MARKET WRAPS
Stocks:
European shares fell at open and remained lower on higher oil prices and an extended selloff in AI-related stocks, but losses weren't as marked as in Asia.
"A pause in the stock market's nine-week positive run off of the March lows is entirely understandable," BMO Wealth Management said, following the market's worst day in 10 months to close out last week.
"We believe Friday's pullback was a healthy reset for stocks and is not the start of something more worrisome, especially since fundamentals continue to strengthen from better-than-expected earnings and economic data."
The strikes and counterstrikes by Iran and Israel appeared to be over, after Israel hit a petrochemical plant in Iran and an air-defense site. Iran said it targeted a petrochemical facility in Haifa. However Iranian media was reporting an explosion in Tehran.
Meanwhile, the European Central Bank should leave the door open for more after its first anticipated interest-rate hike since 2023 , Commerzbank said.
"The bar for a 25bp ECB rate hike on Thursday is so low that there is barely any stumbling risk," it said, adding "Every man and his dog expect the ECB to act."
The focus is on how far the ECB opens the door to further action and whether a back-to-back rate hike will follow in July.
Commerzbank sees a follow-up rate hike in July as premature, "but we expect another hike in September."
Stocks to Watch
Despite recent share underperformance, Panmure Liberum said long-term support for Europe's defense industry remained strong, with military procurement from the likes of Germany and the U.K.
"We think European defense stocks should be traded more actively to reduce short-term downside risks and to take advantage of lower prices before the long-term trend reasserts itself."
Market Insight
The inclusion of the mega IPOs in global benchmarks could modestly increase the U.S. weighting in these indexes and further strengthen their exposure to sectors linked to technology, software, AI and aerospace, T. Rowe Price said.
This could concentrate global equity indexes in a narrower group of U.S. growth and AI-related companies, and investors need to pay closer attention to diversification, benchmark risk and portfolio construction as more mega-caps get listed.
U.S. Markets:
The Dow was on track to fall as oil rose, which could squeeze margins for some of the index's members.
Still, if the S&P and Nasdaq do manage to rise on Monday, that would reassure investors.
The big question for Wall Street now is whether the selloff at the end of last week was a one-off dip or the start of the AI rally fizzling out.
Forex:
The euro was weaker against the dollar,
increasing pressure on the ECB to sound hawkish in favor of tightening monetary policy on Thursday, ING said.
The dollar remained elevated after reaching a two-month high after the attacks in the Middle East.
ING said separately that the dollar should remain supported ahead of the Fed's June 17 policy decision, adding it could potentially rise above 100.250-100.650 resistance levels.
Bonds:
Eurozone government bond yields rose, with the 10-year Bund yield hitting a two-week high at open.
Investors were focused on oil prices and the ECB's meeting, anticipating its first rate hike since 2023.
"On Thursday the ECB will confirm their dedication to fighting inflation with a first hike and we think markets will already be prepared for more, " ING said.
Treasury yields rose with oil prices as the fragile Middle East ceasefire was tested once again.
Goldman Sachs now expects the 10-year Treasury yields to end the year at 4.4% from 4.1% previously.
"Given yields are currently above this level, we expect limited spillover effects into other G10 markets."
Energy:
Oil surged after Israel and Iran exchanged fire, threatening the already fragile ceasefire in the Middle East and dimming hopes for an agreement to reopen the Strait of Hormuz.
Saudi Arabia sharply cut the price of its main oil grade for Asia even as the near-closure of the Strait of Hormuz continues to choke off supplies out of the Persian Gulf and tighten global markets.
Fitch Ratings' base case is for Brent to average $87 a barrel in 2026 on the assumption that the Strait of Hormuz reopens by the end of July.
Fitch expects oil prices to fall with the market reverting quickly to a surplus after the strait reopens with a projected oversupply of about 4 million bpd in 4Q, depending on OPEC policy.
Julius Baer stuck with its cautious view that oil prices would fall after the summer.
Metals:
Gold prices fell as fighting dimmed hopes for a near-term deal in the Middle East, heightening inflation concerns and reinforcing expectations of higher interest rates.
"Following Friday's jobs report and a broader deterioration in risk sentiment that also weighed on equities, bullion closed below its 200-day moving average for the first time since October 2023," Saxo Bank said.
