Morning Wrap: ASX 200 to fall, US markets closed but European stocks hit records, Gold nears US$4,200

In a nutshell:

• Wall Street was closed Friday for the Independence Day holiday, all US-related data in the Overnight Summary refers to last Thursday's session, while sector performance and ETF tables have been excluded

• European equities notched fresh record highs and a fourth straight weekly gain, while gold rallied back toward US$4,200

• OPEC+ approved another 188,000 barrels per day August output rise as Strait of Hormuz shipping recovers, and Iran held a state funeral for slain Supreme Leader Khamenei

Let's dive in.

• US equity markets closed Friday for the Independence Day holiday, leaving Thursday's record Dow close near 52,900 as the latest Wall Street read, with the S&P 500 flat and Nasdaq lower on chip weakness 

• European stocks closed at a record highs on Friday and booked a fourth straight weekly gain, with the STOXX 600 up 0.7% led by technology and utilities

• DAX up 0.7% to a second-straight all-time high, CAC40 up 0.4%, FTSE 100 down 0.4%, Swiss SMI up 0.5% also closed at records

• Average US equity funds returned 17.1% in Q2, lifting year-to-date gains to 13.4% (WSJ)

• Indian equities are regaining favour as more investors seek shelter from AI volatility (BBG)

• JPMorgan forecasts US$4,500 gold price in Q4, flags downside risks due to potential rate hikes (RT)

• Analysts see economic resilience and earnings driving markets higher despite concerns over valuations, borrowing costs and AI disruption (BBG)

• BofA's Flow Show notes US stock funds had $17.2bn outflows through 1-Jul, fastest since March (BBG)

• LSEG Lipper data shows global equity funds saw $10.44bn inflows by 1-Jul as investors bought tech after market pullbacks (RT)

• S&P 500 earnings forecasts rising at fastest rate since post-Covid rebound, stoking bubble concerns (FT)

• Energy profits should lift European earnings growth in Q2, masking weaker rest-of-market gains (RT)

• Foxconn Q2 revenue jumps 40% year-on-year on strong demand for AI products (USN)

• Tesla posted record Q2 deliveries, led by Europe, raising hopes of ending 2-year annual decline streak in 2026 (NYT)

• Meta CEO Mark Zuckerberg says AI agent development proceeding slower than expected (RT)

• ARM CEO says CPU demand is "off the charts" thanks to the rise of agentic AI (WSJ)

• Anthropic has begun early-stage work on its own AI chip, in talks with Samsung on custom chip (TC)

• Kalshi and Polymarket volumes soared to new record highs in June amid World Cup betting (CNBC)

• Iran held a state funeral in Tehran for slain Supreme Leader Ayatollah Khamenei over the weekend, with officials expecting 15 to 20 million mourners in the largest such event in the country's history (CBS) 

• Iran refuses US offer to unfreeze assets if Tehran relinquishes demand to charge Strait of Hormuz fees (WSJ)

• Iran and Oman propose a fee plan to administer the Strait of Hormuz, sources say (NBC)

• New regime has emerged in Iran comprised of younger, uncompromising hardliners more focused on security (WP)

• OPEC+ agrees to a further increase in output targets from August by 188,000 bpd (CNBC)

• Strait of Hormuz voyages have more than quadrupled in past week amid growing confidence in sustainability of US-Iran MoU (FT)

• Saudi Arabia boosts oil shipments through Hormuz since US-Iran MoU shipping ~34m barrels since 17-Jun (CNBC)

• Citi forecasts Brent could fall to US$60 by Christmas, noting US and Iran have good reason to maintain ceasefire (BBG)

• Trump's tariffs offset by Asia's large-scale trade pacts (NK)

• Canada unveils plans for a new oil pipeline to Asia, aiming to cut dependence on the US amid trade tensions (FT)

• China and the US move to roll back some agricultural tariffs to preserve last year's trade truce (BBG)

• EU-US goods trade hit a record €875bn in 2024, but German Economic Institute finds tariff pressures harmed key sectors (RT)

• Trump administration exploring how to remove Fed members from board of governors and replace them with Trump's picks (BBG)

• Trump says Warsh dealing with hostile board that may compel him to do the wrong thing on rates (BBG)

• Lagarde says she won't rule out leaving the ECB early to join France's 2027 presidential race (CNBC)

• BoE's Mann says she'll consider an "activist" hike if inflation expectations worsen later this year (BBG)

• Extreme heat across central and eastern US into 4-Jul will strain power demand, raise power prices and disrupt travel (CNBC)

• China services growth eased by less than expected in June, RatingDog PMI at 54.1 from 54.4, with new export business the fastest since October 2024 and selling prices rising for the first time in four months (RT)

• Japan plans a US$2.3tn stimulus to ignite "animal spirits," boosting competitiveness beliefs (NK)

• Eurozone composite PMI stabilised at 50.0 in June from 48.5, ending two months of contraction as the services decline eased to 48.9 and input cost inflation cooled to its slowest since the Middle East war began  (RT)

• UK services PMI fell to 48.8 in June from 49.3, the weakest since January 2023, as new orders dropped for a fourth month on soft demand, cost pressures and political uncertainty  (BBG)

• Anthropic is seeking more than 1.4GW of Australian data centre capacity via a confidential tender, far above prior estimates, with CDC tipped to win the majority (AFR)

• BHP workers at Western Australia iron ore sites voted to approve a new labor deal (RT)

• Critical Metals amends Scheme Implementation Deed for European Lithium acquisition, terms unchanged but adds sale facility for holders of  less than 50,000 shares/options and switches from CDIs to direct share issuance (EUR)

• Develop Global to replace Qube in the S&P/ASX 200, effective prior to open 9-Jul, subject to final court approval of Qube's acquisition by Rubik Australia (DVP)

• Infratil reports 49.72% interest in CDC valued at $9.12b as at 30-Jun, independent CDC valuation up $3.5b from 31-Mar to $18.5bn (IFT)

• Navigator Global Investments holder Stable Group discloses a 9.6% stake (NGI)

• Regal Partners holder New Highland decreases its stake to 8.60% from 10.07% (RPL)

Gold bounce continues: Gold is trading 1.4% higher this morning to US$4,183/oz, with prices now up ~4.4% in the last three sessions. Commodities have opened broadly higher, with notable gains for Silver (+3.2%), Zinc (+2.7%), Platinum (+2.0%), Palladium (+1.3%) and Copper (+0.1%). The S&P/ASX 200 Materials Index surged 2.5% last Friday, this follows a ~10% pullback between 17-25 June.

• Beach Energy upgraded to Equal-weight from Underweight; but target lowered to $0.88 from $1.20 (Morgan Stanley)

• Santos upgraded to Overweight from Equal-weight; target up to $7.67 from $7.50 (Morgan Stanley)

• Woodside upgraded to Equal-weight from Underweight; target unchanged at $28.00 (Morgan Stanley)

Stocks trading ex-dividend: 

• Mon 6 Jul: Ryder Capital (RYD) – $0.03, Qualitas Real Estate Income Fund (QRI) – $0.011

• Tue 7  Jul: Katana Capital (KAT) – $0.005

• Wed 8 Jul: A2 Milk (A2M) – $0.228

• Thu 9 Jul: None

• Fri 10 Jul: None

Other ASX corporate actions today:       

• Dividends paid: None

• Earnings: None

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 11:00 am: Australia TD-MI Inflation Gauge

• 11:30 am: ANZ-Indeed Job Ads

• 12:00 am: US ISM Services PMI