- Shifting Rate Bets Push Dollar, Bond Yields Lower: Markets Wrap
Stocks in Asia advanced as the Israel-Iran truce appeared to hold and Treasury traders ramped up bets for US
interest rate cuts. MSCI’s gauge for Asian equities gained 0.3% early on Wednesday following a more than 2%
rise in the previous session, when US President Donald Trump announced a ceasefire between the Middle East
rivals. US equity futures dipped after the S&P 500 climbed 1.1% and the Nasdaq 100 rose 1.5% on Tuesday,
notching its first record since February. Treasuries and a gauge of the dollar steadied. The benchmark 10-year
yield shed five basis points on Tuesday after Federal Reserve Chair Jerome Powell said “many paths are
possible” for monetary policy, with data showing weakening consumer confidence. Traders continued to keep
a very close eye on the Middle East as the nascent peace deal remains precarious. Iran and Israel appeared to
honor the agreement after Trump lashed out at both side for early breaches. - S&P 500 ends Wednesday little changed as record high remains in reach
The S&P 500 ended the session near the flatline on Wednesday as investors watched to see if the benchmark
index could return to its all-time high. The broad market index was little changed, ending the session at
6,092.16, while the Nasdaq Composite added 0.31% to close at 19,973.55. The Dow Jones Industrial Average
slipped 106.59 points, or 0.25%, settling at 42,982.43. Shares of artificial intelligence darling Nvidia added 4.3%
after hitting a record high. Google-parent company Alphabet and chipmaker AMD gained 2.3% and 3.6%. The
S&P 500 was less than 1% below 6,147.43, the intraday record set on Feb. 19. It was also within reach of its
closing all-time high of 6,144.15. On top of that, the Nasdaq was just over 1% off its peak reached in December. - U.S. crude oil rises after steep selloff following Israel-Iran ceasefire
U.S. crude oil futures rose on Wednesday, after the Iran-Israel ceasefire triggered a steep selloff earlier this
week. U.S. West Texas Intermediate futures contracts rose 85 cents, or 0.85%, to close at $64.92 per barrel.
Global benchmark Brent gained 54 cents, or 0.8%, to settle at $67.68 per barrel. Prices briefly jumped to five
month highs after the U.S. bombed three nuclear sites in Iran over the weekend. But futures rapidly sold off
on Monday and Tuesday after Iran held back from targeting regional crude supplies, and President Donald
Trump pushed Jerusalem and Tehran into a truce. “With the announcement of a ceasefire [Monday], President
Trump called time on the twelve-day Israel-Iran war after successfully executing an escalate to de-escalate
strategy,” Helima Croft, head of global commodity strategy at RBC Capital Markets, told clients in a note
Tuesday. “The worst appears over for now,” Croft said, “though the truce still remains fragile.” - Gold holds steady as investors await U.S. economic data
Gold prices were steady on Wednesday as market participants remained cautious ahead of key U.S. economic
data, while the ceasefire between Iran and Israel weighed on safe-haven demand. Spot gold was up 0.1% at
$3,327.91 per ounce at 0158 p.m. EDT (1758 GMT) after prices hit their lowest in over two weeks in the
previous session. U.S. gold futures settled 0.3% lower at $3,343.1. With all the momentum and potential in the
markets, the factors that typically drive gold never pushed it to new highs, said Daniel Pavilonis, senior market
strategist at RJO Futures. “So, I think the path is now more to the downside; it may hit $2,900 if things don’t
escalate in the Middle East.” U.S. President Donald Trump revelled in the swift end to war between Iran and
Israel, saying he now expected a relationship with Tehran that would preclude rebuilding its nuclear
programme. Wall Street’s S&P 500 and Nasdaq indexes rose on Wednesday, hovering near a record peak.