"A combination of resilient economic growth and rising inflation expectations has created a challenging environment for gold, overshadowing the longer-term supportive themes of central bank buying, fiscal concerns, and reserve diversification."
Julius Baer said gold was likely to benefit from continued central-bank buying, which appeared to be the strongest structural force in the precious metal markets.
EMEA HEADLINES
Intesa Makes $35 Billion Bid for Monte dei Paschi to Rival BPM's Merger Plan
Intesa Sanpaolo said it launched a 30.66 billion-euro ($35.32 billion) takeover bid for Banca Monte dei Paschi di Siena, shortly after Banco BPM made a rival merger proposal.
The approaches pit Italian lenders Intesa and BPM against each other for control of their domestic rival Monte dei Paschi, which is considered the world's oldest bank still in operation, and continue a wave of dealmaking activity in Italy's banking industry.
Ingredion to Take Over Tate & Lyle in $3.6 Billion Deal
U.S. food-and-beverage ingredients maker Ingredion reached a deal to take over U.K. rival Tate & Lyle for 2.7 billion pounds ($3.60 billion) in cash.
The companies said Monday that their boards reached an agreement under which Ingredion offered 595 pence for each Tate & Lyle share, a 59% premium to the last closing price before takeover talks were disclosed last month.
ECB Expected to Be First Among Peers to Raise Key Rate in Response to Conflict
The European Central Bank is set to raise its key interest rate for the first time in almost three years Thursday, becoming the first of its peers to tighten policy in response to a jump in energy prices caused by the conflict in the Middle East.
However, economists think it unlikely that the increase will be the first of many, given the weak state of the eurozone economy.
German Factory Orders Fell Back in April
German manufacturing orders dropped in April, reversing some of the gains in March that came on the back of stock building after the outbreak of the war in Iran.
Factory orders fell 3.8% on month, a first decline since January, offsetting part of the 4.5% increase in March, data agency Destatis said Monday. A consensus of economists polled by The Wall Street Journal expected a smaller 2.2% decline.
This Oil Giant Has Capped Prices at the Pump-but Just for the French
PARIS-Most oil companies say price caps at gas stations are a terrible way to address the energy shock sparked by the Iran war. There is one major exception: France's TotalEnergies.
The company, based just outside Paris, has capped prices at its 3,300 gas stations across France and pledged to continue doing so for as long as the conflict in the Middle East endures. It is the only Western oil company to limit fuel prices voluntarily.
Roche Enters $2.3 Billion Blood-Cancer Drug Deal With Nurix Therapeutics
Roche said it entered into an exclusive licensing and collaboration agreement with Nurix Therapeutics to develop a blood-cancer-treatment drug, bexobrutideg, in a deal valued up to $2.3 billion.
The Swiss drugmaker on Monday said it would pay Nurix an upfront cash payment of $700 million, while development costs would be shared 40% by Nurix and 60% by Roche.
GLOBAL NEWS
Korean Authorities Urge Banks to Step Up Controls as Won Slumps
South Korean authorities urged banks to step up measures against what they described as "speculative market-disrupting behavior," after the won slumped to its weakest level since 2009 amid escalating Middle East tensions and speculation the Federal Reserve could raise rates by the year-end.
The Financial Supervisory Service, the country's financial regulator, held an emergency meeting Monday with Bank of Korea officials and executives from major domestic lenders, including KB Kookmin Bank, Shinhan Bank, Hana Bank and Woori Bank.
Powerful Earthquake Rocks Southern Philippines
A powerful 7.8-magnitude earthquake struck off the southern coast of the Philippines on Monday morning, prompting a tsunami threat across the region.
The quake hit at 7:37 a.m. local time about 20 miles south of the municipality of Maasim off the southern island of Mindanao, according to the Philippine Institute of Volcanology and Seismology. There was a series of smaller shocks in the area, including one with a magnitude of 6.7 at 8:55 a.m.
Hormuz Crisis Exposes a Global Flaw That Will Take Years to Fix
Iran's closure of the Strait of Hormuz showed how a country can weaponize an economic pinch point to seismic effect.
The question now is what governments decide to do about it.
Barcelona's Sagrada Família Nears Completion-and Inflames a Tourism Backlash
BARCELONA-One of the world's most famous construction sites, the Basilica of the Sagrada Família, is finally nearing completion after 144 years of work. Not everyone here is celebrating.
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June 08, 2026 05:02 ET (09:02 GMT)
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