Morning Wrap: ASX 200 to fall, S&P 500 snaps nine-day winning streak, Copper and gold prices dip

In a nutshell:

• US benchmarks snapped a historic run, with the S&P 500 closing its first down day in nine sessions as oil and Treasury yields rose on renewed Iran-US strikes.

• Trump flagged a deal could come "fairly quickly" even as the Iran blockade risks dragging past Labor Day, after a sharp escalation in the Gulf, including Iranian missile and drone strikes on Kuwait and Bahrain, US strikes on a ground control station on Qeshm Island and the disabling of an Iran-bound oil tanker

• Broadcom delivered a blowout Q3 AI guide ($16bn, over 200% growth) but shares slid ~12% after hours

Let's dive in.

• Major US benchmarks finished lower and near session lows, with the S&P 500 snapping a nine-day win streak as oil and yields climbed on Iran fears

• Commodities traded sharply lower, notably palladium (-5.3%), silver (-3.1%), copper (-2.9%) and gold (-1.1%) 

• Bitcoin down a further 1.7% to ~US$65,500, now down 11% in the last three sessions

• No major catalyst behind the defensive tilt, oil continues to grind higher on US-Iran escalation and growing skepticism about a near-term deal, yields higher (but still ~10-20 bps off recent highs), massive equity supply from Alphabet raise and upcoming SpaceX IPO raising concerns and private credit under renewed scrutiny amind latest redemption headlines     

• S&P 500 rallied nearly 20% in nine weeks before Wednesday, an historic surge that made even the most bullish investors blush (CNBC) 

• Goldman Sachs CEO Solomon sees more greed than fear in markets, ample liquidity available to support blockbuster IPOs (CNBC)

• Vanguard ETF that tracks S&P 500 becomes first to reach $1T in assets (FT)

• Trump says a deal could be struck "fairly quickly" while conceding the blockade of Iran could stretch past Labor Day (NYP)

• Iran fired missiles and drones at Kuwait and Bahrain, with drones striking the passenger terminal at Kuwait International Airport, killing one person, after the US struck a target on Qeshm Island (BBG)

• US military said it launched strikes on an Iranian military ground control station on Qeshm Island in the Strait of Hormuz in response to the attacks on Bahrain and Kuwait (NPR)

• US forces disabled an oil tanker bound for Iran's Kharg Island by firing a Hellfire missile at the ship's engine room, escalating the Gulf flare-up (CM)

• Broadcom Q2 FY26: revenue up 48% to $22.19bn, modestly ahead of ~$22.0bn ests, AI semiconductor revenue up 143% to $10.8bn, shares down ~12% after hours(IL)

• Broadcom guided Q3 revenue up 84% to $29.4bn, with AI semiconductor revenue expected to grow over 200% year-over-year to $16.0bn, well above bullish whisper numbers (SEC)

• CrowdStrike fell ~9% after hours despite a slight beat, after raising FY27 net new ARR growth guidance by 5.2% at the midpoint and announcing a new 4-for-1 stock split (TS)

• Alphabet upsized its equity capital raise to $84.75bn from $80bn to fund AI compute, including a $10bn private placement from Berkshire Hathaway (RT)

• Palo Alto Networks guides earnings above forecasts, AI threats driving demand for cybersecurity, shares down 5.6% (CNBC)

• Tesla's China-made EV sales up 40% in May, signaling recovery in the domestic market (CNBC )

• US proposed tariffs of at least 10% on imports from around 60 countries under a Section 301 forced-labour probe, with higher 12.5% levies targeting China, India, Japan and others (BBG)

• Trump signed a proclamation on June 1 further modifying Section 232 tariff regimes on aluminum, steel and copper, with changes taking effect June 8 and running through December 31, 2027 (GHY)

• Markets continue to price the Fed on hold, with bond markets assessing a 77% probability the benchmark rate will be unchanged in December, in a range of 3.5% to 3.75%, as the oil shock revives inflation concerns (YF)

• Australian Q1 GDP rose 0.3% quarter-on-quarter and 2.5% year-on-year, both softer than expectations of 0.5% and 2.7%, as sticky inflation and higher fuel costs weighed on spending (BBG)

• Australian exports fell 1.1%, the largest quarterly decline in two years, with net trade detracting 0.8 percentage points from GDP growth (ABS)

• US ADP private payrolls rose 122,000 in May, with annual pay up 4.4% year-over-year, ahead of the 116,000 forecast (PRN)

• US ISM Services PMI increased to 54.5 in May from 53.6, above forecasts of 53.8, the strongest gain in three months, while the prices index hit its highest since August 2022 (BBG)

• China's services PMI rose to 54.4 in May from 52.6, the fastest expansion in three months, with new orders growing for a 41st straight month (BBG)

• Japan PM Takaichi finalises $19bn extra budget to cushion economy from Iran war impact (RT)

• GDI Property Group CEO Steph Burns offloads ~500k shares, beneficially owns 1.6m shares after the transaction (GDI)

• Magnetic Resources shareholders vote in favour of proposed acquisition by Genesis Minerals (MAU)

• Pro Medicus signs 5-year, $16m contract renewal with Ohio State University Wexner Medical Centre (PME)

• A heavy day for resources: A rather challenged overnight session for most commodity prices, most of which rallied pretty strongly in the previous session. Most of our overnight resource-related ETFs like Uranium, Rare Earths/Strategic Metals, Copper and Gold fell 3-5%. NYSE-listed BHP, Newmont and Alcoa shares fell 2.4%, 1.8% and 3.5% respectively.

• Software pullback: iShares Expanded Tech-Software fell 4.3%, now down 6.9% in the last two sessions. A bit of a pullback at play after a massive bounce (up 44% from 10-Apr low). The local tech index has held up relatively well, down just 0.7% on Wednesday, but US weakness could put a pullback in play.

• Thoughts on Energy: There's growing skepticism around a near-term framework agreement between the US and Iran, at a time where physical oil markets continue to tighten and countries continue to draw down on SPRs. Thinking out loud here: lower oil prices = still-solid demand = more inventories are down. The risk/reward for energy seems to be improving, given the recent back-and-forth.

• Capricorn Metals downgraded to Neutral from Buy; target cut to $16.90 from $17.60 (Goldman Sachs)

• Evolution Mining upgraded to Neutral from Sell; target lowered to $12.70 from $13.10 (Goldman Sachs)

• Superloop downgraded to Neutral from Outperform; target up to $3.70 from $3.50 (Macquarie)

Stocks trading ex-dividend: 

• Wed 3 Jun: Qualitas Real Estate Income Fund (QRI) – $0.011

• Thu 4 Jun: None

• Fri 5 Jun: None

Other ASX corporate actions today:       

• Dividends paid: None

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 11:30 am: Australia Balance of Trade

• 3:00 pm: RBA Gov Bullock Speech