• President Trump denies talks with Iran halted; ‘fake news’ he says
• SpaceX targets $1.75 trillion valuation ahead of IPO Roadshow
• Stocks hit fresh record highs, as SOX semiconductor index soars

Forex

USD printed a small inside day which means the high and low of the day were inside the previous day’s range. FX volatility has continued to fall sharply, as it slides back to lows seen in the summer two years ago. US-Iran headlines are kind of white noise at the moment as markets expect a resolution, even if there is ongoing deliberation from both sides. We note the two-year Treasury yield has found support around the 2% psychological level. Money markets currently price in around 13bp for 2026, so roughly a coin toss chance of a rate hike. JOLTS job openings surged above estimates signifying a tighter more resilient labour market, while the quits rate dipped. 

EUR was similarly quiet as it printed a doji candle and remained below the 50-day SMA at 1.1665. Eurozone headline inflation printed in line but core came in one-tenth higher than expected at 2.5%. Notably, services inflation rose 0.4% m/m and 3.5% y/y perhaps hinting of second round effects. This cemented a rate hike at next week’s ECB meeting, so it’s what happens next and guidance which is key. There’s currently around 70bps priced in for 2026. 

GBP pushed up to the 100-day SMA at 1.3474 before pulling back modestly, in relatively quiet trade. BoE Governor Bailey commented that the inflation overshoot is entirely due to events in the Persian Gulf. That signalled a mild pushback against rate hike expectations. BoE’s Greene was also on the wires and said the risk of acting is less severe than the risk of failing to act. There’s around a 50% chance of a September 25bps rate hike.

JPY weakened again as the major edged up close to 160 and the intervention zone. Interestingly, volatility in the pair has dropped, which is odd considering we saw the largest intervention since 2004 just above here at 160.60 in April and May. Perhaps the bar is now higher as the authorities look for a more improved macro environment ie. lower oil, BoJ hikes which is needed to consolidate yen strength.  We note that June is a seasonally weak month for the yen.

Stocks

US stocks: The S&P 500 added 0.13% to close at 7,610, the Nasdaq closed up 0.48% at 30,661 and the Dow Jones settled higher by 0.45% at 51,313. Sector performance was mixed, with Utilities and Materials leading the advance. Communication Services was the clear laggard, weighed down by Alphabet (-3.8%) after it announced plans to raise $80bn for AI infrastructure.

Marvell soared over 32% as Nvidia’s boss Jensen Huang called it the next trillion-dollar company.  Other chipmakers also jumped with Ciena rising 10% ahead of its earnings on Thursday. Hewlett Packard Enterprises surged 19.4% as it pulled forward long-term financial targets. Broadcom, known as part of the ‘Mag 8’, hit record highs as it rose 4.7%. The tech titan reports after the US close today with sky high expectations. Palo Alto reported after the close and was up 7.8% after hours on an earnings beat and rosy guidance as AI fuels cybersecurity urgency. 

Asian Stocks: Futures are mixed. APAC stocks were mixed amid tech strength and geopolitical concerns. The ASX 200 was muted amid softness in defensives and real estate. The Nikkei 225 slipped from Monday’s record highs as investors took profits. The Shanghai Composite and Hang Seng were mixed with tech names helping Hong Kong as JD and Tencent outperformed.

Gold

Gold was mixed as it printed an inside day. The 200-day is key long-term support, now at $4,385.

Day Ahead – Australia GDP, ISM Services

Australian growth is expected to have remained solid in Q1, at 2.6% y/y and 0.5% q/q, which is a pace that is well above most economist’s estimates of the economy’s potential growth rate, which is around 1.8%. That points to the economy exceeding the economy’s ‘speed limit’ in the first quarter. Activity is forecast to have been supported by a solid rise in consumer spending and strong growth in business investment, much of which is datacentres and related infrastructure. But the strength is predicted to fall in the second quarter owing to a big drop in sentiment. 

After the strong US ISM Manufacturing figures on Monday, we get May non-manufacturing services ISM later today, which is forecast to come in marginally higher at 53.7. Recent business confidence and the labour market picture have been weakening with higher inflation, rates and increased political uncertainty dampening the outlook for activity.   

Chart of the Day – Stocks Non-stop Rally

The S&P 500 has risen over 20% since its March lows, but also did something rarer – it enjoyed nine straight weekly gains, while also climbing for nine straight days. The former has occurred just 14 times since 1930, making the current streak one of the strongest momentum signals seen in modern market history. But history suggests markets take a breather straight after such powerful bull runs with mild pullbacks and short-term consolidation. The issue concerning some market watchers is stock leadership, which is looking ever narrower.

Since late March, global equities have gained roughly 17%, but the move has been overwhelmingly powered by tech, which has rallied nearly 45% from the lows. Semiconductors lead this charge, with their market cap now roughly 18% of the market, compared to around 4% a couple of years ago. This year is solely a story about AI and the capital buildout behind it. Earnings growth is running at around four times the pace that GDP would normally justify. All that said, you can add concerns around debt financing by hyperscalers, circular capex financing and insider selling, upcoming IPO booms, plus oil, Iran and broader geopolitics as tail risks, but at present, ultimately they all secondary.