Europe receiving leftovers of Friday's brutal tech selloff as SpaceX hype accelerates into IPO

Notes/observations

- European equities broadly lower, with tech and German DAX setting the pace to the downside. FTSE 100 is more resilient on its commodity-heavy, defensive tilt; Direct continuation of Friday's US rout - the worst day for US stocks since October, with the SOX posting its worst week since March 2020 (-10%) - that has since rolled through Asia and into Europe. The proximate blame is a Broadcom disappointment colliding with a strong US payrolls print that triggered hawkish repricing of the Fed path. The more interesting read is a supply-and-liquidity narrative building underneath the price action: chatter that the SpaceX IPO (12th June) is prompting funds to raise "powder," dovetailing with a broader equity-supply overhang - Meta reportedly weighing a tens-of-billions stock offering (FT) on the heels of Google's equity sale, and the WSJ report that US officials have discussed taking stakes in the AI industry (an idea Altman floated in 2025). Market is being asked to absorb heavy primary equity supply in AI names just as the rate-cut cushion is pulled away - a poor backdrop for richly valued semis and growth. That said, the unwind looks more like positioning than a broken thesis. Huang is publicly framing the dip as a buying opportunity and unveiled a multi-year SK Hynix partnership; SemiAnalysis is defending its Vera Rubin SOCAMM memory-cut report against "fake news" claims (supply-chain noise feeding the vol); and the policy bid is intact, with Starmer pledging £400M for specialist AI chips at London Tech Week (in line with the prior ~£1B compute commitment) and Korea's Lee touting full-industry AI integration.

- Key local catalyst is Thursday's ECB, and it carries a notable tension. The market is almost fully priced (99%) for a 25bps hike to a 2.25% deposit rate - the ECB tightening into this tape - but the path beyond is split, and the incoming data is uncomfortable. German April factory orders cratered -3.8% m/m (vs -2.0%e), dragged by autos, with the y/y collapsing to 1.6% from 4.8%e; eurozone Sentix was a touch better than feared at -13.4 (vs -14.0e), and the forward expectations component improved meaningfully to -6.5 from -11.3. The risk some are flagging is a policy mistake - hiking into clearly deteriorating activity. A hawkish ECB layered on top of fading Fed cuts compounds the headwind for the same duration-sensitive growth and tech names already under pressure, so the equity and rates stories are reinforcing rather than offsetting each other this week.

- Energy is the cleanest expression of the third theme. Oil & Gas (SXEP) is the standout sector gainer at +0.7%, bid on Middle East risk premium: Iran fired a missile barrage at Israel, Israel retaliated with strikes inside Iran, a separate missile launched from Yemen toward Israeli territory, and Saudi civil defense issued an Al-Kharj early warning near Riyadh. Crucially, this is a premium bid, not a fundamentals bid - OPEC+ confirmed an additional +188K bpd from July (as expected) and Aramco raised July Arab Light to +$12.60/bbl vs ASCI for the US, so physical supply is actually rising. Trump is simultaneously playing the conflict down, insisting a deal is "close" (possibly signed Mon–Wed), with access to frozen Iranian assets - to be made available to Gulf allies - cited as a sticking point. The implication: a credible Iran agreement would deflate both the oil premium and, per Trump, fertilizer and gasoline prices, so the energy complex is unusually headline-sensitive into mid-week. Watch this as a fast-moving swing factor for the FTSE's relative resilience.

- WWDC 2026 keynote tonight is expected to center on Apple's continued push into AI, particularly a significant Siri overhaul. Reports point to a more conversational, chatbot-style assistant with Gemini integration, a potential dedicated app, Dynamic Island enhancements, and improved contextual awareness across platforms - though many features may launch in beta. iOS 27, macOS 27, and related updates are slated for preview, incorporating broader Apple Intelligence capabilities in areas like Photos, Health, and developer tools under the "All Systems Glow" theme. This event carries added weight as Tim Cook's likely final keynote in the CEO role, ahead of the planned September transition to John Ternus.

- M&A dominated European corporate news: Intesa Sanpaolo launched a cash-and-shares offer for MPS - itself a response to Banco BPM's weekend proposal for a merger of equals with MPS - with Unipol expected to take MPS branches from Intesa; In the UK, Ingredion confirmed a recommended offer for Tate & Lyle.

