FX.co ★ U.S. Stocks May Experience Choppy Trading Early On

The major U.S. index futures are indicating a mostly flat open on Tuesday, with expectations of choppy trading following a significant surge in the previous session.

Futures remained relatively unchanged after the Commerce Department reported that retail sales in the U.S. slightly underperformed expectations in May. According to the department, retail sales inched up by 0.1 percent in May, following a revised 0.2 percent decline in April. Economists had anticipated a 0.2 percent increase.

Excluding sales in motor vehicles and parts dealers, retail sales edged down by 0.1 percent in May after a revised 0.1 percent decline in April. Economists had forecasted a 0.2 percent increase in ex-auto sales for the month.

Trading activity may be subdued ahead of the Juneteenth holiday on Wednesday when markets will be closed. However, it's worth noting that stocks displayed indecision in early trading on Monday before a surge in buying interest pushed markets to record highs.

Despite showing a lack of direction initially, stocks moved significantly higher throughout the trading day on Monday. Key indices, including the Nasdaq and the S&P 500, achieved new record closing highs. The Nasdaq rose by 168.14 points, or 1.0 percent, to 17,857.02. The S&P 500 advanced by 41.63 points, or 0.8 percent, to 5,473.23, and the Dow climbed 188.94 points, or 0.5 percent, to 38,778.10.

Initially, traders seemed hesitant to make significant moves as they assessed recent market activities and the near-term outlook. However, positive sentiment from last week spurred buying interest later in the session. Lower-than-expected inflation data contributed to the gains in the Nasdaq and the S&P 500, although the Dow bucked the trend.

Even though Federal Reserve officials predicted just one interest rate cut this year post the latest monetary policy meeting, traders remain hopeful that ongoing moderation in inflation could prompt further rate cuts.

In U.S. economic news, the Federal Reserve Bank of New York reported a slower contraction in New York manufacturing activity in June. The general business conditions index rose to -6.0 in June from -15.6 in May, still indicating contraction. Economists had expected an improvement to -9.0. Despite current activity contraction, optimism about the six-month outlook reached its highest in more than two years.

Among the sectors observing significant movement, oil service stocks surged alongside crude oil prices, with the Philadelphia Oil Service Index jumping 2.1 percent. Computer hardware stocks also displayed notable strength, reflected in a 2.0 percent rise in the NYSE Arca Computer Hardware Index. Additionally, the NYSE Arca Airline Index climbed 1.7 percent. Semiconductor, banking, and software stocks also showed solid gains, while utilities and telecom stocks lagged behind.

**Commodity and Currency Markets**

Crude oil futures are slightly up by $0.03, trading at $80.36 per barrel after surging $1.88 to $80.33 per barrel on Monday. Gold futures, after dropping $20.10 to $2,329 per ounce in the previous session, are edging up by $3.70 to $2,332.70 per ounce.

On the currency front, the U.S. dollar is trading at 157.73 yen compared to 157.74 yen at Monday's close in New York. Against the euro, the dollar stands at $1.0729, slightly down from $1.0734.

**Asia**

Asian stocks advanced on Tuesday, driven by a tech-driven rally that propelled Wall Street to another record high overnight. The dollar paused ahead of crucial U.S. retail sales and business activity data, in addition to upcoming speeches from several Federal Reserve officials later this week. Gold remained relatively stable, while oil consolidated recent gains.

China's Shanghai Composite Index rose 0.5 percent to 3,030.25, despite escalating trade tensions between China and the EU. China has initiated a trade investigation into European pork imports, following the EU's additional tariffs on Chinese electric vehicles.## Asia-Pacific Markets

**Hong Kong:**

Hong Kong's Hang Seng Index concluded a volatile session with a slight decline, closing 0.1 percent lower at 17,915.55.

**Japan:**

Japanese markets saw a rebound following significant losses in the previous session. The Nikkei 225 Index surged 1.0 percent to settle at 38,482.11 after Bank of Japan Governor Kazuo Ueda signaled a potential interest rate hike in July. The broader Topix Index rose 0.6 percent to finish at 2,715.76. Among individual stocks, Tokyo Electron, a chip-making equipment manufacturer, jumped 2.7 percent, and electronic components maker TDK soared 6.3 percent. Toyota Motor Company saw a 0.5 percent increase as Akio Toyoda, the grandson of the company's founder, secured shareholder approval to remain at the helm.

**South Korea:**

Seoul stocks climbed significantly after the central bank governor suggested inflation might ease, potentially leading to interest rate cuts by the end of the year. The Kospi Index advanced 0.7 percent to 2,763.92.

**Australia:**

Australian markets rallied with the S&P/ASX 200 Index rising 1.0 percent to 7,778.10 and the broader All Ordinaries Index increasing 0.9 percent to 8,015.80. The Reserve Bank of Australia held interest rates steady but cautioned that inflation remains above target.

**New Zealand:**

Across the Tasman Sea, New Zealand's S&P/NZX 50 Index gained 0.6 percent, closing at 11,767.40.

## European Markets

European stocks registered modest gains on Tuesday after Eurozone CPI was finalized at 2.6 percent year-on-year in May, up from April's 2.4 percent, as anticipated. The German ZEW Economic Sentiment Index improved slightly to 47.5 in June from 47.1 in May, and industry data indicated a sixteenth consecutive month of declining grocery inflation in the U.K.

**Market Highlights:**

- The German DAX Index rose by 0.3 percent.

- France's CAC 40 Index and the U.K.'s FTSE 100 Index both increased by 0.5 percent.

**Corporate News:**

- **Novonesis:** Shares surged after the Danish biotech group raised its full-year outlook, citing increased demand for its biosolutions.

- **Schneider Electric:** Shares moved higher in Paris following an upgrade from Jefferies, which changed the stock rating to "buy" from "hold".

- **Whitbread:** The British hotel group rallied after reaffirming its annual forecast despite flat first-quarter sales.

- **Frasers Group:** Advanced after announcing a new share buyback program worth up to £80 million aimed at reducing share capital.

- **Carrefour:** Shares plummeted following reports that the finance ministry plans to levy a record fine against the supermarket group for management issues in its franchise network.

- **Ashtead Group:** The equipment rental firm saw a sharp decline after forecasting slower growth in rental revenue for fiscal 2025.

## U.S. Economic Reports

Retail sales in the U.S. saw a marginal increase in May, according to the Commerce Department's report. Retail sales edged up by 0.1 percent in May following a revised 0.2 percent decline in April. Economists had anticipated a 0.2 percent rise. Excluding an increase in sales by motor vehicle and parts dealers, retail sales fell by 0.1 percent in May after a revised 0.1 percent decline in April, against economists' expectations of a 0.2 percent rise.

### Scheduled Reports and Federal Reserve Activities:

- **Industrial Production:** The Federal Reserve will release its May report at 9:15 am ET, with projections indicating a 0.3 percent rise from April's unchanged reading.

- **Business Inventories:** The Commerce Department will publish its April report at 10 am ET, with anticipated growth of 0.3 percent following a 0.1 percent decrease in March.

- **Speeches:**

- Richmond Federal Reserve President Thomas Barkin (9:15 am ET)

- Boston Federal Reserve President Susan Collins (11:40 am ET)

- Dallas Federal Reserve President Lorie Logan (1 pm ET)

- St. Louis Federal Reserve President Alberto Musalem (1 pm ET)

- Chicago Federal Reserve President Austan Goolsbee (2 pm ET)

- **Treasury Auction:** Results from the Treasury Department's monthly auction of $13 billion worth of twenty-year bonds will be announced at 1 pm ET.