Mid-Morning Look

Monday, June 02, 2025

U.S. stock futures were lower overnight as trade tensions between the U.S. and China are flaring up again, and Ukraine and Russia war headlines heating up as well. A little pullback overall after major averages posted their best monthly return since late 2023 for the S&P in May. Global stocks fell after China denied violating the recent trade truce struck with Washington, pushing back against President Trump’s accusation from late last week. On Sunday, Treasury Secretary Scott Bessent said he was confident Trump and Chinese leader Xi Jinping would soon talk and problems “will be ironed out.” The Dow industrials, S&P 500 and Nasdaq Composite slip on the first trading day of June (but already paring losses) while Treasury yields edged higher and gold (+2.5% to highest in 3 weeks) and oil prices surged amid a weaker dollar. Oil rises after Ukraine launched a massive drone attack on Russian military airports and OPEC+ agreed to another large supply increase over the weekend, which will take effect July. President Trump announced the doubling of steel and aluminum tariffs to 50% effective June 4th on Friday during his visit to a US Steel plant near Pittsburgh. This followed his swift retraction of a 50% tariff threat on the EU earlier last week. Also on Friday, President Trump accused China of violating the Geneva agreement, while Monday, China’s commerce ministry responded, firmly rejecting what it called “unreasonable accusations” from the US. The ministry accused the US of violating their bilateral agreement through measures like AI chip export controls, halted chip design software sales, and the revocation of Chinese student visas. Coming up later today, Federal Reserve Chair Jerome Powell is due to speak at 1 p.m. ET.  The US dollar Index (DXY) slumped -0.65% to multi-year lows around 98.70 as the euro topped 1.14.

• US April construction spending -0.4% (vs. consensus +0.3%) to $2.152 trillion, vs March -0.8% (prev -0.5%); US April private construction spending -0.7%, public spending +0.4%.
• S&P Global May final manufacturing PMI at 52.0 (vs flash 52.3).

• In Other Metals: Goldman Sachs raises 2h2025 aluminium price forecast by $140/t to $2,280/t, said expects aluminium prices to decline to a low of $2,100/t in early 2026 and sees 2026/2027 price forecasts at $2,230/$2,500/t, down from $2,540/$2,800/t previously for aluminium. Gold (GLD) prices jumping as the dollar slides and global tensions rise between the US/China and Russia/Ukraine. AngloGold Ashanti (AU) said it agreed to sell its interest in a Brazilian mine to Aura Minerals for $76 million in cash.
• In Transports: Goldman Sachs said to lean into Trucking (LTL and Truckload) as believe Truck earnings are finally nearing a bottom. The firm said green shoots are elusive as the industry remains depressed, but historically, this has been the best time to engage in stocks. They upgraded ODFL, SAIA, ARCB, KNX, WERN, SNDR to Buy from Neutral and WERN from Sell to Buy. Conversely, the firm adopts a more neutral view on the Rails and Rail-adjacent sector (intermodal) and downgraded NSC, UNP, CP, CSX and JBHT to Neutral. In Airlines, JBLU CEO Joanna Geraghty said the company’s partnership with UAL would not lead to a merger between the two carriers after last week announcing a collaboration between the two carriers.
• In FinTech & Payments: Truist launched coverage on the sector, with Buy ratings on ADYEN, AFRM, FI, FLYW, MA, TOST and Visa (V), hold ratings on BILL, DLO, FIS, FOUR, GPN, LSPD and SOFI and sell ratings on GLBE, PYPL and XYZ. Truist said they are wary of companies that we believe are over earning, either through an unsustainable high take rate (dLocal, Global-e, PayPal) or elevated margins. They also believe investors should be critical regarding the quality of growth (organic vs. inorganic, credit-fueled growth, unique reporting, etc.) for firms such as Block, Lightspeed, PayPal, Shift4, and SoFi.

• BA +1%; was upgraded to Buy from Neutral at Bank America with a $260 price target saying aircraft have emerged as the favored trade tool for the Trump Administration in recent trade deals.
• BNTX +16%; and BMY announced a global partnership to jointly develop and commercialize an experimental cancer drug, BNT327 where BMY will pay BioNTech $1.5 billion upfront, up to $2 billion in non-contingent payments and up to $7.6 billion in additional milestones payments
• BPMC +26%; to be acquired by SNY for up to $9.5 billion to boost its position in rare immunology diseases; SNY would initially pay $129.00 per share in cash, or around $9.1 billion.
• CLF +24%; along with gains in NUE, STLD after President Donald Trump said late Friday, he would double tariffs on imported steel and aluminium to 50%, which will take effect on June 4.
• KYMR +26%; after disclosing positive clinical results from the Phase 1 healthy volunteer study of KT-621 saying the trial was a double-blind, placebo-controlled study that enrolled 118 subjects, consisting of single ascending dose and multiple ascending dose cohorts.
• LYRA +477%; after reporting positive results from the ENLIGHTEN 2 phase 3 trial of LYR-210 achieving statistically significant results for primary and key secondary endpoints in the treatment of chronic rhinosinusitis.
• VERA +60%; after announcing that its Phase 3 ORIGIN study of atacipcept for the treatment of IgAN met its primary endpoints, with a 46% reduction from baseline (42% reduction vs. placebo) in proteinuria. The company currently plants to submit a BLA for accelerated approval in 4Q25
• XOM +1%; as oil and gas stocks advance following a sharp jump in crude oil prices surge after OPEC+ member countries agreed to a smaller-than-feared output hike for July.

• DKNG -7%; along with FLUT after Illinois lawmakers approved a fiscal year budget on Saturday and the $55.2 billion budget includes another sports betting tax hike. A $0.25 tax will be included on the first 20,000,000 bets taken in the state, and $0.50 for every bet thereafter.
• OKLO -2%; after files for mixed shelf offering of up to $1B.
• SAIC -10%; shares slipped after Q1 EPS of $1.92 missed the $2.12 consensus estimate on in-line revs of $1.88B while backing its year EPS and rev outlooks.
• WPP -2%; and PUBGY shares -3% after the WSJ reported that META will unveil a fully automated AI system for ad creation and targeting. Meta’s new AI tool, designed to leverage real-time behavioral data from Facebook, Instagram, and WhatsApp potentially disrupting the market dominance of Publicis and WPP.