Blowout Micron earnings lifts tech sector

EU mid-market update: Blowout Micron earnings lifts tech sector; Huge earthquake in Venezuela currently has unknown impact on oil production.

Notes/observations

- Micron's post-close results were the clear overnight catalyst, beating even elevated expectations and triggering a broad relief rally across the AI/semiconductor complex. Q3 EPS came in at $25.11 (vs $20.98e) on revenue of $41.5B (vs $36.5Be), with non-GAAP gross margin jumping to 84.9% from 39% a year ago, operating margin at 81.2% (more than doubled y/y!), and adjusted free cash flow of $18.3B versus just $1.95B y/y. The story was as much about guidance as the print: Q4 EPS guided to $30.00–32.00 (vs $24.91e) and revenue to $49.0–51.0B (vs $42.6Be), with gross margin seen near 86%, alongside a Capex step-up to $7.1B. The AI memory crunch is doing the heavy lifting on pricing. Shares ran ~16% after-hours and were last quoted up 18–19% pre-market. Read-through dominated Asia: the Nikkei hit a record high (+4.3%), Kospi rose as much as +6%, with SK Hynix +10%, Samsung +6%, Tokyo Electron +12% and Kioxia +9%; Nasdaq futures were up sharply (~+2%). For European cash, this is the supportive backdrop into the open for semis and AI-adjacent names.

- Big US banks aced the Fed’s stress tests exactly as scripted: capital barely dipped 1.6% despite a nasty recession scenario with crashing CRE, housing, and soaring unemployment, thanks to fat net interest income shielding them from $708B in projected loan losses. With scenarios and models now pre-released, the test has become theater rather than a real audit, freeing JPMorgan to announce $50B in buybacks, Morgan Stanley $20 billion, plus dividend hikes across the board while the Trump deregulatory wave loosens capital rules further. This green-lights the next leg - more lending, bigger acquisitions, and aggressive shareholder returns - as Jamie Dimon and peers shift from hoarding buffers to putting record profits to work in a deliberately deregulated environment.

- A major 7.5-magnitude earthquake struck the Moron region of Venezuela, causing collapsed buildings and significant damage extending to the capital, Caracas. USGS fatality modelling skews severe - roughly 39% probability of a death toll in the ~10,000 range, 37% for 1,000-10,000, and 13% for the 100,000 range - meaning this could become the deadliest land earthquake since Mexico City in 1985 (estimated 30,000-45,000 deaths). Pres Trump has instructed all US government agencies to assist. Market impact is limited for now given Venezuela's diminished role in global crude flows, but it's worth flagging for any energy/commodity exposure and as a developing humanitarian situation.

- Geopolitical risk premium continues to drain out of oil despite ongoing Iranian sabre-rattling. The IRGC Navy declared that safe Hormuz transit is only possible via Iranian-designated routes and that non-compliant vessels would "face action," but the market shrugged it off - front WTI touched fresh multi-month lows around $69/bbl. US Energy Sec Wright said a full return to normal flows is delayed a few weeks because of Iranian mines in the Strait, while stressing Iran will not be able to block Hormuz going forward. Sec of State Rubio struck a firm line: no deal "at any price," the Strait is an international waterway, and any tolling would set an unacceptable precedent - though he expressed hope for a positive outcome. Importantly, Maersk signalled a cautious restart of Hormuz movements (the Maersk Baltimore and another chartered vessel exited the Gulf and will pursue an additional transit), reinforcing the normalisation narrative. For European energy names this is a clear headwind: the sector slipped at the open as crude returned to pre-war levels amid near-term oversupply concerns. ECB's Schnabel cautioned that the US-Iran ceasefire is no reason for policymakers to relax.

- US consumers continue to spend at a very strong clip despite falling gasoline prices and the fading tailwind from tariff refunds. BofA Institute data shows total card spending rose +6.8% for the week ending June 21st (vs +5.9% prior week), with ex-gas spending holding rock-solid at +6.1%. Father’s Day timing (boosted by Juneteenth falling on the Friday before in 2026) provided some lift, but the underlying resilience is clear — even as gas spending slowed on lower prices, core consumption remains very robust June-to-date.

