Data for Australian economic growth in the January - March quarter of 2026.GDP 0.3% q/qexpected 0.5%, prior 0.8%GDP 2.5% y/yexpected 2.7%, prior 2.6%Rising rates and war impacts will bite harder in Q2. ---Capital Expenditure 3.0% q/q (huge, data centres linked)prior 0.7%Final Consumption 0.3% q/qprior 0.5% This article was written by Eamonn Sheridan at investinglive.com.

Japan's services PMI flatlined at 50.0 in May as business costs surged to a 43-month high on Middle East war disruption, ending 13 months of sector expansion.Summary: Source: S&P Global Japan Services PMI, May 2026The headline Services Business Activity Index fell to 50.0 in May from 51.0 in April, ending a 13-month expansion streak; the composite Output Index slipped to 51.1 from 52.2, with growth driven solely by manufacturingBusiness input costs rose to the greatest extent in 43 months, driven by fuel, energy and raw materials price hikes linked to the Middle East war and supply chain disruption, alongside higher labour costsOutput price inflation reached the second-fastest pace since the survey began in 2007, with the composite output charge measure hitting a fresh record highNew order growth slipped to a 23-month low, with export business falling at the sharpest pace in over four years; consumer services posted the steepest contraction among all sub-sectorsEmployment grew at its slowest rate in nine months; business confidence remained below the post-pandemic average, weighed by geopolitical uncertainty, rising costs and demographic pressuresS&P Global warned that manufacturing growth is partly a function of temporary stockbuilding expected to fade, and that the outlook hinges heavily on Middle East developmentsJapan's services sector stalled in May for the first time in over a year, as a near-record surge in business costs driven by the Middle East war collided with softening demand and squeezed activity to a standstill.The S&P Global Japan Services PMI Business Activity Index fell to the neutral reading of 50.0 in May from 51.0 in April, ending a 13-month run of expansion. The broader composite Output Index, covering both manufacturing and services, slipped to 51.1 from 52.2, with all of the remaining growth attributable to manufacturing. Even that bright spot carried a caveat: S&P Global flagged that the manufacturing upturn is partly driven by temporary stock building that is expected to fade once inventories are deemed adequate, particularly if global economic conditions remain fragile.The cost picture is the dominant story. Average input prices rose to their highest level in 43 months in May, with respondents consistently pointing to supplier price hikes tied to the Middle East conflict, fuel and energy costs, supply chain disruption and higher wages. The pressure fed directly into selling prices, with output charge inflation reaching the second-fastest pace since the survey began in 2007 and the composite measure hitting a fresh record high. Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence, described the price indicators as pointing to a near unprecedented increase in business costs.On the demand side, new order growth slowed to a 23-month low, while export business fell at the sharpest pace in more than four years. Consumer services registered the steepest contraction of all sub-sectors monitored, consistent with household budgets coming under increasing strain from elevated prices. Employment growth slowed to its weakest in nine months.The data compound an already difficult macro picture for Japan. The government approved a ¥3.1 trillion supplementary budget on Wednesday to subsidise fuel and utility costs, funded entirely through deficit bonds, while Finance Minister Katayama issued a fresh verbal warning on currency markets as USD/JPY approaches the 160 intervention threshold. A services sector that has now stalled, record output price inflation and a BOJ caught between competing signals make for an uncomfortable policy backdrop heading into the second half of the year. ---The stagnation of Japan's services sector puts the BOJ in an increasingly uncomfortable position: output price inflation hit a record high in May, which argues against further easing, but demand is softening and consumer services are already contracting, which argues against tightening. That stagflationary tension is difficult to resolve while the Hormuz disruption persists and supply chain costs keep rising. For the yen, a BOJ that is effectively pinned by conflicting signals is yet another headwind alongside the fiscal deficit expansion flagged in Tuesday's supplementary budget. The manufacturing stockbuilding impulse that is currently holding the composite above 50 is explicitly flagged as temporary, making the Q3 outlook fragile. This article was written by Eamonn Sheridan at investinglive.com.

