 2025 but faces communication challenge amid trade uncertainty and market expectations (BBG)

• RBA shifts focus from fighting inflation to addressing downside growth risks, money markets now pricing in three more rate cuts by year-end (BBG)

TARIFFS

• Talks between US and China are "a bit stalled," may need to be revived through call between Trump and China's Xi (FT)

• Both White House and Beijing have ramped up other restrictions, particularly export controls, since Geneva de-escalation (NYT)

• White House plans wider China tech restrictions to cover subsidiaries of companies under US curbs (BBG)

• Trump says he will double tariffs on imported steel and aluminum to 50%, says move will even further secure steel industry in the US (RT)

• EU slams Trump's doubling of steel tariffs, policymakers 'prepared to impose countermeasures' (CNBC)

• Canada's steel industry warns of 'catastrophic' job losses, factory slowdowns and supply chain complications following Trump's doubling of tariffs (FT)

• Trump says China has totally violated the tariff pause deal that was agreed to earlier this month (AX)

• Trump administration has other avenues to impose tariffs following court ruling, according to trade and legal experts (RT)

ECONOMY

• US April core PCE up 0.1% month-on-month and 2.5% year-on-year, both in-line with consensus, April personal spending slowed to 0.2% vs. 0.4% consensus, while goods imports plummeted by 20% due to tariffs (BBG)

• China manufacturing PMI up to 49.5 in May from 49.0 in April and in-line with consensus; Non-manufacturing PMI slips to 50.3 from 50.4, just below 50.5 consensus (BBG)

• Spanish inflation eased to 1.9% in May, below ECB's 2.0% target, strengthening case for rate cut next week (BBG)

• Tokyo core inflation up 3.6% in May, the highest in two years duet o surging food costs, BOJ likely to hike rates in the coming months (BBG)

• Australian retail sales unexpectedly fall 0.1% in April vs. expectations for a 0.3% increase, driven by a decline in clothing purchases (BBG)

ASX TODAY

• Cash Converters acquires 10 UK franchise stores for $15.7m, acquisition to be earnings accretive, funded by new debt facility (CCV)

• Coronado Global making substantial progress towards executing liquidity improvement plan, secured further extension in existing waver, Mammoth and Buchanan expansion projects are on track and budget (CRN)

• Perenti awarded $1.1bn underground contract with Endeavour Mining, contract term is 60 months from 1-Jun-25, capital requirements include in guidance (PRN)

• James Hardie announces successful syndication of new credit facilities to support planned acquisition of Azek, new senior secured facilities totaled $3.5bn, with broad support from 30 participating banks (JHX)

• Soul Patts set to merge with Brickworks, forming a $14bn behemoth, $500m capital raising launched (AFR)

• South Africa's Harmoney Gold has more acquisitions on its agenda, after agreeing to buy Cobar-based MAC Copper for $1.6bn last week (The Aus)

WHAT TO WATCH TODAY

• Not a whole lot: A pretty quiet start to June. Futures flat, not many corporate updates. IPO market showing some signs of revival with ~6 IPOs scheduled for Jun-Jul. Some tariff volatility with US-China talks stalling and US-EU escalation.

• Perenti: The $1.5bn market cap mining services company has signed $2.1bn worth of contracts for major gold miners in the past 10 days. Both contracts are 60 months in duration, with no new capital growth required.

BROKER MOVES

• Fisher & Paykel upgraded to Overweight from Equal-weight; target up to $35.90 from $34 (MS)

• Lotus Resources initiated Underweight with $0.13 target (JPM)

Stocks trading ex-dividend: 

• Mon 2 Jun: Pengana Global Private Credit Trust (PCX) – $0.012

• Tue 3 Jun: None

• Wed 4 Jun: None

• Thu 5 Jun: None

• Fri 6 Jun: None

Other ASX corporate actions today: 

• Dividends paid: None

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 11:30 am: ANZ-Indeed Job Ads (May)

• 12:00 am: US ISM Manufacturing PMI (May)