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Wednesday, June 4

Noteworthy macro moves today: US 10Y Treasury Bond +0.3%.

The U.S. labor market is showing signs of slowing, with private sector job growth in May falling to 37K workers added—the lowest since March 2023—compared to expectations for a much higher figure of around 115K. This decline follows the previous month's revised addition of only 60K jobs and raises concerns about economic momentum as trade tensions continue.

In Europe, recent PMI data indicates mixed signals across major economies; while Italy's services activity showed strong expansion at its highest level in nearly a year, Germany remains mired in contraction with both manufacturing and service sectors declining sharply. The Eurozone Composite PMI was slightly revised up but still reflects marginal overall growth amid ongoing inflation pressures that could influence upcoming ECB policy decisions.

Additionally, geopolitical factors are impacting markets significantly: President Trump's administration has implemented increased tariffs on steel and aluminum imports into the U.S., which may further strain international relations ahead of anticipated talks between Trump and Chinese President Xi Jinping this week aimed at resolving trade disputes. These developments contribute to heightened uncertainty affecting investor sentiment globally.

iShares MSCI Japan ETF (EWJ) [-0.3%]
The iShares MSCI Japan ETF (EWJ) has seen a decline of 0.3% in pre-market trading. The Nikkei 225 Index opened significantly higher, gaining 362 points to reach 37,809. Japan is establishing a new think tank under its National Security Secretariat to address economic security concerns related to supply chains amid rising trade tensions and issues surrounding Taiwan. The au Jibun Bank's Services Purchasing Managers' Index for May reported a figure of 51.0, slightly above expectations but down from the previous month, suggesting modest expansion in the services sector. Additionally, the move in USD/JPY contributed negatively to the ETF's performance. The top holdings, including TM and SMFG, also experienced declines. Furthermore, recent changes in U.S. mortgage rates and applications have historically impacted EWJ, with a mixed outlook for the housing sector reflected in mortgage application trends.

iShares MSCI United Kingdom ETF (EWU) [+0.3%]
The iShares MSCI United Kingdom ETF (EWU) has seen a price increase of 0.3% since Tuesday. U.K. economic indicators released today reflect a positive trend, with the Composite Purchasing Managers' Index for May reported at 50.3, surpassing both the estimate of 49.4 and the previous figure of 48.5. The Services Purchasing Managers' Index for May also exceeded expectations, coming in at 50.9 compared to an estimate of 50.2 and a prior reading of 49.0. Concurrently, the U.S. has enacted a significant tariff increase on steel and aluminum imports, which may create supply chain disruptions for British companies in EWU's portfolio. In terms of holdings, notable contributors to the ETF's performance include AZN, DEO, and RIO, with Rio Tinto making headlines through its acquisition of U.S.-based producer Arcadium for $6.7 billion and ongoing collaborations in the lithium sector.

CRWD | -7.4% | -8.2B
CrowdStrike Holdings Inc | Systems Software
CrowdStrike Holdings Inc. reported its Q1 fiscal year 2026 financial results, posting revenue of $1.10 billion, which was below the consensus estimate of $1.16 billion. The adjusted EPS came in at $0.73, missing expectations of $0.81. The company experienced a net loss of $110.99 million compared to a profit of $42.82 million in the prior year. For Q2, CrowdStrike anticipates revenue between $1.145 billion and $1.152 billion, also falling short of the $1.23 billion estimate, with adjusted EPS guidance set at $0.82 to $0.84, compared to a forecast of $0.92. Following the earnings report, shares declined approximately 7%. Despite raising its full-year revenue guidance to a range of $4.74 billion to $4.81 billion, the market reacted negatively to the lower-than-expected Q2 guidance.

GWRE | +14.1% | +2.9B
Guidewire Software Inc | Application Software
Guidewire Software Inc reported impressive quarterly results, with adjusted earnings per share of $0.88, significantly exceeding the consensus estimate of $0.47. This represents a substantial increase from $0.26 in the same quarter last year. The company generated sales of $293.51 million, surpassing analyst expectations of $286.39 million and reflecting a year-over-year growth of nearly 22%. Following these results, several analysts raised their price targets for Guidewire, with RBC increasing its target to $290, RAJA to $255, and JPMorgan to $271. Additionally, Guidewire raised its fiscal year 2025 revenue guidance to a range of $1.178 billion to $1.186 billion. Social media discussions highlighted the company's annual recurring revenue growth and solid guidance, although some analysts expressed caution regarding valuation concerns amidst the stock's recent performance.

CEG | -3.6% | -3.4B
Constellation Energy Corp | Electric Utilities
Constellation Energy Corp has been downgraded by Citigroup from Buy to Neutral, with a revised price target of 318.00, an increase from the previous target of 232.00. This follows an earlier downgrade to Neutral/High Risk amid a notable market rally and a significant agreement involving Meta. Social media discussions highlight that Mizuho Americas managing director Anthony Crowdell remarked that Constellation would be the company to build a nuclear plant, though it would not be financed on their balance sheet. Additionally, CEG ended the previous trading day lower after peaking with over a nine percent gain, following the announcement of a 20-year nuclear agreement with Meta. Concurrently, the Nasdaq 100 Index experienced a slight decline of 0.03%, reflecting broader market sentiment that may also influence Constellation Energy Corp.

HPE | +6.8% | +1.7B Hewlett Packard Enterprise Co | Technology Hardware, Storage & Peripherals
Hewlett Packard Enterprise Co reported second-quarter financial results that surpassed analyst expectations, with adjusted earnings per share of 0.38 compared to the consensus estimate of 0.33. Revenue reached 7.63 billion, exceeding the anticipated 7.50 billion. Server revenue was particularly strong, increasing year-over-year to 4.1 billion. The company also noted growth in its Intelligent Edge and Hybrid Cloud segments. For the third quarter, HPE provided guidance for earnings per share in the range of 0.40 to 0.45 and revenue expectations between 8.2 billion and 8.5 billion. Additionally, HPE raised its fiscal year 2025 adjusted EPS outlook to a range of 1.78 to 1.90 from a previous estimate of 1.70 to 1.90. Following the earnings announcement, HPE's stock moved positively, reflecting the favorable results and guidance.

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