Morning in New York: focus on Israel-Iran conflict and tensions over US policy

Daily review and forecast of events on the US stock market from Mikhail Denislamov, Deputy Director of Freedom Capital Markets Research.

In the center of attention of the participants of the upcoming trades will be the growing tension around the U.S. trade policy. President Donald Trump at the G7 summit in Canada again urged trade partners to sign bilateral agreements before July 9 - the date of expiration of the 90-day delay in the introduction of «mirror» tariffs. At the same time, negotiations with Canada and Japan are stalled, so the White House expresses its readiness to take tough measures.

The armed conflict between Israel and Iran is having a strong impact on the market in general and on oil price dynamics in particular. Targets in Tehran have been attacked in recent days, including oil ministries, security headquarters and airfields. Israeli strikes have killed senior members of the Islamic Revolutionary Guard Corps. In response, the Islamic Republic has conducted massive shelling of Israel, which intends to continue military action until the threat is eliminated. Iran considers Jerusalem's actions a declaration of war. The escalation of the conflict increases the risks of disruption of oil supplies through the Strait of Hormuz, which provides transportation of more than 20% of all raw materials in the world.

The main macro release will be the publication of Empire State Index - the index of business activity in the manufacturing sector in New York (consensus: -6 points, May: -9.2 points). Improvement of the index may signal stabilization of industrial production in the region.

Futures on US indices are trading in the plus. We assess the balance of risks for the upcoming session as neutral with increased volatility. We focus on S&P 500 movement in the range of 5920-6040 points (from -1% to +1.1% to Friday's closing level).

- Amazon (AMZN) announced a $13 billion investment to build data centers and solar power plants in Australia to strengthen AI capabilities and develop cloud services.

- Honeywell (HON) will supply the U.S. Army with GTCP 36-150 auxiliary power units and the Bell Textron-designed Attune climate control system for long-range attack aircraft.

- A major fire broke out at the Marathon Petroleum (MPC) refinery in Texas City on June 14. There were no casualties, the cause of the fire is being investigated.

June 13 trading on U.S. stock exchanges ended in the negative. S&P 500 decreased by 1.13%, Nasdaq 100 fell by 1.29%, Dow Jones fell by 1.79%, and Russell 2000 fell by 1.85%. Pressure on the indices came from the aforementioned escalation of armed conflict in the Middle East. In the «Magnificent Seven», only Tesla (TSLA) showed strong growth due to the news about possible easing of regulation of unmanned transportation, while the other participants of the top-7 showed predominantly negative dynamics. Of the 11 sectors included in the broad market index, the energy sector (XLE: +1.74%) traded in the plus, supported by a sharp rise in oil prices. The financial industry (XLF: -2.04%) was the outsider.

The University of Michigan's Consumer Confidence Index for June rose to 60.5 from May's 52.2 points, with a consensus of 53. Assessments of current conditions and forecasts showed improvement across all social groups. Long-term inflation expectations fell to 4.1% and annualized inflation expectations fell to 5.1%. This can be regarded as a sign of easing concerns related to the White House tariff policy.

- Shares of Tesla (TSLA: +1.9%) reacted with gains on news that government regulation of autonomous vehicles will be loosened. This could simplify the National Highway Traffic Safety Administration's (NHTSA) permitting process, making commercial robotaxi services possible.

- Visa (V: -5%) was under pressure following news of plans by Walmart and Amazon to launch their own stablecoins. The initiative has the potential to reduce acquiring costs, but its future depends on the passage of the Genius Act bill regulating digital currencies.

- Quotes of Archer Aviation (ACHR: -14.8%) collapsed due to the placement of 85 million shares at $10 in a direct offering. The issue followed Trump's executive order aimed at accelerating the development of electric air cabs.

- Shares of Darling Ingredients (DAR: +9.2%) rose amid reports that the Environmental Protection Agency's (EPA) biofuel quotas will increase by about 8% y/y.