EUROPEAN OPEN: ITX SM Q1 sales beat, May/June growth accelerates; BP/ LN held North Sea asset sale talks; CG wins EU approval for BAS GY coatings deal; BAYN GY has no plans to spin-off Monsanto; PRX NA gets extended DHER GY stake deadline

EUROPEAN OPEN:

• Global equities rose to record highs, with the MSCI All Country World Index rising, and APAC stocks mostly advancing overnight, led by chipmakers after the Philadelphia Semiconductor Index rallied to a record Stateside. However, European equities are opening on a downbeat note amid fresh clashes in the Middle East; Iran fired ballistic missiles at Kuwait and Bahrain, while US forces conducted strikes on Iran’s Qeshm Island.
• Brent is advancing for a third day, trading around USD 98/bbl, as fresh clashes in the Middle East clouded US-Iran peace negotiations. Gold edged lower, near USD 4,460/oz. Copper retreated from a three-week high. US Treasury yields are edging higher as diplomatic efforts to resolve the Middle East conflict stall.
• USDJPY hovered near 160 amid heightened intervention risk, having briefly touched the level earlier in the session; follows last week’s update that Japan had spent a record JPY 11.73tln on currency support in May. FinMin Katayama reiterated authorities stand ready to respond as needed. BoJ Governor Ueda is scheduled to speak later today. Elsewhere, Japan’s cabinet approved a JPY 3.1tln extra budget to cushion households from Middle East-driven inflation; total bond issuance will remain unchanged on a calendar basis; the extra budget will be submitted to parliament on Wednesday, with passage expected as early as Friday.
• In China, the Caixin services PMI rose to 54.4 in May (exp. 52.3, prev. 52.6), broadly in line with the official PMI survey, which showed services activity at 50.3 in May (from 49.6), partly boosted by a five-day holiday break.
• In trade news, the US proposed new tariffs of at least 10% on imports from 60 trading partners following a Section 301 investigation into goods allegedly produced by forced labour; a 10% rate would apply to Canada, Mexico, the EU, Taiwan and the UK, while China, India, Japan, South Korea, Brazil and Switzerland would face 12.5%. The levies are subject to a public comment period, with written comments due by 6th July, and hearings beginning 7th July, before any duties are codified.
• In the UK, Andy Burnham cancelled a planned call with hedge fund managers that was due to discuss issues including “balancing fiscal policy change with bond market pressure”; his team said it was postponed because of by-election commitments, amid investor unease over his borrowing plans and an expected Labour leadership challenge.
• Ahead, highlights include final services PMI data for May, Eurozone PPI, US ADP jobs figures, US ISM Services; speakers include the BoJ’s Ueda, ECB’s Elderson & Cipollone, Fed’s Goolsbee, Barr and Logan. After the US close, earnings are due from Broadcom (AVGO).

STOCK SPECIFICS:

• CONSUMER: Inditex (ITX SM) Q1 sales +8.8% at EUR 8.75bln (exp. 8.72bln), with net profit rising to EUR 1.38bln (vs 1.31bln Y/Y); sales growth accelerated +11.5% in the period from May to June. The company continues to anticipate a stable gross margin for the year through January 2027, +/- 0.5ppt. It added that its Spring/Summer collections have been very well received. The European Commission plans to extend Prosus’ (PRX NA) deadline to sell down its 17% Delivery Hero (DHER GY) stake to 11th October, a condition of its Just Eat Takeaway acquisition; the extension could let Prosus consider a Delivery Hero bid or buy more shares after Uber’s (UBER) EUR 10bln offer was rejected.
• ENERGY: BP (BP/ LN) held advanced talks to sell its UK North Sea assets to Ithaca Energy in a deal worth close to GBP 2bln, though those talks failed in recent weeks, FT reports. BP is still exploring a sale, and may pursue a transaction with other parties.
• MATERIALS: The European Commission has approved Carlyle’s (CG) acquisition of a majority stake in BASF’s (BAS GY) coatings business, subject to the divestiture of Nouryon’s global polysulphide business to a suitable buyer; the transaction values the coatings business at EUR 7.7bln, with BASF retaining a 40% stake and the QIA participating as a co-investor. Voestalpine (VOE AV) FY25/26 net income more than doubled Y/Y, despite a 4% revenue decline; EBITDA and EBIT were up, supported by restructuring and strong orders in railway systems, aerospace and warehouse technology. The company cited 50% US steel tariffs as having a significant negative impact.
• INDUSTRIALS: Maersk (MAERSKB DC) said measures to avoid the Strait of Hormuz are creating severe economic pressure, with incremental expenses from re-routing and rising fuel costs already exceeding USD 500mln/month.
• HEALTHCARE: Bayer (BAYN GY) reportedly has no plans to spin off Monsanto despite facing approximately 100,000 lawsuits over its Roundup weedkiller, according to Reuters. Roche (ROP SW) said its 2027 pipeline catalysts include potentially underappreciated upside in diffuse large B-cell lymphoma, with its Phase 3 SkyGlow trial described as a significant multi-billion-dollar opportunity that is not yet fully reflected in consensus estimates.
• TECH: Intel (INTC) said progress to date could allow it to pull in some FY27 margin targets, according to comments from its presentation at the Bank of America Global Technology Conference. Palo Alto Networks (PANW) shares gave up gains of around 10% in extended trading, ending afterhours with losses of around 3%, despite a beat-and-raise. Morgan Stanley raised its PT on ASML (ASML NA) to EUR 1,660 (prev. 1,400).

DAY AHEAD:

• DATA: In Europe, final S&P Global Services PMIs are due (France exp. 42.9 from 46.5; Germany exp. 47.8 from 46.9; Eurozone exp. 46.4 from 47.6); UK final S&P Global Services PMIs seen at 47.9 (prev. 52.7). Eurozone PPI for April is also released (prev. 2.1% Y/Y). In North America, US ADP employment change for May (exp. 117K, prev. 109K); ISM Services PMI is seen at 53.8 (from 53.6), with prices at 71.3 (prev. 70.7), new orders at 52.8 (prev. 53.5) and employment at 48.1 (prev. 48.0). US factory orders also released today (prev. 1.5% M/M).
• CENTRAL BANKS: BoJ Governor Ueda is scheduled to speak at 17:30pm on Wednesday (09:30BST), ahead of its 16th June rate-setting meeting. The Fed will release its Beige Book. Fed’s Goolsbee (2027 voter), Fed’s Barr (voter), Fed’s Logan (2026 voter); ECB’s Elderson, ECB’s Cipollone. NBP’s Glapinski is due to give remarks today following yesterday’s NBP decision to hold rates.
• SUPPLY: UK auctions GBP 1.6bln of 2035 linkers.
• ENERGY: EIA weekly energy inventories due; afterhours on Tuesday, API data reportedly showed headline crude stocks drawing by a larger than expected -6.8mln bbls (exp. -3.6mln), Cushing drawing by -0.3mln bbls, distillates posting a smaller than expected draw of -0.2mln bbls (exp. -0.6mln), and gasoline posting a surprise build of +3.5mln bbls (exp. -0.1mln).
• EARNINGS: Notable companies reporting today include: Broadcom (AVGO), CrowdStrike (CRWD), Medtronic (MDT), Veeva Systems (VEEV), Macy’s (M), PVH Corp. (PVH).