FX.co ★ Profit Taking May Contribute To Initial Pullback On Wall Street

**U.S. Futures Point to Lower Open Amid Potential Profit Taking**

Major U.S. index futures suggest a lower start on Friday, likely driven by profit taking after the Nasdaq and S&P 500 concluded Thursday’s choppy session with new record highs.

Recent strength in the market was partly bolstered by positive inflation data, though concerns persist regarding the Federal Reserve's cautious projection of just one interest rate cut this year. Allaying some fears, the Labor Department reported an unexpected decline in U.S. import and export prices for May.

Specifically, import prices decreased by 0.4% in May following a 0.9% rise in April, contrary to economist predictions of a 0.1% uptick. This drop was mainly driven by a 2.0% fall in fuel import prices, while non-fuel imports edged down by 0.3%. On the export side, prices fell by 0.6% in May after a revised 0.6% increase in April, against expectations of no change.

Thursday’s trading was relatively subdued, with the Nasdaq gaining 59.12 points (0.3%) to 17,667.56 and the S&P 500 rising 12.71 points (0.2%) to 5,433.74. In contrast, the Dow slipped 65.11 points (0.2%) to 38,647.10. This tepid performance came despite economic data that could have fueled optimism about the interest rate outlook.

The Labor Department also revealed a slight 0.2% reduction in the producer price index (PPI) for final demand in May, following a 0.5% increase in April, against expectations of a 0.1% rise. The annual growth rate of producer prices slowed to 2.2% in May from a revised 2.3% in April, lower than the anticipated 2.5%.

Additionally, initial jobless claims rose by 13,000 to 242,000 for the week ending June 8, the highest level since August 2023. This spike was unexpected, as economists had forecast a decline to 225,000 claims.

Bill Adams, Chief Economist at Comerica Bank, noted, “The latest data slightly opens the door for the Fed to initiate an interest rate cut later this year. We forecast the first cut in September, followed by another in December.”

In sector-specific movements, semiconductor and computer hardware stocks led gains, with the Philadelphia Semiconductor Index and NYSE Arca Computer Hardware Index climbing 1.5% and 1.4%, respectively. Notably, Broadcom (AVGO) surged by 12.3% after announcing robust fiscal Q2 results and a 10-for-1 stock split.

Conversely, gold stocks experienced a sharp decline, with the NYSE Arca Gold Bugs Index dropping by 2.4%, balancing out Thursday’s recoveries. Similarly, oil service stocks fell significantly, as evidenced by the Philadelphia Oil Service Index’s 2.1% drop, despite a minor rise in crude oil prices.

**Commodity and Currency Markets**

Crude oil futures are adding $0.32 to reach $78.94 per barrel, following a $0.12 increase to $78.62 on Thursday. Gold futures, bouncing back from a $36.80 plunge to $2,318 an ounce, are up $25.10 to $2,343.10 an ounce.**Currency Market**

The U.S. dollar is currently trading at 157.25 yen compared to 157.03 yen at the close of New York trading on Thursday. Against the euro, the dollar stands at $1.0687, down from yesterday's $1.0737.

**Asia**

Asian stocks presented a mixed performance on Friday as Beijing criticized EU tariffs on Chinese electric vehicles, labeling them as protectionist, and hinted at retaliatory measures amidst the escalating trade tensions. Evidence of slowing inflation in the United States helped moderate regional losses.

In Japan, both the yen and bond yields decreased as the Bank of Japan indicated a reduction in debt purchases without specifying figures or a timeline.

Gold experienced a slight uptick in Asian trading, while oil prices eased but were on track for their best week in over two months.

China's Shanghai Composite Index recovered from early losses to close 0.1 percent higher at 3,032.63, while Hong Kong's Hang Seng Index declined by 0.9 percent to 17,941.78, driven by tariff concerns.

Japanese markets rebounded from early losses to close higher after the Bank of Japan announced it would scale down its substantial bond-buying program and would unveil a detailed plan for the reduction at the next policy meeting in July. The Nikkei 225 Index rose by 0.2 percent to 38,814.56, relieved by no immediate changes to the central bank's bond-buying program. The broader Topix Index climbed by 0.5 percent to 2,746.61 despite a dip in banking stocks.