- UK politics turned market-relevant - reports that Chancellor Reeves is backing Andy Burnham as next PM, with reassurance he's committed to the fiscal rules, helped sterling firm and gilt yields steady on reduced political risk, though analysts flag a new PM could eventually face pressure to revisit the fiscal framework.

- As traders circulating unverified social chatters with mobile screenshots from Claude's coding interface showing Fable 5 as again selectable model labeled "For your toughest challenges.", Sakana’s Fugu flips the script: it trains orchestration as the core intelligence layer and claims to reach Fable-level performance on hard agentic tasks by letting a GRPO-trained Conductor autonomously discover dynamic roles, recursive self-calls, and brutal verification loops that actually deliver. It effectively kills the spoilage problem head-on by making negative capability the premium feature — cheap agents triage and murder bad premises early, quarantine risky paths, and only escalate what deserves premium silicon, turning the flood of cheap tokens from a liability into disciplined output under real budget and cleanup constraints. In a world where GPUs are softening and enterprises are hitting rationing walls, Fugu’s learned routing becomes the economic moat: it hides the proprietary topologies and model-selection logic behind a clean endpoint while giving you antifragile mixing across frontier, open, and local silicon without vendor lock-in.

- China said to be ramping up July refined fuel export quotas to 800Kt from ~600Kt in June and scrapping destination restrictions — a sharp reversal from March when Beijing was actively telling refiners to curb or halt exports amid Middle East supply stress. This surprise easing positions China as a bigger swing supplier of gasoline, diesel, and jet fuel into Asia, which should quickly relieve tight regional supply but hammer product cracks and refining margins across the board. For Chinese refiners holding quota access it’s a clear win, while the rest of Asian refining faces renewed margin pressure as Beijing flips from restraint to aggressive export liberalization.

- European defense remains a theme with Germany reaffirming its 3.5% target.

- Asia closed higher with KOSPI outperforming +5.4%. EU indices +0.4-0.8%. US futures +0.1-2.1%. Gold -0.1%, DXY -0.1%; Commodity: Brent -1.5%, WTI -1.5%; Crypto: BTC -1.6%, ETH -0.9%.

Asia

- Australia May Employment Change: +40.3K v +32.5Ke; Unemployment Rate: 4.4% v 4.4%e; Better May reading offset by negative revisions to April data.

- Australia May Household Spending M/M: 1.3% v 0.5%e; Y/Y: 5.5% v 4.3%e.

- South Korea Jun Business Manufacturing Survey: 101.2 v 100.8 prior; Non-Manufacturing Survey: 95.4 v 97.5 prior.

- BOJ’s Tamura (hawk) called for steady interest rate hikes and said the central bank should be prepared to tighten more aggressively if inflation risks increase, with rates ultimately moving toward a neutral level near 2%.

Global Conflict/tensions

- Israel-Lebanon talks in Washington ended their first day without progress.

- EU Commission Pres Von der Leyen: EU was transferring first tranche of promised loan to Ukraine today; €3.2B for microfinancial assistance.

Europe

- UK Chancellor Reeves reportedly backing Andy Burnham as next UK PM.

Americas

- All 32 US banks passed this year's stress tests, collective losses would be at $708B in a severe recession scenario, with capital levels still robust.

- USGS: 7.5 mag earthquake strikes in Moron, Venezuela region; Estimates death toll could range from 10,000 to 100,000 according to USGS initial estimates.

Energy

- IRGC Navy stressed that safe transit through Strait of Hormuz possible only via routes designated by Iran.

- UN Shipping Agency: almost 5 dozen ships have sailed through the Starit of Hormuz between Jun 23-25th under evacuation scheme.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 +0.60% at 638.96, FTSE +0.41% at 10,504, DAX +0.76% at 24,904, CAC-40 +0.34% at 8,414, IBEX-35 +0.12% at 19,413, FTSE MIB +0.32% at 51,806, SMI +0.23% at 14,151, S&P 500 Futures +0.66%].