Japan's cabinet approved a ¥3.1 trillion supplementary budget funded by deficit bonds to subsidise fuel and utility costs, with a ¥2.5 trillion reserve targeting gasoline prices first.Summary:Japan's cabinet approved a ¥3.1 trillion ($19 billion) supplementary budget to cushion households and businesses from Middle East-driven inflationary pressureThe package creates a ¥2.5 trillion contingency reserve to subsidise commodity price rises, with gasoline price controls the initial priority, followed by utility bill supportThe budget will be funded entirely through deficit-financing bonds; the government projects overall calendar-year bond supply will remain unchanged by cancelling some debt approved under the previous fiscal year budget and pointing to stronger tax and non-tax revenuesPrime Minister Sanae Takaichi's government framed the spending as a response to the risk of a prolonged Middle East crisis continuing to drive energy costs higherThe package revives fiscal policy as a focal point for JGB investors at a time when the yen is already under pressure near the 160 per dollar intervention thresholdJapan's cabinet approved a ¥3.1 trillion supplementary budget on Wednesday, committing the equivalent of $19 billion to shield households and businesses from the inflationary consequences of the Middle East conflict, and in doing so handed bond and currency markets a fresh set of concerns to digest.The package is anchored by a ¥2.5 trillion contingency reserve designed to subsidise commodity price rises. The government expects the initial drawdown to target gasoline costs, with utility bill support likely to follow as the Hormuz disruption continues to inflate energy import bills. Prime Minister Sanae Takaichi's administration framed the spending as a necessary buffer against the risk of a prolonged regional crisis, with no near-term resolution to the strait closure in sight.The financing mechanism will attract close scrutiny. The entire supplementary budget will be funded through deficit-financing bonds, a straightforward addition to Japan's already substantial public debt load. The government is attempting to limit the market impact by arguing that total calendar-year bond supply will remain roughly unchanged: some debt approved under the previous fiscal year's budget will be cancelled, and stronger tax and non-tax revenues are expected to provide a partial offset. Whether those projections hold will depend heavily on whether the energy subsidy costs stay within the reserve envelope, itself contingent on how long the Hormuz closure persists.The fiscal development lands at a delicate moment for the yen. USD/JPY has returned to the vicinity of 160, the level that prompted large-scale intervention operations in 2024, and Finance Minister Katayama issued a verbal warning on Tuesday that Tokyo stands ready to respond in currency markets as needed. A widening fiscal deficit funded by new bond issuance, combined with persistent energy import costs and a Bank of Japan still moving cautiously on rates, does little to support the currency fundamentals. Yen weakness in turn inflates the yen cost of those energy imports further, creating a feedback loop that the subsidy programme addresses at the margin but does not resolve.---The decision to fund the entire package through deficit-financing bonds puts Japan's already stretched fiscal position back in focus for JGB investors, even as the government attempts to neutralise the market impact by offsetting new issuance with stronger tax revenues. For the yen, the combination of a widening fiscal deficit, persistent energy import costs driven by the Hormuz closure, and a central bank still moving cautiously on rates creates a difficult backdrop; the supplementary budget does nothing to address the structural current account pressure that has been weighing on the currency. Bond markets will watch closely to see whether the projected offset to gross supply holds as the fiscal year progresses. This article was written by Eamonn Sheridan at investinglive.com.

Australia's services PMI fell to 48.7 in May from 50.7, with new orders contracting at the fastest pace in two and a half years and employment falling for the first time since late 2024.Summary: Source: S&P Global Australia Services PMI, May 2026The services Business Activity Index fell to 48.7 in May from 50.7 in April, the second contraction in three months, with respondents citing reduced demand, market uncertainty and higher prices linked to the Middle East conflictNew business declined at the sharpest pace in just under two and a half years, falling for a third consecutive month; new export orders also dropped for the second time in three monthsEmployment fell for the first time since December 2024, ending a 17-month streak of job creation; the rate of decline was the sharpest since August 2021Input costs rose rapidly, driven primarily by fuel price increases attributed to the war; output price inflation was only fractionally below April's 39-month highBusiness confidence fell to its lowest since November 2023, with optimists linking any recovery hopes to a potential end to the Middle East conflict, rising sales and AI developmentThe Composite Output Index, covering both manufacturing and services, fell to 48.7 from 50.4 in April, with S&P Global warning the data suggest Australia will struggle to generate growth in Q2Australia's services sector contracted in May for the second time in three months, with new orders falling at their fastest pace in nearly two and a half years as the economic fallout from the Middle East war continued to squeeze demand and inflate costs across the economy.The S&P Global Australia Services PMI Business Activity Index fell to 48.7 in May from 50.7 in April, dropping back below the 50.0 threshold that separates expansion from contraction. Survey respondents pointed directly to reduced demand, elevated prices and uncertainty linked to the ongoing conflict as the primary drivers of the deterioration.New business volumes contracted for a third straight month, with the pace of decline the sharpest since late 2023. Export orders also fell for the second time in three months. The weakening demand environment prompted firms to cut staffing levels for the first time since December 2024, ending a 17-month run of employment growth. Though modest, the fall in headcount was the steepest since August 2021.Cost pressures remain acute. Input costs continued to rise rapidly in May, with fuel price increases linked to the war cited as the dominant factor. The transport and storage sector reported the sharpest increases in both input and output costs of all five sectors monitored. Output price inflation eased only fractionally from April's 39-month high, meaning firms are still passing elevated costs through to customers at a near-record pace.Business confidence deteriorated further, falling to a two-and-a-half-year low. Among the minority expecting conditions to improve, the most commonly cited hope was an end to the Middle East conflict.The services result compounds a weak manufacturing PMI released earlier in the week. The Composite Output Index, covering both sectors, fell to 48.7 from 50.4 in April. Andrew Harker, Economics Director at S&P Global Market Intelligence, said the combined picture suggested Australia would struggle to generate any growth across the second quarter as a whole.---The back-to-back deterioration in both services and manufacturing PMIs puts meaningful downward pressure on RBA rate cut expectations, with elevated fuel-driven inflation complicating any dovish pivot just as the economy weakens. The explicit and repeated linkage of the slowdown to Middle East war costs underlines that Hormuz disruption is now transmitting directly into Australian business conditions, not just energy prices. For the Australian dollar, the combination of softening growth and persistent inflation is a difficult backdrop, particularly if the composite reading continues to track below 50 into Q3. This article was written by Eamonn Sheridan at investinglive.com.