- On rates, BOE's Taylor sounded comfortable on hold, and Hungary's MNB signaled that disinflation and a lower risk premium (post-election forint rally, EU-fund hopes) have cut the neutral rate, keeping a June cut live off 6.25%.

- FX is subdued with USD/JPY holding above ¥160 and Japanese officials quiet, even as final Q1 GDP was revised up (0.5% q/q, 1.8% annualized) and May bank lending accelerated to 5.7%.

- Asia closed lower with KOSPI underperforming -8.3%. EU indices -0.4% to -0.9%. US futures -0.3% to +0.5%. Gold -1.0%, DXY +0.1%; Commodity: Brent +4.5%, WTI +4.4%; Crypto: BTC +1.0%, ETH +1.5%.

Asia

- Japan Q1 Final GDP Q/Q: 0.5 v 0.5% prelim; GDP Annualized Q/Q: 1.8% v 2.1% prelim.

- Japan Apr Current Account Balance: ¥3.908T v ¥3.119Te; Trade Balance (BoP Basis): ¥395.7B v ¥512.6Be.

- Japan May Bank Lending Y/Y: 5.7% v 5.4% prior.

Global conflict/tensions

- Iranian ballistic missile barrage against Israel, Tehran's first strike since their April ceasefire.

- Israel launched counter strikes on military targets in western and central Iran in response to Iranian missile attacks, Israel targeted Iranian petrochemical facility in new attack (**Note: Israel War Cabinet is expected to convene at 11a.m.on Monday, following the latest Iranian missile barrage).

- US military noted that early Saturday Iran fired 7 missiles as well as drones toward Kuwait and Bahrain; Drones were also fired toward 4 commercial ships in the Strait of Hormuz; US intercepted multiple missiles and drones. No reports of harm to US personnel.

- President Trump said to have urged Israel PM Netanyahu to refrain from retaliating against Iran's missile strikes, advising him to allow more window for diplomacy. Trump in a FT interview noted Netanyahu would have no choice but to accept any US-negotiated deal with Iran. Trump emphasized his own authority over the situation, declaring, "I call the shots. I call all the shots.

- Iran Parliamentary Speaker Qalibaf stressed that neither US or Israel was committed to a ceasefire nor believed in dialogue. Naval blockade and violation of agreements on Lebanon, they showed that they only understand the language of power.

- US said to be planning to make frozen Iranian assets available to Gulf allies to support rebuilding and repairs for future damage caused by Iran, and potentially for past damages as well.

- NATO allies said to weigh new €70B military aid pledge for Ukraine. Potentially to be announced at a summit in Ankara.

Europe

- ECB’s Patsalides (Cyprus) said the case for joint European debt is ‘compelling’ and that large common safe asset would strengthen the EU’s sovereignty.

Americas

- Goldman Sachs analyst now expected US FED to maintain interest rates unchanged for 2026, saw two 25bps rate cuts each in Jun 2027 and Dec 2027 [further pushed back call for rate cuts after US jobs data] (**Note: President Trump has argued against raising interest rates despite growing expectations of a Fed hike).

Energy

- Oil prices higher by over 4% as geopolitical events in Mid-East remain on the front burner.

- OPEC+ to raise output targets by an additional 188K bpd (as expected) starting in July, 2026.

- US Resolution to IAEA said to demands that Iran tell the agency what happened to its bombed nuclear sites and the enriched uranium stored there.

Speakers/fixed income/FX/commodities/erratum

Equities

Market focal points/key themes: European equities opened the week with measured resilience amid transatlantic turbulence. European indices slipped today, catching up with US markets' losses from Friday, with the DAX shed around 0.8%, the CAC 40 declined 0.3%, and the FTSE 100 remained broadly flat—demonstrating markedly lower volatility than Wall Street's sharper retreat. Geopolitical flares between Iran and Israel, coupled with elevated oil prices near $98 per barrel, injected inflationary caution, yet Europe's more defensive and commodity-tilted composition cushioned the blow relative to AI-heavy US indices. Technology and semiconductor stocks faced spillover pressure from Broadcom's disappointing results and broader AI enthusiasm doubts, though limited exposure spared the continent the Nasdaq-style rout.

Equities

- Consumer discretionary: On The Beach [OTB.UK] +5.0% (share buyback).

- Consumer staples: Tate & Lyle [TATE.UK] +13.5% (offered to be acquired; trades under offer price due to regulatory concerns).

