EUROPEAN OPEN: TSM revenue rises in May; MBG GY to sign anti-drone infrastructure MoU; SMWH LN cuts guidance, will raise capital; INGA NA launches retail subscriptions; SAN FP halts late-stage riliprubart trial; ADS GY, STMPA FP upgraded

EUROPEAN OPEN:

European equities started a little higher, despite some downside in APAC stocks overnight, as investors cut tech exposure before US CPI inflation data, and after US attacks on Iran. The MSCI Asia Pacific declined, with South Korea’s Kospi falling as much as 5.4% as chip stocks resumed losses; the Korea Exchange briefly halted Kospi programme selling after futures dropped.
US CENTCOM said it completed self defence strikes on Iranian air defence and radar systems near the Strait of Hormuz after Iran downed a US Army Apache helicopter. President Trump said the response was strong and necessary. The IRGC claimed attacks on US bases and the Fifth Fleet in Bahrain. Prior to the flare-up, talks had narrowed to four nuclear issues, NYT reported, with discussions centring on a roughly 15-year halt to Iran’s nuclear programme; Washington sought 20 years of no enrichment, Iran proposed 10, with US demands including downblending stockpiles, dismantling Natanz, Fordo and Isfahan, and snap inspections. Oil erased gains, with Brent near USD 91/bbl.
Gold extended declines after US strikes on Iran raised inflation and rate concerns; bullion fell towards USD 4,170/oz, though has reclaimed the USD 4,200 mark as the European day gets underway; analysts at Standard Chartered have warned of further downside risks for gold. Aluminium fell to a one-month low as Middle East tensions and expectations for US rate hikes weakened sentiment for industrial metals; copper also fell, but reports cite China’s planned CNY 2tln data-centre spending supporting longer-term demand prospects.
In data releases, China’s CPI rose 1.2% Y/Y (exp. 1.3%), while Core CPI slowed to 1.1% Y/Y (from 1.2%); PPI picked up to 3.9% (exp. 3.8%); weak demand limited pass-through from higher energy, chip and metals costs, widening the PPI-CPI gap, analysts said.
Japan’s producer prices +0.9% M/M in May (exp. 0.5%), with annual prices climbing the most in three years (6.3% Y/Y vs exp. 5.5%). Higher petroleum and coal products, electric power, gas and chemicals drove the increase. Separately, Japan’s 30yr government bond auction drew the weakest demand since June 2025, with bid-to-cover falling to 2.94x (from 3.49). Most economists expect the BoJ to raise its key rate 25bps to 1% next week, with another hike to 1.25% by year-end.
Ahead, the highlight is the US CPI data for May, which comes ahead of PPI measures on Thursday, and next week’s FOMC meeting (see below for primer).

STOCK SPECIFICS:

INDUSTRIALS: Of note for industrials, the German government will today approve a plan to boost Germany’s aviation competitiveness and strategic sovereignty; the plan reportedly includes EUR 2bln to expand research into sustainable aviation fuels from 2030-39.
CONSUMER: Mercedes-Benz (MBG GY) is set to sign an MoU with Tytan Technologies to protect European critical infrastructure from hostile drones, as part of an attempt to expand into the defence sector. WH Smith (SMWH LN) cut profit guidance is raising capital via a placing and share offer amid weakened trading conditions and a probe into past accounting issues.
FINANCIALS: ING Groep (INGA NA) is introducing a four-tier retail subscription model across nine markets, bundling services to raise loyalty, personalisation and fee income above EUR 5bln, and revenue above EUR 25bln by 2027. UniCredit (UCG IM) said market take-up of its Commerzbank (CBK GY) buyout offer reached 10.9%, while Commerzbank found no institutional investor had tendered shares.
TECH: TSMC (TSM) reported a +30% Y/Y rise in May revenue to TWD 416.98bln (prev. 410.7bln), with combined April-May sales up approximately 24%; analysts expect a 35% Q2 sales increase. A Bloomberg article notes that despite ASML (ASML NA) record-highs, its relative valuation is at a multi-year low as gains lag AMAT and SSNLF, with the report citing investor concerns over pricing, slow high-NA tool adoption after TSM delayed deployment to post-2029, and whether capacity can scale fast enough to meet demand.
HEALTHCARE: Sanofi (SAN FP) halted a late-stage trial of riliprubart, an experimental treatment for chronic inflammatory demyelinating polyneuropathy, after an independent data-monitoring committee concluded the drug was unlikely to achieve sufficient efficacy.
NOTABLE BROKER UPDATES: Adidas (ADS GY) upgraded at RBC; STMicroelectronics (STMPA FP) upgraded at BofA; easyJet (EZJ LN) upgraded at Deutsche Bank; Svenska Cellulosa (SCAB SS) was initiated with a Neutral rating at BNP Paribas.

