EBC Markets Briefing | Euro down as US and Iran ramped up attacks

The euro eased on Wednesday on geopolitical uncertainties and economic divergence. US job openings increased by the most in five years in April, though EBC Financial Group is cautious about the outlook.

US Central Command said Tuesday that it had defeated multiple Iranian ballistic missiles and drones and launched defensive strikes. But oil prices remained below the $100 threshold.

Iran is reportedly reviewing an agreement proposed by the Trump administration to end the war but has not communicated with Washington for a few days, Iranian media reported

Euro zone inflation rose to an estimated 3.2% in May, driven by double-digit energy price growth, official data showed. Notably, services inflation also rose to 3.5% from 3%.

Markets are currently pricing in a 94% chance of the ECB hiking its key interest rate by 25bps at its meeting later this month, according to LSEG data. That would mark its fresh tightening cycle.

PMI data showed the eurozone taking an increasingly severe toll from the war in the Middle East. Output has now contracted for two successive months; job losses are more widespread.

The single currency was locked in a short-term horizontal trading range with prices compressing tightly around the 1.16289 pivot line. The path of least resistance is a moderate rebound.

Asset recap

As of market close on 2 June, among EBC major products, Applied Materials shares led gains as a cascade of bullish analyst revisions continued to push the shares higher into fresh territory.

Goldman Sachs downgraded the Intuit stock to Sell from Neutral and sharply reduced its 12-month price target to $276 from $519, citing mounting competitive risks in the tax software market.

Technology stocks led a broad market rally across China as investors poured into AI related companies, but mainland investors turned net sellers of Hong Kong stocks for the first time in nearly three years in May.

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