Morning Wrap: ASX 200 futures flat, Wall Street ends mixed on soft payrolls and services data

ASX 200 futures are down 1pt (-0.01%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished mixed as soft payrolls and services data weighed on sentiment

• US services PMI dipped into contract territory for the first time in a year, driven by a sharp decline in new orders

• Lithium stocks attempt to set a bottom, with solid gains from Pilbara Minerals on Wednesday and further gains for global peers overnight

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, closed near worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks mixed and finished around session lows amid choppy trade

• Today’s big story – Weak economic data, with US private payrolls much softer-than-expected and May ISM Services PMI unexpectedly falling into contraction territory, driving bond yields lower

• Markets pricing in two Fed rate cuts in 2025, but options traders increasing bets that hedge against dramatic shifts in rate outcomes (BBG)

• South Korea's Kospi Index rallies 2.7% after Lee Jae-myung's election win, entering a bull market with a gain of over 20% from its April low (BBG)

• Oil prices under pressure after Saudi Arabia wants OPEC+ to accelerate oil supply hikes to regain lost market share (BBG)

STOCKS

• AI-driven search ad spending set to surge to $26bn by 2029, data shows (RT)

• Volvo worldwide sales of 59,822 cars in May, down 12% year-on-year (EN)

• Deloitte UK cuts the number of partner promotions by 25%, the latest sign of pressure on the Big Four (BI)

• Tesla's China-made EV sales fell 15% in May, while BYD's sales jumped 14.1% (RT)

• CrowdStrike shares tumble after revenue guidance below expectations flagging softer spending on cybersecurity (BBG)

• HP revenue beats estimates, tariffs to have milder impact on bottom line than initially expected (BBG)

• Meta has agreed to purchase electricity from an Illinois nuclear plant for 20 years, supporting its AI initiatives (FT)

• Toyota Industries shares fell over 12% after a disappointing $33B take-private offer (FT)

CENTRAL BANKS

• Bank of Canada holds rates steady at 2.75%, officials suggested a rate cut could be necessary if the economy weakens (BBG)

• Trump says 'Too Late' Powell must lower rates after weak jobs report (CNBC)

• Fed officials maintain cautious stance on rate outlook amid stagflation risks from tariffs (Reuters)

TARIFFS & GEOPOLITICS

• Trump says China President Xi "very tough and extremely hard to make deal with" in late night social media post (BBG)

• Trump's steel and aluminum tariff hike to take effect from 4-Jun (BBG)

• Lutnick says US will not give Vietnam reprieve on tariffs (BBG)

• Trump exempts UK from the new 50% tariff on steel and aluminum for five-weeks (BBG)

• US and China have differing views on rare earth agreements from recent trade talks, resulting in shortfall of supply to US (BBG)

• EU and US escalate trade tensions as Paris talks open amid 50% tariff threat (FT)

• Global automakers warn China's export restrictions on critical minerals may disrupt production (RT)

ECONOMY

• US May ADP private payrolls prints 37,000 vs. 130,000 consensus, pace of hiring reached lowest level since Mar-23 (YF)

• US May ISM Services PMI contracts for the first time in nearly a year, down to 49.9 vs. 52.2 consensus and 51.6 in April, lowest since Jun-24, new orders sub-index tumbled to 46.4 from 52.3 and lowest since Dec-22 (BBG)

• US auto sales slumped most in roughly five years in May after tariff fears pulled demand forward (Reuters)

• Eurozone Composite PMI prints 50.2 in April, economy close to stagnation (BBG)

• South Korea inflation falls to five-month low, reiterating BOK's dovish stance (RT)

• Australian GDP growth slows to 0.2% in the first quarter due to weak public demand and exports, bolsters case for further RBA rate cuts (BBG)

ASX TODAY

• Catapult Group acquires weight room technology solutions company Perch for $18m in cash and scrip, Perch ACV sits at ~$2.5m (CAT)

• COSOL says it expects higher sales activity in the second half vs. first half, guides to $118-121m revenue, expects further margin expansion, statutory EBITDA to be lower than previously expected due to timing of new contracts (COS)

• EU Commission selects 13 Strategic Projects to secure access to raw materials and support local value creation, list features three ASX-listed names including Rio Tinto, Evion Group and Sarytogan Graphite (EU)

• G8 Education completes on-market share buyback, with 38m shares purchase at an average price of $1.32 per share vs. current share price of $1.20 (GEM)

• Iperionx awarded Phase III Department of Defence contract for supply of titanium, components, contract value capped at $99m (IPX)

• Maas Group reaffirms FY25 underlying EBITDA of $215-245m, reaffirms guidance for FY25 assets to be sold in excess of $100m (MGH)

• New Zealand Commerce Commission moves to disrupt structures among supermarkets, including Woolworths, seeks to limit supplier charges, require compliance records and ensuring fair pricing practices (CC)

WHAT TO WATCH TODAY

• Hovering record levels: S&P/ASX 200 futures point towards a flat open after the market closed within 0.2% of its 14-Feb record high on Wednesday. Australian GDP data and overnight US data reiterate softening economic growth and tariff impacts, though offset by growing rate cut expectations and falling bond yields.

• Lithium: Lithium is looking to mark a bit of a bottom, with the Rare Earth/Strategic Metals ETF up 3.2% overnight to a two week high. Pilbara Minerals rallied 5.7% on Wednesday after trading as low as $1.07 this week.

BROKER MOVES

• Austal downgraded to Hold from Buy; target up to $5.60 from $4.45 (BP)

Stocks trading ex-dividend: 

• Thu 5 Jun: Hancock & Gore (HNG) – $0.01, Resimac (RMC) – $0.12

• Fri 6 Jun: None

Other ASX corporate actions today: 

• Dividends paid: None

• Earnings: None

• IPOs: Robex Resources (RXR) at 11:00 am

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Balance of Trade (Apr)

• 11:45 am: China Caixin Services PMI

• 10:15 pm: ECB Interest Rate Decision (Ests: 25 bp cut to 2.15%)