U.S. stock futures moved higher in pre-market trading as traders covered short positions following a swift conclusion to the latest U.S. airstrikes on Iran, with expectations rising for resumed peace talks and the reopening of the Strait of Hormuz. U.S. Treasury yields and Bitcoin gained, while gold declined.
As of the time of writing, Dow futures were up 0.80%, S&P 500 futures were up 0.77%, and Nasdaq futures were up 1.26%.
The pan-European STOXX 600 index and the euro edged slightly higher. Overnight, the MSCI global equity index had fallen to a one-month low, while European indices advanced in early trading. Oil prices initially rose and energy stocks were boosted following new U.S. military action against Iran. The pan-European Stoxx 600 index gained 0.4%, with London's FTSE 100 and France's CAC 40 both up 0.5%. Germany's DAX index rose 0.03%.
Market Concerns Over Tech Bubble
U.S. inflation data reached a three-year high as the Middle East conflict pushed oil prices higher. Concurrently, concerns that the tech bubble may have peaked, ahead of the SpaceX IPO, weighed on index performance.
Shares of Oracle Corporation fell over 7% in U.S. pre-market trading after its data center spending exceeded expectations. The company forecasts net capital expenditure of approximately $70 billion for the fiscal year ending May 2027.
Chip and space-related stocks outperformed. While AI-themed stocks have recently led global markets to repeated new highs, traders are questioning whether the rally has gone too far due to profit pressures.
Andrea Tueni, Head of Sales Trading at Saxo Banque France, stated: "Market sentiment has shifted rapidly since Friday's sell-off, with increased volatility and more cautious investment choices. Even with an overall upward trend, we must be wary of more irregular fluctuations."
Oil Prices Reverse Gains
Approximately four hours after launching airstrikes on multiple Iranian targets, U.S. Central Command announced the conclusion of "additional self-defense" actions. Brent crude oil reversed its gains, falling about 1.2% to trade near $92 per barrel.
Jorge Leon of Rystad Energy commented: "The probability of a near-term agreement has decreased, and the current path is more uncertain. The coming days will be crucial in determining whether diplomacy can regain its role or if the conflict will enter a more sustained cycle of escalation." Meanwhile, the latest EIA inventory data showed U.S. crude oil stocks continued to tighten, decreasing by 7.2 million barrels last week.
Trump Aims to Avoid Escalation
Despite concerns about further escalation, U.S. President Trump indicated that the U.S. would act again if Iranian leaders do not sign a provisional peace agreement. Iran's Foreign Ministry stated the latest attacks rendered the existing ceasefire "meaningless." However, traders found some comfort in the view that further escalation would be detrimental to all parties.
Hostilities in the Middle East escalated again this week. On Monday, a U.S. Apache helicopter was shot down near the Strait of Hormuz, triggering a series of retaliatory strikes between targets in Iran and U.S. bases in the region. However, three Iranian sources and one European official told Reuters on Thursday that efforts to reach a preliminary peace deal with Washington had intensified, with information being exchanged on a proposed "memorandum of understanding."
Christophe Boucher, Chief Investment Officer at ABN Amro Investment Solutions, said: "We maintain an overweight position in equities. The market believes Trump does not want further escalation and does not want oil prices to spike again."
SpaceX IPO Draws Market Attention
The market is anticipating the SpaceX listing, with its $75 billion initial public offering set to price on Thursday. According to informed sources, subscription demand exceeded the available shares by four times. The potential SpaceX and OpenAI listings have sparked debate: will investors withdraw funds from existing stocks to participate in the IPOs, or will they further fuel the AI stock rally?
Josh Gilbert, Chief Analyst at eToro for Asia-Pacific and the Middle East, said: "Investors cannot ignore the impact of the SpaceX IPO on the market. This historically large listing will test whether market enthusiasm for AI trades remains high." Kylar Montgomery Koning, Bloomberg Macro Strategist, noted: "A wave of AI company IPOs starting this week could usher in a new phase of stock market gains while also exposing potential risks. In the short term, the upward momentum may be more pronounced."
Bond Markets Focus on European Central Bank
U.S. Treasury yields recovered across the board, with the 10-year yield rising 1 basis point to 4.5483%. Eurozone bond yields edged higher, with Germany's 2-year yield, most sensitive to ECB rate moves, rising 1.5 basis points to 2.72%. Investors are focused on the upcoming European Central Bank interest rate decision. The key focus of this meeting is how much guidance the ECB will provide on the future rate path following the expected hike and what signals the updated staff projections will release regarding the outlook.
