US stocks mostly eked mild gains amid focus on US-China talks - Newsquawk Asia-Pac Market Open

• US stocks mostly eked mild gains in rangebound trade with most sectors higher, led by outperformance in Consumer Discretionary, Materials and Energy, while Utilities, Financials and Consumer Staples lagged. The main developments on Monday included US/China trade talks in a meeting that lasted for nearly 7 hours, which the US side described as "good" and "fruitful" so far, and with talks to resume on Tuesday at 10:00BST/05:00EDT, while the attention was also on the latest NY Fed SCE which saw consumer inflation expectations ease across the 1, 3 and 5-year horizons.
• USD slightly weakened, albeit with the DXY kept to within a narrow range amid thin newsflow, a lack of tier-1 US data and with the Fed in a blackout ahead of the confab next Wednesday, while participants await a readout from US/China talks in London which are set to continue from 10:00BST/ 05:00EDT. Aside from this, traders will also be watching for US CPI on Wednesday and the Fed's preferred PPI inflation gauge on Thursday.
• Looking ahead, highlights include South Korean Current Account, Australian Westpac Consumer Sentiment & NAB Business Confidence, Supply from Japan.

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LOOKING AHEAD

• Highlights include South Korean Current Account, Australian Westpac Consumer Sentiment & NAB Business Confidence, Supply from Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks mostly eked mild gains in rangebound trade with most sectors higher, led by outperformance in Consumer Discretionary, Materials and Energy, while Utilities, Financials and Consumer Staples lagged. The main developments on Monday included US/China trade talks in a meeting that lasted for nearly 7 hours, which the US side described as "good" and "fruitful" so far, and with talks to resume on Tuesday at 10:00BST/05:00EDT, while the attention was also on the latest NY Fed SCE which saw consumer inflation expectations ease across the 1, 3 and 5-year horizons.
• SPX +0.09% at 6,006, NDX +0.17% at 21,798, DJI unch. at 42,762, RUT +0.57% at 2,144.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump reportedly allowed Treasury Secretary Bessent latitude on export controls, giving him room to lift export controls on China, according to WSJ.
• US Treasury Secretary Bessent said regarding US-China talks that it was a 'good meeting', while Commerce Secretary Lutnick said US-China talks were "fruitful".
• US-China talks in London will continue on Tuesday at 10 am London time following talks on Monday which concluded after 6 hours and 40 minutes.
• NEC Director Hassett said the US-China meeting today would be short but bear results and the US is seeking a handshake on rare earths agreement from China. Furthermore, he said that after the handshake, any export controls from the US will be eased and rare earths will be released in volume.
• US posted a notice of aluminium products subject to tariffs.

NOTABLE HEADLINES

• US President Trump admin and lawmakers are to meet over the tax bill on Thursday, according to Bloomberg. It was separately reported that Senate Republican Leader Thune met with US President Trump at the White House, according to Politico.
• US President Trump said if the budget bill takes a little longer than the target, "that is okay".
• US CBO said the US is to hit the debt limit deadline between mid-August and end-September.
• NY FED SCE (May) stated the one median one-year ahead inflation expectations at 3.2% (prev. 3.6%), three-year at 3.0% (prev. 3.2%), and five-year at 2.6% (prev. 2.7%).

DATA RECAP

• US Wholesale Sales MM (Apr) 0.1% (Prev. 0.6%, Rev. 0.8%)
• US Employment Trends (May) 107.49 (Prev. 107.57, Rev. 108.00)

FX

• USD slightly weakened albeit with the DXY kept to within a narrow range amid thin newsflow, a lack of tier-1 US data and with the Fed in a blackout ahead of the confab next Wednesday, while participants await a readout from US/China talks in London which are set to continue from 10:00BST/ 05:00EDT. Aside from this, traders will also be watching for US CPI on Wednesday and the Fed's preferred PPI inflation gauge on Thursday.
• EUR rebounded from an initial dip returned to 1.1400 territory, while there notable comments from ECB's Kazimir who thinks the bank is nearly done with, if not already at the end of the easing cycle.
• GBP marginally benefitted from the weaker dollar albeit with price action choppy and with participants now awaiting employment and earnings data on Tuesday, as well as the spending review on Wednesday.
• JPY swung between gains and losses and mildly strengthened against the dollar following USD/JPY's retreat from around the 145.00 level.

FIXED INCOME

• T-notes saw two-way price action but settled firmer after falling consumer inflation expectations.

COMMODITIES

• Oil prices were ultimately firmer but with price action choppy amid relatively light oil-specific newsflow.
• OPEC May oil output rose 150k bpd from April to 26.75mln, according to a Reuters survey which showed the OPEC oil output by the five-member party to OPEC+ output hike rises by 180k bpd in May, less than the 310k bpd increase pledged.
• Iraq set July Basrah medium crude OSPs to Asia at USD +0.30/bbl vs. Oman/Dubai average and to Europe USD -1.30/bbl vs. dated Brent, while it set OSPs to North and South America at USD -1.05/bbl vs. ASCI.

GEOPOLITICAL

MIDDLE EAST

• US President Trump said they are doing a lot of work with Iran now and that they are tough negotiators, while he discussed Iran and other things with Israeli PM Netanyahu. Furthermore, Trump said the Iran meeting is on Thursday and that they are asking for things you cannot do, while he added they seek enrichment and can't have it and so far, they're not there, as well as noted that alternatives are ‘very very dire’.
• Israeli PM Netanyahu will convene a security discussion on the issue of Iran following a call with US President Trump, according to Axios. It was also reported that security sources estimated if nuclear talks fail, Israel would have to decide whether to attack Iran, according to the Israeli Broadcasting Authority.
• Iran will reportedly propose a counteroffer to the US nuclear proposal soon which will be sent by Tuesday, according to state TV.
• Iranian Deputy Foreign Minister said they believe their response to the US proposal will be "reasonable", according to Sky News Arabia.
• Iran's National Security spokesperson said Russia is contracted to build eight nuclear power plants in Iran, including four in the southern city of Bushehr, according to Iran International.

ASIA-PAC

NOTABLE HEADLINES

• Chinese Premier Li said they must break through the bottleneck in the commercialisation of scientific and technological achievements.
• Japan’s government is mulling cash handouts without an income cap as part of its election pledge, according to Mainichi newspaper.
• Japan’s government is considering buying back some super-long JGBs issued in the past, according to Reuters sources.

EU/UK

NOTABLE HEADLINES

• UK government confirmed U-turn on winter fuel payment with 9mln pensioners to receive winter fuel payments this winter at a cost of GBP 1.25bln but will not lead to permanent additional borrowing.
• ECB's Holzmann said the pause in cutting rates could last a while and if economic data worsens there could be more cuts, while he is moderately optimistic about what will happen with Trump and tariffs, according to Orf TV.
• ECB's Kazimir said he thinks the bank is nearly done with, if not already at the end of the easing cycle and sees clear downside risks to growth but warned it would be a mistake to ignore upside inflation risks. Kazimir said need to keep all options open and data over the summer will indicate whether additional fine-tuning is required.