EMEA Morning Briefing : Stock Futures Rise as Trump Pushes to End Lebanon Conflict

MARKET WRAPS

Watch For:

Eurozone inflation flash estimate; U.K. money and credit; trading update from British American Tobacco

Opening Call:

European stock futures traded higher early Tuesday. Asian stock benchmarks were mixed; the dollar was unchanged; Treasury yields were flat; while oil futures fell and gold rose.

Equities:

Stock futures point to a higher open in Europe, after President Trump sought to quell a growing conflict between Israel and Hezbollah that threatens to derail U.S. peace talks with Iran.

Trump declared that both sides had agreed to stop fighting and that Israeli Prime Minister Benjamin Netanyahu had called off attacks in Lebanon. The fighting in Lebanon had become a major sticking point in end-of-war talks as Iran considers the conflict a violation of the U.S.-Iran ceasefire. Hezbollah agreed to the terms, according to Lebanon's embassy in Washington.

"Middle East talks remain fluid, keeping geopolitical risks elevated," analysts at Commerzbank Research said.

Forex:

The dollar was unchanged, as traders weighed Middle East developments. "We expect the U.S. and Iran to agree to gradually re-open the Strait of Hormuz and a 60-day extension of the ceasefire to negotiate Iran's uranium enrichment sometime this week," CBA's Kristina Clifton said.

"Good news about the war ending will weigh on the USD because it is a safe-haven currency," the senior economist and senior currency strategist added.

Bonds:

Active global asset managers are adding more Canadian public-sector debt to their portfolios, as the Treasury market faces questions about U.S. debt sustainability, said Tiago Figueiredo, economist at Desjardins Group.

Investors "appear to be treating Canadian public-sector duration as a credible high-quality alternative to Treasurys, albeit with a much smaller market," Figueiredo said.

Energy:

Oil edged lower in early trade. "Geopolitical developments remain unfavorable, with negotiations aimed at securing a prolonged ceasefire still unresolved," said Spartan Capital's Peter Cardillo.

"Elevated geopolitical risk is likely to keep energy markets volatile, with upside risks to oil prices remaining firmly in place."

Metals:

Gold posted a third straight monthly decline in May as investors continued to focus on the inflationary impact of elevated energy prices instead of traditional safe-haven demand, said Ole Hansen, head of commodity strategy of Saxo Bank.

While near-term sentiment remains pressured, gold's recent weakness doesn't alter the longer-term bullish case amid continued central-bank purchases, de-dollarization trends, strong Chinese demand and concerns over rising fiscal deficits, Hansen said.

-

Copper and aluminum rose. President Trump has signed a proclamation adjusting certain metal tariffs to more effectively address national-security threats, the White House said.

Foreign companies that use more U.S. steel and aluminum can qualify for a 10% duty rate, if their capital equipment includes at least 85% of U.S. melted and poured or smelted and cast steel or aluminum by weight, it said.

The premium for copper in the U.S. has also risen again, ANZ Research analysts said. "This could see renewed flows of the metal to U.S. ports just as supply side issues mount in the market," they added.

-

Iron ore strengthened in early Asian trading. Shipping costs currently account for nearly 15% of iron ore prices, the highest in nearly five years, providing strong support for iron ore prices, Nanhua Futures analysts said. Overall demand remains supported, but upside will be limited due to ample supply, they said.

TODAY'S TOP HEADLINES

U.S. Presses Neutral Oman to Pick a Side and Cut Ties With Iran

At the start of the U.S.-Iran war, officials in Oman raced to establish a back channel with Tehran that, according to Arab officials, helped Gulf states reopen flight corridors-a diplomatic coup made possible by Muscat's staunch impartiality in the conflict.

Three months later, that neutral stance is beginning to backfire. Washington increasingly interprets Oman's approach toward Tehran as hostile to America and, according to U.S. and Arab officials, has pressed Oman to pick a side and cut diplomatic ties with Iran.

Trump Pushes to End Lebanon Conflict in Hope of Unlocking a Deal With Iran

President Trump on Monday aimed to quash a growing conflict between Israel and Hezbollah that threatened to derail his peace talks with Iran, declaring that both sides had agreed to stop fighting and that Israeli Prime Minister Benjamin Netanyahu had called off attacks in Lebanon.

Hezbollah agreed to the terms, according to Lebanon's embassy in Washington. Netanyahu said he would attack "terror targets in Beirut" if Hezbollah continued targeting Israel. Israeli forces would continue operating in southern Lebanon, Netanyahu added.

Google Seeks $80 Billion for AI Buildout; Berkshire Will Buy $10 Billion Stake

Google parent Alphabet on Monday announced a plan to issue $80 billion in equity to finance enormous capital expenditures tied to the artificial-intelligence race.

The company said it had reached an agreement to sell $10 billion of stock to Berkshire Hathaway, deepening one of the Omaha, Neb.-based holding company's few big-tech investments. Alphabet plans to issue another $70 billion by various means this year.

Anthropic Files to Go Public in Blockbuster Year for IPOs

Anthropic, the artificial intelligence lab recently valued at nearly $1 trillion, said Monday it has filed confidentially for an initial public offering, setting up a blockbuster year for IPOs.

The filing could put the company behind the Claude AI model on a path to go public this fall.

Write to [e-mail]

Expected Major Events for Tuesday

00:01/IRL: May Ireland Manufacturing PMI

04:30/NED: Apr Retail turnover

04:30/NED: May Flash Estimate CPI

06:00/SWI: Apr Trade Balance

06:30/HUN: 1Q GDP

07:00/SPN: May Unemployment

07:00/SVK: 1Q Labour Force Sample Survey: Employment & unemployment

07:00/SVK: 1Q Average monthly wage of employees

08:00/GRE: May Greece Manufacturing PMI

08:30/UK: Apr Money and Credit - Lending to Individuals, Lending to Businesses, Broad Money and Credit

08:30/UK: Apr Bank of England effective interest rates

08:30/UK: Apr Monetary & Financial Statistics

08:30/UK: 1Q Household Finance Review

09:00/CYP: 1Q GDP

09:00/CYP: Apr Retail trade

09:00/EU: May Flash Estimate euro area inflation

15:00/DEN: May Foreign Exchange & Liquidity

16:59/POL: Polish interest rate decision

All times in GMT. Powered by Onclusive and Dow Jones.

Write to us at [e-mail]

We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

06-02-26 0015ET