Market focal points/key themes: European indices open mixed with an upward bias that strengthened through the early part of the session; lower energy prices seen supporting investor appetite; among sectors leading the way higher are financials and technology; lagging sectors include materials and industrials; tech sector supported following Micron’s earnings; EasyJet rejects fourth offer from Castlelake; BP, TotalEnergies enter Bag gas cap concession; Fuller offers to acquire Advanced Medical Solutions; focus on US PCE price index data coming out later in the day; earnings expected in the upcoming Americas session include Darden, Commercial Metals and TD SYNNEX.

Equities

- Consumer discretionary: H&M [HMB.SE] -2.0% (earnings; June sales), EasyJet [EZJ.UK] +6.5% (rejects 4th bid from Castlelake).

- Industrials: Maersk [MAERSKB.DK] +1.0% (Maersk Baltimore and another time-chartered vessel have exited the Persian Gulf; To pursue one additional Strait of Hormuz transit), Volkswagen [VOW3.DE] +2.5% (Bain Capital reportedly near deal for controlling stake in Volkswagen's Everllence diesel engine manufacturing subsidiary).

- Technology: Infineon [IFX.DE] +5.5% (Micron results and guidance), Eltel [ELTEL.SE] -5.0% (analyst downgrade).

Speakers

- ECB's Schnabel (Germany) stated that short-term situation now looked better than had expected, the US-Iran ceasefire was no reason for monetary policymakers to let their guard down. Need to raise rates further to bring inflation back to target.

- ECB Economic Bulletin reiterated stance that was committed to setting monetary policy to ensure that inflation stabilized at its 2% target in the medium term.

- IMF Article IV comments on SNB noted that the central bank should be flexible to move rates in either direction. FX intervention could be effective but had its limits.

- German Finance Agency confirmed Q3 federal debt sales of €138B.

- UK Chancellor Reeves noted that Burnham was clear on being committed to UK's fiscal rules; He would be the next UK PM; Labour has unfinished business on fiscal devolution.

- Austria WIFO Quarterly Economic Forecasts maintained 2026 GDP growth at 0.9% while cutting 2027 GDP growth forecast from 1.3% to 1.1%. WIFO raised the 2026 CPI forecast from 2.7% to 3.2% and raised 2027 CPI from 2.3% to 2.4%.

- US Sec of State Rubio commented that did not want a deal with Iran at any price; Strait of Hormuz did not belong to anyone, it was an international waterway.

Currencies/fixed income

- USD was slightly weaker in quiet trading on Thurs. Focus on a slew of US economic releases including Q1 final GDP and PPI data. Currently Fed rate outlook saw 66% chance of a pause at July meeting but a 49% chance of a rate hike at Sept meeting (15% chance of a 50bps hike then).

- EUR/USD moved off its 1-year low and was at 1.1360 by mid-session. ECB officials continued to note that more rate hikes were needed but its impact offset by expectations that the Fed will move into tightening later this year.

- USD/JPY inching closer towards the 162 neighborhood which would mark a 4 decade low for the yen currency. YEN unable to capitalize on hawkish commentary from BOJ member Himino as rate path divergence appeared comprised.

- 10-year German Bund yield last at 2.87%, France 10-year Oat at 3.63% and 10-year Gilt yield at 4.70% 10-year Treasury yield: 4.41%; 10-year JGB: 2.62%.

Economic data

- (FI) Finland May House Price Index M/M: -0.2% v +0.6% prior; Y/Y: -3.0% v -3.7% prior.

- (DE) Germany July GfK Consumer Confidence: -29.2 v -28.0e.

- (HU) Hungary May Unemployment Rate: 4.3% v 4.5%e.

- (FR) France Jun Consumer Confidence: 84 v 83e.

- (ES) Spain Q1 Final GDP Q/Q: 0.6% v 0.6% prelim; Y/Y: 2.7% v 2.7% prelim.

- (ES) Spain May PPI M/M: 1.0% v 2.0% prior; Y/Y: 10.5% v 8.5% prior.

- (IT) Italy Apr Industrial Sales M/M: 0.3% v 1.8% prior; Y/Y: 3.2% v 4.2% prior.

- (HK) Hong Kong May Trade Balance (HKD): -44.2B v -30.0Be; Exports Y/Y: 40.8% v 41.7%e v; Imports Y/Y: 42.0% v 40.2%e.