- Financials: Banca Monte Paschi de Siena [BMPS.IT] +11.5% (Intesa is preparing to make an offer for Banca Monte Paschi de Siena in attempt to "gatecrash" €50B bank merger).

- Healthcare: Zealand Pharma [ZEAL.DK] -26.5% (trial results).

- Porsche [P911.DE] +3.5% (analyst upgrade), Evonik Industries [EVK.DE] -1.0% (analyst downgrade), MPAC Group [MPAC.UK] -11.5% (trading update).

Economic data

- (DE) Germany Apr Factory Orders M/M: -3.8% v -2.0%e; Y/Y: 1.6% v 4.8%e.

- (ES) Spain Q1 INE House Price Index Q/Q: 3.5% v 1.8% prior; Y/Y: 12.9% v 12.9% prior.

- (CZ) Czech Apr Industrial Output Y/Y: 1.5% v 0.5%e; Construction Output Y/Y: 7.7% v 5.8% prior.

- (CZ) Czech Apr Trade Balance (CZK): 6.8B v 18.0Be.

- (CH) Swiss weekly Total Sight Deposits (CHF): 469.6B v 468.6B prior.

- (CZ) Czech May Unemployed Rate: 4.8% v 4.8%e.

- (EU) Euro Zone Jun Sentix Investor Confidence: -13.4 v -14.0e.

- (IS) Iceland May Preliminary Trade Balance (ISK): -56.6B v -65.9B prior.

- (HU) Hungary May YTD Budget Balance (HUF): T v -3.849T prior.

- (SG) Singapore May Foreign Reserves: $430.1B v $427.3B prior.

Fixed income issuance

- None seen.

Looking ahead

- 05:30 (DE) Germany to sell combined €4.0B indicated in 6-month and 12-month BuBills.

- 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).

- 06:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 06:00 (IL) Israel to sell ILS2.3B in 2031, 2035, 2037 and 2056 bonds and linkers.

- 06:30 (TR) Turkey to sell 5.2% 2027 bonds and 5.26% 2030 inflation-linked bonds.

- 06:00 (IE) Ireland May Live Register Monthly Change: No est v -0.2K prior; Live Register Level: No est v 170.6K prior.

- 07:25 (BR) Brazil Central Bank Weekly Economist Survey.

- 07:30 (TR) Turkey May Real Effective Exchange Rate (REER): No est v 106.3 prior.

- 08:00 (CL) Chile May CPI M/M: 0.4%e v 1.3% prior; Y/Y: 4.2%e v 4.0% prior.

- 08:00 (MX) Mexico May Vehicle Production: No est v 329.9K prior; Vehicle Exports: No est v 286.3K prior.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:30 (CL) Chile May Trade Balance: $2.0Be v $1.9B prior; Exports: No est v $9.7B prior; Imports: No est v $7.8B prior; Copper Exports: No est v $4.6B prior.

- 08:30 (CL) Chile May International Reserves: No est v $51.5B prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.3-7.9B in 3-month, 6-month and 12-month bills(4 tranches).

- 11:00 (US) May NY Fed 1-Year Inflation Expectations: 3.7%e v 3.6% prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 18:45 (NZ) New Zealand Q1 Manufacturing Activity Q/Q: No est v 0.6% prior; Manufacturing Activity Volume Q/Q: No est v -0.5% prior.

- 19:00 (KR) South Korea Q1 Preliminary GDP (2nd reading) Q/Q: 1.7%e v 1.7% advance; Y/Y: 3.6%e v 3.6% advance.

- 19:01 (UK) May BRC LFL Sales Y/Y: 0.8%e v -3.4% prior.

- 19:50 (JP) Japan May M3 Money Supply Y/Y: No est v 1.6% prior; M2 Money Supply Y/Y: No est v 2.3% prior.

- 20:01 (IE) Ireland May Construction PMI: No est v 47.1 prior.

- 20:30 (AU) Australia Jun Westpac Consumer Confidence Index: No est v 83.0 prior.

- 21:00 (PH) Philippines Apr Unemployment Rate: No est v 5.0% prior.

- 21:30 (AU) Australia May NAB Business Confidence: No est v -24 prior; Business Conditions: No est v 3 prior.

- 23:30 (JP) Japan to sell 6-Month Bills.