In focus today
Markets continue to balance resilient US economic data against ongoing geopolitical uncertainty in the Middle East. Equity markets were mixed with weakness early in the day, while some indices rebounded as the day went on, especially in tech. Attention remains on upcoming inflation releases and the ECB meeting on Thursday, which are expected to provide further direction for markets.
In Denmark, foreign trade data for April will be released. In March, total exports of goods and services (seasonally adjusted) increased 8.1% m/m, while imports increased slightly by 3.7% m/m. Also today, industrial production will be released for April. We will follow the industrial production release closely, as it is one of the more reliable indicators for GDP growth in Denmark.
In the US, NFIB small business optimism index for May is released. The index has remained below its historical average of 98.0 for the past two months, with inflation pressures, labour costs and uncertainty being the key drags on sentiment.
Overnight, China releases PPI and CPI for May. We expect PPI inflation to increase from 2.8% y/y in April to around 4.5% y/y in May. It will underline that China is becoming an inflationary force after three years of exporting deflation. CPI inflation is expected to be broadly stable around 1.2% y/y as food inflation is pulling lower while energy inflation is moving up.
Economic and market news
What happened overnight
In China, export growth accelerated in May, with exports increasing 19.4% y/y (April: 14.1%, cons.: 15.0%), driven by strong demand for chips, autos and other AI‑related tech goods. The strength has helped to partly offset the impact of higher energy prices linked to the Iran war. Imports also surprised to the upside, increasing 27.4% y/y (April: 25.3%, cons.: 25.0%), signalling still-solid domestic demand.
What happened yesterday
In the Israel-Iran war, both countries halted direct military strikes on each other after an appeal from US President Trump, easing immediate fears of a broader regional escalation. Oil prices initially jumped on the renewed hostilities over the weekend before retreating once both sides signalled a halt to strikes. Brent crude is thus now trading close to the closing levels from Friday. The dollar also pulled back slightly from a near two‑month high as safe‑haven demand moderated following the de‑escalation.
In tech space, OpenAI has confidentially filed for a US IPO, joining rival Anthropic in seeking to tap strong investor demand for AI exposure. The company has not disclosed deal size, terms or timing, but Reuters reports it is targeting a valuation of up to USD 1 trillion, with a listing potentially as early as September. The move coincides with a planned SpaceX IPO on Friday, meaning OpenAI, Anthropic and SpaceX are all preparing market debuts, intensifying competition for investor capital.
In the euro area, the June Sentix investor confidence index increased to -13.4 (cons.: -14.6, prior: -16.4), reflecting a slight positive surprise. This marks a continuation of the recovery, supported by easing concerns about a significant economic slowdown, with strength in the US and Asia. However, the influence of rising interest rates and recent developments may not yet be fully reflected in investor sentiment.
In Germany, factory orders fell -3.8% m/m in April (cons: -2% m/m), reversing a revised 4.5% gain in March. The drop was broad-based, reflecting weakness in both domestic and foreign demand. Firms are believed to have brought orders forward in March due to concerns over rising costs and supply disruptions, leading to the decline in April.
Equities: Equity markets fell yesterday, but the moves were highly uneven. The Far East dragged the global market lower, while the US rebounded, in many ways reversing what we saw on Friday. In the US, most major indices ended higher, but the advance was driven mainly by technology and partly by energy, while most sectors were actually lower on the day. At the headline level, the two dominant themes remain the AI buildout and news around Iran, with the associated rise in oil prices also moving markets yesterday. This morning, Asia is catching up with the US moves from last night. Several of the more technology heavy markets, including South Korea, are reversing yesterday’s losses and are sharply higher. European futures are slightly lower, while US futures are higher, again led by technology futures.
FI and FX: EUR/USD started off the week by printing a new two-month low whilst briefly touching 1.1500, before retracing marginally higher through the session. Global yields saw V-shaped action over yesterday’s session, with swap curves steepening modestly. After an elevated opening, Brent crude edged lower throughout the day and closed below USD95/bbl. The Norwegian krona underperformed peers, likely related to the price action in the oil market, whereas the neighbouring SEK positioned itself as today’s winner within G10 FX, with EUR/SEK closing below 10.90.
