S&P Futures Tick Lower With Key U.S. Inflation Data in Focus, U.S.-China Trade Talk Details Awaited

June S&P 500 E-Mini futures (ESM25) are trending down -0.14% this morning after the U.S. and China agreed on a framework to ease trade tensions, but investors were left disappointed by the lack of details, with the focus now shifting to the release of key U.S. inflation data.

Representatives from the countries said the framework would effectively reinstate a pact they reached in Switzerland last month, a deal in which both sides reduced tariffs and which was partly based on Beijing’s pledge to speed up critical mineral-export licenses while the negotiations continue. Little detail from the talks was disclosed, but U.S. negotiators said they “absolutely expect” that issues concerning shipments of rare earth minerals and magnets will be resolved through the framework’s implementation.

“The two largest economies in the world have reached a handshake for a framework,” U.S. Commerce Secretary Howard Lutnick said Tuesday after two days of talks in London. “We’re going to start to implement that framework upon the approval of President Trump, and the Chinese will get their President Xi’s approval, and that’s the process.” Lutnick later told The Wall Street Journal that he anticipates Trump will approve the agreement as early as Wednesday or Thursday.

In yesterday’s trading session, Wall Street’s major indexes ended in the green. Chip stocks advanced, with Intel (INTC) climbing over +7% to lead gainers in the S&P 500 and Nasdaq 100, and KLA Corp. (KLAC) gaining more than +3%. Also, Tesla (TSLA) rose over +5% after executives, including CEO Elon Musk, shared a video of one of its vehicles driving in Austin without anyone behind the wheel, suggesting the company is nearing the launch of its robotaxi service in the Texas capital. In addition, Insmed (INSM) soared more than +28% after the company announced positive top-line results from a Phase 2 trial evaluating the efficacy and safety of treprostinil palmitil inhalation powder. On the bearish side, JM Smucker (SJM) plunged over -15% and was the top percentage loser on the S&P 500 after the maker of Jif peanut butter and Folger’s coffee issued below-consensus FY26 adjusted EPS guidance.

Meanwhile, a federal appeals court on Tuesday approved the Trump administration’s request to keep sweeping tariffs in effect but agreed to expedite its review of the case this summer.

In other tariff news, Bloomberg reported that the U.S. and Mexico are nearing an agreement that would eliminate President Trump’s 50% tariffs on steel imports up to a specified volume.

Today, all eyes are focused on the U.S. consumer inflation report, which is set to be released in a couple of hours. The report will be scrutinized for any indications that Trump’s tariffs are feeding through into prices. Economists, on average, forecast that the U.S. May CPI will come in at +0.2% m/m and +2.5% y/y, compared to the previous numbers of +0.2% m/m and +2.3% y/y. Also, the U.S. core CPI is expected to be +0.3% m/m and +2.9% y/y in May, compared to the April figures of +0.2% m/m and +2.8% y/y.

A survey conducted by 22V Research revealed that 42% of investors expect the market reaction to the CPI report to be “risk-on,” 33% said “mixed,” and 25% said “risk-off.” This marks the first time the reaction has favored risk-on since August 2024, according to 22V.

“The combination of the May inflation figures and upcoming Treasury supply will provide investors tradable events and add to the market’s collective understanding of the early fallout from the trade war as well as demand for U.S. debt in the current environment,” said Ian Lyngen at BMO Capital Markets.

U.S. rate futures have priced in a 99.9% probability of no rate change at next week’s policy meeting.

On the earnings front, cloud services giant Oracle (ORCL) is set to report its FQ4 earnings results today.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.495%, up +0.49%.

The Euro Stoxx 50 Index is up +0.13% this morning as investors assess the U.S.-China agreement to get their trade truce back on track and gear up for the release of key U.S. inflation data. Mining stocks led the gains on Wednesday. Automobile stocks, which stand to benefit from the removal of rare earth curbs, also gained ground. At the same time, retail stocks underperformed. Meanwhile, EU officials indicated that trade talks with the U.S. could stretch past the July 9th deadline. European Central Bank President Christine Lagarde said on Wednesday that coercive trade policies do not resolve financial imbalances, and the risk of mutual economic harm is so significant that all parties must consider policy adjustments to ease tensions. In other news, the ECB’s monthly wage tracker showed on Wednesday that negotiated wage growth across the 20-nation Eurozone is expected to be 3.1% this year, including smoothed one-off payments, matching the figures projected a month earlier. In corporate news, Inditex (0QWI.LN) slid over -4% after the Zara owner posted weaker-than-expected Q1 sales.

