The Monday Market Minute

  • US stocks set to extend gains following President Trump's decision to suspend tariffs on Mexican imports Saturday, as well as stronger-than-expected China export data and the ongoing tailwind of dovish global central banks.
  • Europe markets gain, but volumes were thin owing to the annual Whit Monday holiday; FTSE 100 posts solid gains as the pound slides following the steepest decline in manufacturing output since 2002.
  • Raytheon and United Technologies lay out details of the aerospace and defence sector's biggest-ever merger with a tie-up that would create a "top to tail" planemaker valued at $120 billion.
  • Wall Street futures suggest a triple digit gain for the Dow ahead of JOLTS employment data at 10:00 eastern time.

Market Snapshot

Global stocks rallied Tuesday, pulling Wall Street futures higher into the start of the trading week, as investors reacted to President Donald Trump's weekend decision to suspend tariffs on Mexico and continued to ride market gains fueled by dovish central bank signalling.

Trump defended his agreement with Mexico, which would have seen a 5% tariff applied to all imports as of today, while rising to 25% by the end of October, as he faced criticism for failing to extract new commitments on migration from President Andrés Manuel López Obrador.

Markets were more focused on the economic impact of the trade truce, however, and piled into risk assets in overnight Asia trading, as the yen fell 0.4% against the U.S. dollar and optimism returned to the region's financial markets. Stronger-than-expected May export data from China, as well as extended bets on Federal Reserve rate cuts following Friday's disappointing payroll data, added to the regional and European gains.

U.S. equity futures are indicating a 150 point opening bell advance for the Dow Jones Industrial Average, following Friday's 260-point gain, while contracts tied the S&P 500 are suggesting a 16.5 point gain for the broader benchmark. The Nasdaq Composite, however, is looking at a smaller 46 point rise as investors price in new risks of a global tax crackdown on the tech sector following this weekend's meeting in G20 Finance Ministers and Central Bankers in Fukukoa.

Tableau Software Inc. (DATA) - Get Tableau Software, Inc. Class A Report  shares surged 35% in pre-market trading following a move by Salesforce Inc. (CRM) - Get, inc. Report  to buy the group in a deal that values the data analytics group at more than $15.7 billion in stock and debt.

Raytheon Co. (RTN) - Get Raytheon Company Report shares were another an early market mover of note, rising 2.8% to 191.16 in pre-market trading following its decision to merger with United Technologies in a $120 billion all-stock deal that would market the aerospace and defense sector's biggest-ever tie-up. United Technologies (UTX) - Get United Technologies Corporation Report shares rose 5% to 138.79 each.

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European stocks were also boosted by merger news, with both Renault and Fiat Chrysler helping lift auto sector stocks in the opening hours of trading, following a report from Reuters that suggested their proposed $35 billion merger could be revived if the French government can help smooth relations between Renault and Japan and reduce the company's 43.4% stake in Nissan.

The Stoxx 600 benchmark was seen 0.15% higher by mid-morning trade, although market volumes were thin owing to Whit Monday holidays in major markets around the region.

Britain's FTSE 100 gained 0.5% by mid-day in London as the pound fell to 1.2689 against the U.S. dollar following some dismal economic data over the final months of the spring, which included a 0.4% GDP contraction for the month of April and the biggest slide in May industrial production since 2002.

Overnight in Asia, the region-wide MSCI ex-Japan benchmark surged 1%, while the Nikkei 225 added 1.2% to close at 21,134.42 after data from China showed exports rose by a stronger-than-expected 1.1% and its trade surplus with the United States hit a four-month high of $26.9 billion

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was back on the rise Monday amid the broader market optimism, although gains were capped by both expectations of faster and deeper Fed rate cuts and near-record low European bond yields.

Benchmark 10-year U.S. Treasury bond yields were marked modestly higher at 2.143% heading into the start of the trading session while similarly-date German bunds were changing hands at a near-record low yield of 0.24%.

Global oil prices were little-changed Monday, however, with traders focused on comments from Saudi Arabia's powerful energy minister, Khalif al-Falih, that suggested all OPEC members supported the idea of extending the cartel's 1.2 million barrel per day production cuts into the second half of the year.

OPEC ally Russia, al-Falih said, has yet to officially support the move, although both he and Russian Energy Minister Alexander Novak suggested last week that the world's second and third largest producers were "aligned" on the need to address market imbalances.

Brent crude contracts for August delivery, the new global benchmark, were seen 3 cents lower from from their Friday close in New York and changing hands at $63.26 per barrel while WTI contracts for the July were marked 13 cents higher at $54.12 per barrel.

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