DAY AHEAD:

EVENTS: Apple WWDC continues (8-12 June).
DATA: In North America, US CPI data for May is expected to see the headline rise 0.5% M/M (prev. 0.6%), the annual rate climb to 4.2% Y/Y (prev. 3.8%); meanwhile, core inflation is seen rising 0.3% M/M (prev. 0.4%) and the annual rate of core CPI is expected to rise to 2.9% Y/Y (prev. 2.8%). Later, the US monthly budget statement for May is due (exp. USD -270bln, prev. USD 215bln).
CENTRAL BANKS: Bank of Canada is expected to keep rates at 2.25%; there will be a post-meeting press conference with Governor Macklem. Riksbank’s Thedeen speaks on safeguarding confidence and liquidity reserves in bank crisis. Hungary NBH meeting minutes are published.
SUPPLY: US auctions USD 39bln of 10yr notes. Germany auctions EUR 5bln of 2036 Bunds.
ENERGY: The DoE’s weekly energy inventories are due; afterhours on Tuesday, API data reportedly showed headline crude stocks posting a larger than expected draw of -9.1mln bbls (exp. -3.4mln), Cushing stocks drew down by -1.1mln bbls; in the products, distillate stocks posted a build of +1.3mln bbls (exp. -0.2mln), while gasoline drew by a larger than expected -1.2mln bbls (exp. -0.6mln).
EARNINGS: Notable US corporates reporting today include: Oracle (ORCL).
PRIMER - US CPI (13:30BST/08:30EDT): US CPI data for May is expected to see the headline rise 0.5% M/M (prev. 0.6%), driven primarily by another jump in energy prices, with the annual rate climbing to 4.2% Y/Y (prev. 3.8%), the highest since April 2023; meanwhile, core inflation is seen rising 0.3% M/M (prev. 0.4%) and the annual rate of core CPI is expected to rise to 2.9% Y/Y (prev. 2.8%). The Cleveland Fed’s inflation nowcasting model sees May headline CPI at +0.46% M/M and 4.18% Y/Y, with the core rate at +0.23% M/M and 2.82% Y/Y. Ahead, its June modelling sees headline CPI at +0.12% M/M and 4.05% Y/Y, with a June core rate of +0.23% M/M and 2.83% Y/Y. On the sell-side, both BofA and Citi are at or below consensus on core, forecasting +0.20% and +0.22% M/M respectively; both expect shelter inflation to normalise following April’s outsized print, which was distorted by government shutdown-related measurement issues; BofA specifically pencilled in OER at +0.26% M/M and rent at +0.25% M/M. Core goods and other services are also expected to print modestly. A key forward-looking risk flagged by BofA is that while most tariff-driven inflation has run its course, Iran war-related supply chain pressures are building and could push core goods inflation firmer in H2 of this year. Analysts will use the CPI and PPI data to model how the core PCE (the Fed’s preferred gauge) will come in; notably, core PCE has been running above core CPI since November, and that wedge looks set to persist; BofA initialised its core PCE tracking at +0.17% M/M (and 3.2% Y/Y) but flags upside risk from portfolio management fees; Citi expects a considerably firmer +0.37% M/M, driven by rising equity prices and AI-related components. The Cleveland Fed’s nowcast models May PCE headline at +0.4% M/M and 3.99% Y/Y; for June, headline PCE is seen at +0.2% M/M and 3.9% Y/Y, with core PCE at +0.27% M/M and 3.34% Y/Y.