The European economic data slate is empty on Wednesday.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.52%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.55%.

China’s Shanghai Composite Index closed higher today, hitting its highest level in nearly three weeks after the world’s two largest economies reached an agreement on a plan to ease trade tensions following a two-day meeting in London. Materials, industrial, and consumer stocks outperformed on Wednesday. The U.S. and China eased trade tensions, agreeing to a preliminary deal on implementing the consensus reached in Geneva, negotiators from both sides said. Chinese Vice Commerce Minister Li Chenggang said the negotiating teams had “agreed in principle” and would present the proposal to their respective leaders for approval. As part of the potential deal, China is expected to remove restrictions on rare earth exports, while the U.S. may relax curbs on advanced technology sales to China. Tim Waterer, chief market analyst at KCM Trade, said, “While we don’t have an actual deal yet, we do have something that could be classed as progress, which combined with the constructive post-meeting rhetoric from both sides may be just enough to keep tariff worries at bay for the time being.” In other news, the World Bank projects China’s economic growth to slow to 4.5% in 2025 from 5.0% in 2024, citing “a substantial rise in trade barriers.” In corporate news, BYD rose over +2% after it joined other automakers in reducing bill-payment periods for suppliers to 60 days.

Japan’s Nikkei 225 Stock Index closed higher today, rising for the fourth straight session, as sentiment was boosted after the U.S. and China agreed on a framework to get their trade truce back on track. Chip stocks led the gains on Wednesday. Investors are also closely monitoring for signs of progress in the U.S.-Japan trade talks. The Nikkei business daily reported earlier this week that Japan’s tariff negotiator, Ryosei Akazawa, will travel to the U.S. for his sixth round of tariff negotiations and to Canada from this Friday through June 18th, as the Japanese government aims to finalize a trade deal on the sidelines of the Group of Seven summit. Data released on Wednesday showed that Japan’s annual wholesale inflation eased in May due to falling import costs for raw materials, reducing some pressure on the Bank of Japan to raise interest rates. However, the increase in wholesale prices for food and beverages accelerated in May, indicating that global uncertainties and weak consumption are not deterring firms from passing on higher costs. Meanwhile, Bank of Japan Governor Kazuo Ueda on Tuesday reiterated the central bank’s willingness to continue raising interest rates if underlying inflation approaches its 2% target. In other news, Reuters reported that Japan’s ruling coalition has agreed to a cash handout plan ahead of an upper house election scheduled for July. In corporate news, Hino Motors tumbled over -17% after the truckmaker announced it would issue new shares under a merger agreement with Mitsubishi Fuso. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed down -0.65% to 22.80.

The Japanese May PPI has been reported at +3.2% y/y, weaker than expectations of +3.5% y/y.

Pre-Market U.S. Stock Movers

Tesla (TSLA) gained over +2% in pre-market trading after CEO Elon Musk voiced regret over his recent social-media outburst aimed at U.S. President Donald Trump.

U.S. steel stocks slumped in pre-market trading after Bloomberg reported that the U.S. and Mexico are nearing an agreement that would eliminate President Trump’s 50% tariffs on steel imports up to a specified volume. Cleveland-Cliffs (CLF) is down over -6%, and Nucor (NUE) is down more than -3%.

Gitlab (GTLB) plunged more than -12% in pre-market trading as the software company’s full-year guidance failed to impress investors.

GameStop (GME) slid over -4% in pre-market trading after the videogame retailer posted weaker-than-expected Q1 revenue.

Dave & Buster’s Entertainment (PLAY) climbed more than +7% in pre-market trading after the arcade-restaurant operator reported better-than-expected Q1 revenue and a smaller drop in same-store sales.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - June 11th

Oracle (ORCL), Chewy (CHWY), Sailpoint (SAIL), Oxford Industries (OXM), Cognyte Software (CGNT), J.Jill (JILL), Currency Exchange Int (CURN), Vera Bradley (VRA).