Daily Market Outlook, June 4, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — AI Wobbles, Oil Eases, BoJ Risks Stir

Global equities have pulled back from record highs as a disappointing Broadcom forecast challenged the AI momentum that has carried markets through much of the year. Asian equities snapped a four-day winning streak, with the MSCI regional index down 1.2%, while Korea’s KOSPI fell 1% after being one of the standout global performers. Nasdaq 100 futures are down around 0.5% after Broadcom dropped sharply in after-hours trading, and Europe is set for a softer open, with FTSE futures underperforming. The tone contrasts with the previous session, when equities managed to rally despite renewed US-Iran and regional missile activity. That shift says something important about the market’s current hierarchy of drivers. Middle East headlines still matter for oil and bond yields, but equity sentiment is being led by AI and tech earnings. The Israel-Lebanon ceasefire has helped cool the three-day surge in crude, with Brent slipping toward $97/bbl, but the agreement is dependent on a “complete cessation” of violence by Hezbollah and is not being treated as a decisive de-escalation. Risk assets therefore received only limited support from the news. 

Broadcom is the immediate pressure point. Its weaker revenue outlook has prompted a read-across into global chip names, with European semiconductor stocks such as ASML and STMicroelectronics expected to open lower. The contrast with TSMC is notable: its CEO remains confident in multi-year growth thanks to robust demand for computing power and advanced semiconductors. That means the AI story is not broken, but the market is beginning to differentiate more aggressively between companies that can keep beating inflated expectations and those where the bar has become too high. This is the key equity issue. AI remains the dominant structural theme, but valuations now assume a near-flawless delivery path. When the macro backdrop included falling oil and softer rate expectations, investors were willing to look through individual disappointments. With oil still high, tariff risks back on the radar and central banks reluctant to pivot, earnings misses or cautious guidance are more likely to trigger profit-taking. Broadcom may therefore be less a rejection of AI than a warning about how much optimism is already priced.

Japan is another major overnight development. Following Ueda’s hawkish speech, reports suggest BoJ officials are considering a 25bp hike at the June meeting, taking the policy rate to 1%, with the possibility of another increase later in 2026. Market pricing for a June hike has moved from just under 80% at the end of last week to above 90%. The Yen initially benefited but remains heavy just below 160 versus the Dollar. That tells us that while BoJ tightening risk is rising, rate differentials and Dollar resilience remain powerful offsets. Intervention risk has not disappeared either. The US data mix continues to complicate the Fed outlook. The Beige Book reported slight or moderate growth in ten of twelve districts ahead of the June 17 FOMC but also highlighted a widening split in household spending by income group. That is consistent with a consumer economy where higher-income households remain resilient, while lower-income consumers are more exposed to inflation, energy costs and depleted savings. On inflation, the Middle East conflict was identified as a major driver of pricing pressure, but firms’ ability to pass on higher costs remains mixed, especially in consumer-facing sectors. That points to demand fragility beneath the headline growth picture.

ADP employment was almost exactly in line with expectations at 122k jobs in May, leaving the ISM services report as the more important release. The headline index rose to 54.5, business activity improved to 57.7 and new orders jumped to 57.3, signalling that services demand remains solid. The sharp rise in inventories initially looked concerning, but the ISM noted that inventory sentiment barely moved, suggesting the increase is not yet a signal of weakening demand. For policymakers, however, the ISM details are awkward. The employment index remains in contraction, while the already elevated prices index rose further. That combination is not comfortable for the incoming Warsh Fed. It implies a services sector with decent demand, weak hiring appetite and persistent price pressure — not a clean case for easing. In that context, the reported plan to retreat from forward guidance makes sense. Rather than forcing a signal through the next FOMC statement, Warsh can move toward a more explicitly data-dependent framework and reduce the risk that markets over-interpret stale guidance.

Bitcoin’s slide toward $64,000 adds to the broader risk-off tone. Crypto has been an important expression of liquidity optimism and speculative appetite, so its fall to the lowest level since February reinforces the message from equities: investors are trimming exposure to higher-beta assets after a long rally, especially where valuations are heavily dependent on abundant risk appetite.

In Europe, futures point to a modestly weaker start, with Euro STOXX 50 futures down slightly, DAX futures around flat and FTSE futures lower. Alongside the chip-sector read-across, Remy Cointreau will be watched after results and a profit revival plan, while Partners Group is in focus after warning that fundraising could slow in the second half of 2026 and into 2027 because of uncertainty around redemptions from open-ended evergreen funds. That adds another reminder that private-market liquidity is not immune to the same caution now appearing in public risk assets. The market has not abandoned the AI theme, but it is no longer willing to ignore disappointments within it. Broadcom’s outlook has exposed how demanding expectations have become, while the macro backdrop remains complicated by high oil, sticky services prices, BoJ tightening risk and a Fed preparing to communicate less explicitly. The Israel-Lebanon ceasefire helps at the margin, but for equities today the bigger question is whether AI can keep beating a very high bar.