Federal Reserve Chair Jerome Powell in his second day of congressional testimony reiterated that the central
bank doesn’t need to be in a rush to cut interest rates due to uncertainty over the impact of the still-unresolved
tariff debate. - NATO allies agree to higher 5% defense spending target
NATO allies on Thursday agreed to more than double their defense spending target from 2% of gross domestic
product to 5%, in the most decisive move from the alliance in over a decade. In a joint declaration, the alliance
said it was “united in the face of profound security threats and challenges,” in particular the long- term threat
posed by Russia to Euro-Atlantic security and the “persistent threat” of terrorism. “Allies commit to invest 5%
of GDP annually on core defence requirements as well as defence-and security-related spending by 2035 to
ensure our individual and collective obligations.,” it continued. The historic move comes against a backdrop of
tensions in the Middle East and ongoing war between Ukraine and Russia. Allies have been pushed to this point
after years of pressure from U.S. President Donald Trump, across both of his terms in office. - Trump Says US to Meet Iran Next Week, Putin Talks Ahead
NATO leaders have backed a plan to boost defense spending to 5% of GDP at their meeting in The Hague, a win
for US President Donald Trump. Trump says we’re with NATO “all the way” and NATO leaders renewed their
commitment to mutual defense, calming for now doubts about the US commitment to collective defense
obligations of the NATO treaty. The new spending target includes 3.5% via core defense and 1.5% in related
investment including infrastructure and cybersecurity. On the Middle East, Trump says he believes the Israel
Iran war is over, and the US will hold talks with Iran next week. Trump reportedly describes the situation in
Ukraine as “totally out of control,” and says he’ll speak to Putin, though without providing any details. - China doubles down on promoting yuan as confidence in U.S. dollar takes a beating
China is introducing ways to bolster yuan’s usage as confidence in the U.S. dollar falters. Three major Chinese
exchanges have allowed certain foreign institutional investors to trade more futures and options contracts
listed in mainland China. From expanding investment channels to building digital infrastructure, Beijing has
been laying the groundwork to accelerate international use of its currency. - Tesla’s European car sales nosedive for fifth month as customers switch to Chinese EVs
Tesla new car sales in Europe fell for a fifth straight month in May, according to data from the European
Automobile Manufacturers Association (ACEA), as customers pivot to cheaper Chinese electric vehicles. Data
published Wednesday by ACEA found that Tesla’s car sales in the European Union, Britain and the European
Free Trade Association fell to 13,863 units in May, down 27.9% year-on-year. Tesla’s European market share
also dropped to 1.2% from 1.8% in May 2024. Overall car sales in Europe: the figures reinforce a downward
regional trend for the U.S. EV maker, which has suffered brand and reputational damage in part due to CEO
Elon Musk’s incendiary rhetoric and political activity. Musk spent nearly $300 million to help re-elect U.S.
President Donald Trump and subsequently led a tumultuous initiative to slash federal agencies. Protests
erupted at Tesla dealerships across Europe in response. The Tesla CEO has since left the Trump administration,
amid a bitter online feud with the U.S. president. Tesla continues to battle rising competition from traditional
automakers, as well as Chinese players. Auto giant BYD, for instance, registered nearly as many vehicles as
Tesla in May after outselling Musk’s company for the first time in April. It had been thought Tesla’s revamped
Model Y compact sport utility vehicle could help to deliver a turnaround in the firm’s fortunes. The Model Y
was recently found to be instrumental in delivering a rebound in new car sales in Norway. Shares of Tesla are
down more than 15% in the year to date. Rising competition: Chinese manufacturers maintained their strong
momentum in Europe’s new car market in May despite European Union tariffs on Beijing’s EVs. Chinese
automakers sold 65,808 units last month and more than doubled their market share in the region to 5.9%,
according to data published Tuesday by JATO Dynamics. “Despite the EU’s imposition of tariffs on Chinese
electric vehicles, its car brands continue to post strong growth across Europe,” Felipe Munoz, global analyst at
JATO Dynamics, said in a statement. “Their momentum is partly due to their decision to push alternative
powertrains, such as plug-in hybrids and full hybrids, to the region,” he added. - AST SpaceMobile stock falls after $225 million convertible note repurchase
ST SpaceMobile (NASDAQ:ASTS) stock fell 7.75% after the space-based cellular broadband network company
announced the pricing of a repurchase of $225 million of its convertible notes and a registered direct offering
of common stock to fund the repurchase. The company will repurchase $225 million aggregate principal
amount of its 4.25% convertible notes due 2032 through privately negotiated transactions with a limited
number of note holders. To fund this repurchase, AST SpaceMobile is conducting a registered direct offering
of 9,450,268 shares of its Class A common stock at $53.22 per share to the same note holders participating in
the repurchase. According to the company, these transactions will remove approximately 8.3 million
underlying shares associated with the convertible notes while eliminating approximately $63.8 million in
remaining interest payments. After the repurchase, $235 million aggregate principal amount of the 2032
convertible notes will remain outstanding. “We are excited to retire approximately half of our 2032 convertible
notes and the underlying shares at a price attractive to our shareholders in a series of innovative transactions.
These transactions allow us to substantially reduce our outstanding debt and cash interest obligations,” said
Scott Wisniewski, AST SpaceMobile President. The company noted that the previously purchased capped call
will remain outstanding and is expected to reduce dilution upon any future conversion of the remaining notes.
