Macro update
Nikkei recovers as chip stocks rebound: Japan’s benchmark index gained 0.95%, led by a strong recovery in semiconductor heavyweights Tokyo Electron (+7.3%) and Advantest (+4.1%) after the previous session’s sharp decline, although SoftBank slipped 2.9%.
Asian equities strengthen after recent sell-off: MSCI’s Asia-Pacific index excluding Japan advanced 3.0%, while South Korea’s Kospi jumped 7% as investors reversed some of Monday’s losses. Chinese blue-chip stocks also rose 0.9% after stronger-than-expected May trade data.
Iran-Israel ceasefire boosts market sentiment: Risk appetite improved after Israel and Iran suspended attacks following an appeal from President Trump, although both sides cautioned that hostilities could resume and shipping through the Strait of Hormuz remains significantly restricted.
Oil prices retreat as geopolitical fears ease: Brent crude fell 1% to around $92 a barrel and WTI declined 1.5% to $90, giving back much of Monday’s 5% rally as investors remained cautious over the durability of the ceasefire.
Wall Street futures edge higher on IPO optimism: S&P 500 futures gained 0.2% and Nasdaq futures rose 0.5%, supported by reports that OpenAI has confidentially filed for a US initial public offering targeting a valuation of up to $1 trillion, adding to optimism around the AI sector.
Markets increase expectations for further rate hikes: Fed funds futures imply a 70% probability of a Federal Reserve rate increase by December ahead of Wednesday’s US CPI release, while investors have fully priced in a quarter-point European Central Bank rate hike this week as the US two-year Treasury yield remains near a 15-month high.