Overnight Headlines

• Trump: Won’t Resume All-Out Iran War Unless US Troops Are Killed

• US Says Israel And Lebanon Agree To Ceasefire If Hezbollah Stops

• Trump Downplays Hormuz Mine Threats, Touts Alternative Routes

• Fed’s Logan: Rates May Need To Rise This Year To Cool Inflation

• Fed’s Warsh Inherits Economy Increasingly Squeezed By Inflation

• Trump Says He Will Attend G7 Summit In France This Month

• US Trade Judge Warns DOJ Appeal Could Upend Trump Tariff Refunds

• Industry Group: US Tariff Doubling Has Cut EU Steel Exports By 34%

• BoJ Is Said To Consider June Hike With Another Possible In 2026

• Australia’s Monthly Goods Trade Balance Recovered In April

• US Allies Begin Testing Xi On Taiwan As Trump Treads Carefully

• Google Upsizes Historic Equity Raising To $85B For AI Spending

• TSMC CEO: AI-Fuelled Chip Demand Will Outstrip Supply For Years

• Nvidia’s RTX Spark Sets Up Battle For Future Of Windows PCs

• Apple To Launch New Siri In Sept With Support From Google, Nvidia

• Meta Bets On AI Agents To Unlock WhatsApp Revenue Growth

• Broadcom Outlook Disappoints Investors Seeking AI-Fueled Blowout

• CrowdStrike Lifts Outlook After Swinging To First-Quarter Profit

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

• EUR/USD: 1.1710 (EU2.47b), 1.1500 (EU2.42b), 1.1570 (EU2.34b)

• USD/JPY: 159.00 ($4.91b), 158.00 ($2.75b), 160.00 ($2.72b)

• AUD/USD: 0.7050 (AUD848.6m), 0.7235 (AUD771.3m), 0.7155 (AUD625m)

• EUR/GBP: 0.8645 (EU637.8m), 0.8800 (EU584.1m), 0.8700 (EU490.7m)

• GBP/USD: 1.3380 (GBP620.4m), 1.3550 (GBP603.5m), 1.3545 (GBP496.1m)

• USD/CNY: 6.8140 ($1.22b), 6.7500 ($315m), 6.7000 ($300m)

• USD/KRW: 1425.00 ($665m), 1450.00 ($505m), 1500.00 ($470m)

• USD/MXN: 17.28 ($435m)

• NZD/USD: 0.5985 (NZD320.8m)

CFTC Positions as of May 29, 2026: 

• Speculators have been busy adjusting their positions across various Treasury futures. The net short position for CBOT US 5-year Treasury futures has been reduced by 27,389 contracts, now sitting at 1,323,127. Similarly, the CBOT US 10-year Treasury futures saw a trim of 60,098 contracts, bringing its net short position down to 787,954. In a more significant shift, the CBOT US 2-year Treasury futures net short position decreased by a hefty 305,591 contracts, now totaling 1,255,246.

• On the flip side, the CBOT US UltraBond Treasury futures saw an uptick in their net short position, increasing by 5,378 contracts to reach 259,842. Additionally, there’s been a rise in the net short position for CBOT US Treasury bonds futures, which climbed by 20,577 contracts to hit 199,251.

• Turning to equities, equity fund speculators have ramped up their net short position in the S&P 500 CME by 63,334 contracts, now totaling 447,470. However, equity fund managers are taking a different approach by increasing their net long position in the S&P 500 CME by 3,488 contracts, bringing it to an impressive 1,009,014.

• In the cryptocurrency realm, Bitcoin maintains a net long position of 2,282 contracts. 

• The foreign exchange market shows some interesting dynamics: the Swiss franc has a net short position of -35,140 contracts, while the British pound is even deeper in the red with a net short of -61,398 contracts. The Euro is faring better with a net long position of 29,426 contracts, but the Japanese yen is struggling with a significant net short position of -114,667 contracts.

Technical & Trade Views

SP500

• Daily VWAP Bearish

• Weekly VWAP Bullish

• Above 7600 Target 7700

• Below 7500 Target 7400

DXY

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 98.50 Target 99.50

• Below 98.20 Target 96.12

EURUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 1.1710 Target 1.18

• Below 1.1680 Target 1.1550

GBPUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 1.3465 Target 1.3525

• Below 1.3425 Target 1.3350

USDJPY 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 160 Target 161

• Below 159.50 Target 157.50

XAUUSD

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 4700 Target 4800

• Below 4500 Target 4386

BTCUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 71.5k Target 73.5k

• Below 70.5k Target 59.6k