Seoul's equities posted gains for the fourth consecutive day, buoyed by robust technology stocks. Samsung Electronics advanced by 1.3 percent, while LG Energy Solution fell by 3.9 percent. The Kospi edged up 0.1 percent to 2,758.42 as the government extended a market-wide ban on short-selling stocks through Q1 2025.

In Australia, markets ended lower as investors anticipated the Reserve Bank of Australia's policy meeting scheduled for next week. The S&P/ASX 200 Index dropped by 0.3 percent to 7,724.30, influenced by declining miners on account of pressure on iron ore prices due to China's weakening property market. The broader All Ordinaries Index fell by 0.4 percent to 7,974.80.

In New Zealand, the S&P NZX-50 Index finished marginally lower at 11,864.89.

**Europe**

European stocks mostly fell on Friday, extending losses from the previous session amid ongoing election campaigns in the U.K. and France.

Political uncertainty in France weighed on the markets after the finance minister warned that a new left-wing coalition would lead to France exiting the European Union.

Elsewhere, Nigel Farage's Reform UK surpassed Prime Minister Rishi Sunak's Conservatives in a YouGov poll. The poll for the Times newspaper put Reform UK at 19 percent, up from 17 percent, while the Conservative Party remained unchanged at 18 percent in voting intention.

While the U.K.'s FTSE 100 Index was marginally lower, Germany's DAX Index declined by 1.1 percent, and France's CAC 40 Index dropped 2.1 percent.

Regional banks faced significant losses, with French lenders BNP Paribas, Credit Agricole, and Societe Generale plummeting as the risk premium on French bonds reached a four-year high due to political concerns. The French finance minister cautioned that the country could face a debt crisis akin to the U.K.'s episode two years ago if far-right leader Marine Le Pen wins the upcoming legislative elections. Ratings agency S&P Global, which recently downgraded France, noted that the party's advocated policies could impact the nation's credit rating.

French retail company Casino Group saw a decline after announcing exclusive negotiations with Auchan Retail France and Rocca for the sale of its Corsican subsidiary Codim 2.

In contrast, Crest Nicholson shares surged in London as the embattled homebuilder rebuffed a second all-share takeover approach from larger rival Bellway. Tesco also rallied after reporting a significant increase in grocery purchases by U.K. shoppers in the most recent quarter.

From an economic perspective, French consumer price inflation picked up in May due to higher energy and food prices, according to the final data from the statistical office INSEE. The consumer price index rose by 2.3 percent on a yearly basis in May, compared to a 2.2 percent increase in April, with the rate for May revised up from 2.2 percent. The slight inflationary rise was driven by accelerated growth in energy prices, which increased by 5.7 percent due to base effects.Britons' short-term inflation expectations eased in May, according to the quarterly Inflation Attitudes Survey conducted by Ipsos for the Bank of England.

The one-year ahead inflation expectations declined to 2.6 percent from 2.8 percent in February. Respondents perceived current inflation at 5.5 percent, down from 6.1 percent in the previous survey period.

### U.S. Economic Reports

The Labor Department released a report on Friday revealing unexpected decreases in U.S. import and export prices for May.

Import prices fell by 0.4 percent in May, following a 0.9 percent rise in April. Economists had anticipated a slight increase of 0.1 percent. Fuel import prices led the decline, dropping by 2.0 percent, while non-fuel import prices dipped by 0.3 percent.

Conversely, export prices decreased by 0.6 percent in May after an upwardly revised 0.6 percent increase in April. Economists had expected export prices to remain unchanged from the originally reported 0.5 percent increase for the previous month.

At 10 a.m. ET, the University of Michigan will release its preliminary report on consumer sentiment for June. The consumer sentiment index is expected to rise to 72.0, up from 69.1 in May.

Chicago Federal Reserve President Austan Goolsbee is set to participate in a fireside chat at the Iowa Farm Bureau Economic Summit at 2 p.m. ET.

At 7 p.m. ET, Federal Reserve Board Governor Lisa Cook will speak at an event commemorating the 50th anniversary of the American Economic Association Summer Program.

### Stocks In Focus

Adobe (ADBE) shares are surging in pre-market trading after the software company reported better-than-expected fiscal second-quarter results and raised its full-year guidance.

Toymaker Hasbro (HAS) might also see an uptick after Bank of America upgraded its stock rating to Buy from Neutral.

In contrast, shares of RH (RH) are experiencing significant pre-market weakness following a wider-than-expected fiscal first-quarter loss reported by the high-end retailer.