Julien Lafargue, Chief Market Strategist at Barclays Private Bank, said: "For the market, the key question is how the ECB will define this action: as a 'one-off hike' or the start of a tightening cycle." Tradeweb data showed Germany's 10-year bond yield rose 0.9 basis points to 3.079%.
Fed Rate Hike Expectations Heat Up
The U.S. Dollar Index, which measures the dollar's strength against a basket of six major currencies, edged higher, slightly above 100. Investors weighed the latest developments in the Middle East conflict and Wednesday's U.S. inflation data ahead of the Federal Reserve's policy decision on June 17. U.S. headline annual inflation for May rose to 4.2% as expected, but core inflation slowed more than anticipated month-over-month to 0.2%. Evercore ISI analysts said this gave the Fed "some breathing room." Market expectations for the timing of a potential Fed rate hike are also heating up. According to CME Group's FedWatch tool, federal funds futures indicate an implied probability of 51.6% for a rate hike at the two-day meeting concluding on October 28.
European Central Bank Poised to Hike Rates
The euro was largely flat, just above $1.15, ahead of the European Central Bank's interest rate decision and subsequent press conference scheduled for 20:15 Hong Kong time on Thursday. The ECB will then release a new set of internal economic forecasts. Inflation in the 21-nation eurozone has exceeded 3%, well above the ECB's 2% target, while economic growth has slowed. This would be the first rate hike since 2023, aimed at addressing inflationary pressures stemming from the Iran conflict. Markets will also focus on comments from ECB President Christine Lagarde regarding the future policy outlook.
Julien Lafargue, Chief Market Strategist at Barclays Private Bank, stated: "For the market, the key question is how the ECB will define this action: as a 'one-off hike' or the start of a tightening cycle." He added that, given the ongoing Iran conflict, President Lagarde would likely try to avoid committing to any follow-up actions to preserve "maximum policy optionality."
Bitcoin and Gold Rebound
In the cryptocurrency market, Bitcoin rebounded after three consecutive days of declines. Bitcoin rose 0.4% to $62,013.58; Ethereum gained 0.3% to $1,634.13. Both stabilized slightly after recent selling pressure. The upcoming SpaceX IPO is driving a rotation of funds out of cryptocurrencies and other speculative assets.
Naeem Aslam, an analyst at Zaye Capital Markets, noted that geopolitical uncertainty could weigh on Bitcoin in the short term as traders reduce exposure to speculative assets, but Bitcoin could attract longer-term interest when investors seek alternatives to traditional assets. He said Wednesday's inflation data had a similarly mixed impact on Bitcoin.
Gold prices continued to retreat as investors assessed U.S. monetary policy prospects. New York gold futures fell 0.1% to $4,129.60, bringing the weekly loss to over 8%. Analysts at ING stated that while geopolitical uncertainty and central bank gold purchases continue to provide long-term support for gold, the short-term price direction will remain closely tied to U.S. economic data, U.S. Treasury yields, and Fed policy expectations. Traders are now awaiting PPI data due later on Thursday.
JPMorgan: Expects Fed to Hold Rates Unchanged Unanimously Next Week
Despite the latest U.S. inflation data reaching its highest level in over three years, J.P. Morgan Asset Management believes this is insufficient to prompt the Federal Reserve to act at next week's meeting, with policymakers most likely to continue holding rates steady.
David Kelly, Chief Global Strategist at J.P. Morgan Asset Management, stated that while inflation remains above the Fed's target, the May data likely marked the peak of this inflation cycle, and price pressures are expected to gradually ease in the coming months. "Essentially, I think the Fed will decide to do nothing next week with a 12-0 vote."
U.S. core CPI for May, excluding food and energy, rose only 0.2% month-over-month, below market expectations, indicating underlying inflationary pressures did not worsen significantly further.
Kelly believes this is also a key reason the Fed can remain patient and watchful. He said: "Seeing inflation back in the '4-handle' is not a pleasant sight, but there is also no reason to ease monetary policy immediately at this time."
Gold Trapped in a "Worse Chaos, Deeper Fall" Dilemma! Options Market Bets on a Two-Year Gold Winter.