Fixed income issuance

- (IN) India sold total INR280B vs. INR280B indicated in 2040 and 2076 bonds.

- (UK) DMO sold £1.5B in 0.50% Jan 2029 Gilts via tender.

- (IT) Italy Debt Agency (Tesoro) sold total €6.0B vs. €6.0B indicated in 6-month bills (2 tranches).

Looking ahead

- (RO) Romania May M3 Money Supply Y/Y: No est v 6.8% prior.

- 05:25 (EU) Daily ECB Liquidity Stats.

- 05:30 (ZA) South Africa May PPI M/M: 1.6%e v 3.0% prior; Y/Y: 6.7%e v 4.8% prior.

- 05:30 (HU) Hungary Debt Agency (AKK) to sell 3-year, 5-year and 10-year bonds.

- 05:40 (UK) BOE 7-day short-term repo operation (STR).

- 06:00 (UK) Jun CBI Retailing Reported Sales: -40e v -46 prior; Distribution Reported Sales: No est v -35 prior.

- 06:00 (IE) ECB’s Lane (Ireland, chief economist).

- 07:00 (BR) Brazil Central Bank (BCB) Quarterly Monetary Policy Report.

- 07:00 (BR) Brazil Jun FGV Construction Costs M/M: No est v 0.8% prior.

- 08:00 (BR) Brazil mid-Jun IBGE Inflation IPCA-15 M/M: 0.5%e v 0.6% prior; Y/Y: 4.8%e v 4.6% prior.

- 08:00 (MX) Mexico May Unemployment Rate: 2.6%e v 2.5% prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (IT) ECB’s Cipollone (Italy).

- 08:30 (US) Q1 Final GDP Annualized (3rd reading) Q/Q: 1.6%e v 1.6% prelim; Personal Consumption: 1.4%e v 1.4% prelim.

- 08:30 (US) Q1 Final GDP Price Index: 3.5%e v 3.5% prelim; Core PCE Price Index: 4.4%e v 4.4% prelim.

- 08:30 (US) May Personal Income: 0.4%e v 0.0% prior; Personal Spending: 0.2%e v 0.5% prior; Real Personal Spending (PCE): 0.2%e v 0.1% prior.

- 08:30 (US) May PCE Price Index M/M: 0.5%e v 0.4% prior; Y/y: 4.1%e v 3.8% prior.

- 08:30 (US) May Core PCE Price Index M/M: 0.3%e v 0.2% prior; Y/Y: 3.4%e v 3.3% prior.

- 08:30 (US) May Preliminary Durable Goods Orders: -5.0%e v +8.0% prior; Durables (ex-transportation): 0.6%e v 1.1% prior; Capital Goods Orders (non-defense/ex-aircraft): +0.6%e v -1.0% prior; Capital Goods Shipments (non-defense/ex-aircraft): 0.5%e v 0.4% prior.

- 08:30 (US) Initial Jobless Claims: 225Ke v 226K prior; Continuing Claims: 1.80Me v 1.810M prior.

- 08:30 (US) May Chicago Fed National Activity Index: 0.12e v 0.14 prior.

- 08:30 (US) Weekly USDA Net Export Sales.

- 09:00 (RU) Russia Gold and Forex Reserve w/e Jun 19th: No est v $729.3B prior.

- 10:00 (BR) Brazil May Tax Collections (BRL): No est v 279.2B prior.

- 10:30 (US) Weekly EIA Natural Gas Inventories.

- 11:00 (US) Jun Kansas City Fed Manufacturing Activity: 6e v 8 prior.

- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.

- 12:00 (CA) Canada to sell 2 Year Bonds.

- 13:00 (US) Treasury to sell 7-Year Notes.

- 15:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 6.50%.

- 15:40 (US) Fed’s Williams.

- 18:30 (US) Fed's Goolsbee.

- 19:30 (JP) Japan Jun Tokyo CPI Y/Y: 1.6%e v 1.4% prior; CPI (ex-fresh food) Y/Y: 1.6%e v 1.3% prior; CPI (ex-fresh food/energy) Y/Y: No est v 1.6% prior.