Both the repurchase and the registered direct offering are expected to close on or about July 1, 2025, with the
transactions being cross-conditional. - FedEx warned that its profit would be worse than expected this quarter and declined to offer guidance
for the rest of the year
The company’s shares fell 3.3%. Although it typically provides a full-year forecast, FedEx said it would only
share its outlook for the current quarter due to the “uncertain global demand environment.” The forecast
assumes no further negative developments in global trade dynamics. Adjusted earnings in the fiscal first
quarter will be $3.40 to $4 a share, the company said . Analysts had projected $4.03 on average. US-China
shipments — the company’s most profitable trade route — “deteriorated sharply” in May and volumes are
expected to remain under pressure, Carere said. Analysts had already reduced their 2026 profit estimates for
FedEx in recent months, worried that weakening consumer confidence and soft industrial demand would
overshadow the company’s efforts to slash costs and revamp its delivery network. Still, there are signs that the
company’s long-running push to reduce expenses and combine FedEx’s ground and air shipping networks into
a single operation is paying off. The company achieved its goal of cutting $2.2 billion in costs during its most
recent fiscal year and expects an additional $1 billion in savings this year. Adjusted earnings were $6.07 a share
in the fourth quarter, topping the $5.81 average of analyst estimates. Higher US and international export
volumes, price increases and cost reductions provided a boost, while the expiration of its US Postal
Service contract along with higher transportation and wage expenses weighed on results, the company said. - Stellantis rose 3.1% as Jefferies upgraded the automaker to buy from hold, writing in a note that
operations may be starting to take a more positive turn
Analyst Philippe Houchois cites stronger data points and says that while the sector still faces a multitude of
challenges, many of the issues for Stellantis are “self-inflicted and fixable”. Product-launch delays easing in
Europe, while model re-positioning and renewal underway in North America following “painful” de-stocking.
New CEO has had time to create a viable plan and should be able to make quick decisions, boosted by probable
internal support compared to someone joining from outside the company. PT to €11.5 vs €9. - Micron Technology delivered an outlook that wasn’t quite rosy enough to keep its 2025 rally going
Though the company posted third-quarter results and a fourth-quarter forecast that exceeded estimates, the
stock pared gains in late trading. A key focus was high-bandwidth memory (HBM), a component used in
artificial intelligence computing. The technology is fueling a sales surge at Micron, but the company didn’t
predict the kind of runaway growth that some investors were looking for. The mismatch in expectations
overshadowed a strong report. Fiscal fourth-quarter revenue will be roughly $10.7 billion, the company said.
That was well ahead of the $9.89 billion average analyst estimate. Profit will be around $2.50 a share, excluding
certain items, compared with a projection of $2.03. Sales rose 37% to $9.3 billion in the fiscal third quarter,
which ended May 29. Analysts had estimated $8.85 billion. Earnings were $1.91 a share, excluding some items,
compared with an average prediction of $1.60. The sales gains “while impressive, still roughly parallel our prior
expectations,” Matt Bryson, an analyst at Wedbush Securities, said. After initially gaining as much as 7.7%
afterhours following the report, the stock briefly turned negative before settling on a 0.9% gain. - European defense stocks rose as NATO leaders agreed to increase defense spending to 5% of GDP and
renewed their “ironclad commitment” to mutual security in response to an increasingly belligerent Russia
The agreement is a major win for Donald Trump, who has repeatedly criticized European allies for
underspending on security, and for European allies and NATO’s secretary general, Mark Rutte. The new
spending target will transform Europe’s militaries and security architecture, with Germany promising to build
Europe’s most powerful conventional military, but some countries like Spain and Slovakia have raised doubts
about meeting the target. - US lawmakers introduce bill to bar Chinese AI in US government agencies
A bipartisan group of U.S. lawmakers on Wednesday planned to introduce a bill in both houses of Congress
that would bar U.S. executive agencies from using artificial intelligence models developed in China, including
those from DeepSeek. The introduction of the bill, dubbed the “No Adversarial AI Act,” comes after Reuters
reported that a senior U.S. official has concluded that DeepSeek is aiding China’s military and intelligence
operations and has had access to “large volumes” of Nvidia (NASDAQ:NVDA)’s chips. DeepSeek shook the
technology world in January with claims that it had developed an AI model that rivaled those from U.S. firms
such as ChatGPT creator OpenAI at much lower cost. Since then, some U.S. companies and government
agencies have banned the use of DeepSeek over data security concerns, and President Donald Trump’s
administration has mulled banning its use on U.S. government devices. The bill introduced Wednesday into the
U.S. House of Representatives by Representative John Moolenaar, a Michigan Republican who chairs the Select
Committee on the Chinese Communist Party, and Representative Raja Krishnamoorthi, an Illinois Democrat
who is the ranking member on the committee, would create a permanent framework for barring the use of all
Chinese AI models from U.S. executive agencies, as well as those from Russia, Iran and North Korea. The bill
would require the Federal Acquisition Security Council to create a list of AI models developed in those countries
and regularly update it. - Meta wins AI copyright case, but judge says others could bring lawsuits
Meta on Wednesday prevailed against a group of 13 authors, including Sarah Silverman and Ta-Nehisi Coates,
in a major copyright case involving the company’s Llama artificial intelligence model. The judge wrote that it
“is generally illegal to copy protected works without permission,” but in this case, the plaintiffs failed to present
a compelling argument that Meta’s methods caused “market harm.” U.S. District Judge Vince Chhabria left the
door open for other authors to bring similar AI-related copyright lawsuits against Meta. “In the grand scheme
of things, the consequences of this ruling are limited,” he wrote.