Gold prices seem unlikely to shake off their sluggishness in the near term. The key reason is that this round of Middle East geopolitical risk is not being interpreted by the market simply as "safe-haven buying of gold." Instead, it is being repriced as a macro shock chain: "rising oil prices → rising inflation expectations →升温的Fed rate hike bets → rising real rate expectations and a strengthening dollar."
The dominant pressure on gold currently is not insufficient panic buying due to geopolitics, but rather that geopolitical conflict, via energy prices, has increased the "opportunity cost of holding a non-yielding asset."
Currently, the most actively traded put option contract for the GLD gold ETF is an in-the-money contract expiring today with a strike price of $380; the second most popular is a put option expiring in June 2028 with a strike price of just $240—each contract priced at $11.50. This is a deeply bearish bet, wagering that the price of the gold ETF will fall another 40% over the next two years.
Morgan Stanley: U.S. Stock Liquidity Unfazed by Super IPO Wave "Indigestion"
Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley, stated that despite a constant stream of new deals coming to investors at a rapid pace, the market's ability to digest this wave of stock and bond issuance indicates its underlying financial health remains robust.
Wilson expressed confidence that the market has sufficient funds to handle the recent surge in IPO activity. He described the current environment as "another banner year," though not comparable to the peak in 2021, it still demonstrates strong investor demand.
He added that continued inflows from retail investors, pension recipients, and other asset owners further support market depth.
Wilson acknowledged that concentrating multiple deals within a single quarter could cause temporary "indigestion" for the market. However, he maintained that "there is ample liquidity in the market" to handle these short-term disruptions, as substantial capital returned to shareholders provides a buffer for new issuance.
Macquarie Strategist: Stop Guessing the Crash, Now It's "Bubbles Taking Turns"
The combined market capitalization of the top ten U.S. stocks now accounts for approximately 45% of the total market. Such extreme concentration has completely broken traditional market patterns, leaving investors struggling to determine whether this is a new normal for capital markets or a massive bubble about to burst.
Victor Shvets, Global Strategist at Macquarie Group, offers a distinctly different judgment—neither. He states bluntly: "We are now in an environment where bubbles take turns."
In an interview, Shvets noted that this phenomenon of extreme stock concentration is not unique to the U.S. market but is a common feature across major global equity markets. Regarding the current market structure, Shvets recommends adopting a thematic investment strategy: identify long-term themes with upside potential for the coming years in advance, while remaining flexible in portfolio adjustments, switching allocations promptly when one theme's run ends and a new main theme emerges.
He predicts that robotics, automation, quantum computing, and biotechnology will be the core sectors incubating the next large-scale bubbles, concluding: "The large-scale bubble rallies in these areas are yet to come."
Stocks in Focus
Bank of America upgraded Intel two notches directly from "Underperform" to "Buy," citing rising demand for central processing units as the agent AI theme gains heat. Intel's stock surged nearly 5% on the news.
Oracle announced plans to raise an additional $20 billion in equity and debt financing to bolster its AI business, causing its stock to drop 8%. However, the company's overall revenue and net profit for the quarter exceeded market expectations, and it raised its adjusted earnings guidance for the year.
Oracle's increased capital expenditure plans drove semiconductor equipment stocks higher. Applied Materials and Lam Research each gained nearly 5%, KLA rose 4%, and ASML gained over 3%.
Travel management platform Navan provided Q2 and full-year revenue guidance above FactSet consensus estimates, coupled with better-than-expected non-GAAP profit and revenue for Q1, sending its stock soaring 19%.
Alcoa, which fell 9.5% the previous session, rebounded, rising 2%. Morgan Stanley stated Wednesday's decline was due to pressure on its alumina business but called the pullback "excessive," reaffirming its "Buy" rating on the stock.
Chinese tech stocks fell broadly on concerns over stricter regulatory scrutiny. The Beijing Municipal Market Supervision Bureau summoned several leading e-commerce platforms for talks. Among U.S.-listed stocks, Alibaba fell 3.5%, JD.com dropped nearly 2%, and Baidu declined about 1%.
Space stocks, which fell collectively on Wednesday, rebounded in anticipation of SpaceX's upcoming listing this Friday. Intuitive Machines gained nearly 5%, while Redwire, Rocket Lab, and AST SpaceMobile each rose about 4%.
The memory chip sector saw recovery gains following a broad sell-off on Wednesday. SanDisk surged 5%, while Western Digital, Seagate Technology, and Micron Technology each gained about 3%.
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