New Zealand data Terms of Trade Index Q1 -2.0% q/q expected -1.2%, prior 3.7%Export Prices Q1 -2.7% q/q expected -1.1%, prior 5.3%Import Prices Q1 -0.7% q/q expected +0.3%, prior 1.5%Building Permits April +10.9% m/m prior -1.3% This article was written by Eamonn Sheridan at investinglive.com.

China's SAIC Motor plans its first EU factory in Spain's Galicia, with a 200 million euro initial investment, 120,000-vehicle annual capacity and an operational target of end-2028. Summary: Sources: Reuters; XinhuaSAIC Motor will build its first European Union manufacturing facility in Galicia, northwestern Spain, located between the port of Ferrol and the town of As PontesInitial investment is set at 200 million euros ($232 million), with construction due to begin in 2027 and the plant targeting operational status by end-2028Full capacity at the site is expected to reach 120,000 vehicles per year once a second phase is complete, with the project also including a logistics and vehicle assembly hub near Ferrol portThe project is expected to create more than 2,300 jobs locally, including around 1,000 direct positions, with plans to use significant volumes of locally sourced componentsCentral government approval for foreign direct investment is still required; SAIC owns the MG brand, which has built a substantial following across European marketsChina's Chery, in a joint venture with Spanish firm EBRO, is separately planning to begin production at a former Nissan plant in Barcelona by end-2026 or early 2027, targeting up to 150,000 vehicles annually by 2029Chinese automaker SAIC Motor has announced plans to build its first manufacturing facility inside the European Union, selecting the Galician port town of Ferrol in northwestern Spain for a factory that will produce electric vehicles under the MG brand and related electrified powertrains.The initial investment in the project is set at 200 million euros, equivalent to around $232 million, with construction scheduled to begin in 2027 and the plant targeting full operational status by the end of 2028. The site, located between the port of Ferrol and the nearby town of As Pontes, will include an adjacent industrial zone for vehicle assembly and logistics to facilitate export from the port. Once a second phase of development is complete, the facility is expected to reach an annual production capacity of 120,000 vehicles and support more than 2,300 jobs in the region.The project still requires approval from Spain's central government for foreign direct investment clearance, a procedural step that adds some conditionality to the timeline. SAIC has said it intends to source a significant proportion of components locally, which should strengthen the case for regulatory sign-off and broaden the project's economic footprint beyond the factory gates.SAIC's move is the clearest signal yet that Chinese automakers are shifting from an export-led European strategy to one rooted in local production. Manufacturing inside the EU allows them to avoid the additional import tariffs Brussels imposed on Chinese-made electric vehicles in 2024, while also positioning their brands as European employers rather than foreign competitors. MG has been among the most successful Chinese nameplates in Europe, benefiting from competitive pricing during a continent-wide EV price war.Spain is fast becoming the preferred destination for this manufacturing push. Chery, in a joint venture with domestic partner EBRO, plans to begin production at a former Nissan plant in Barcelona by late 2026 or early 2027, with an ambition to produce up to 150,000 vehicles a year by 2029. With one of Europe's largest existing automotive industries, Spain offers both the infrastructure and the workforce to absorb Chinese capital at scale, even as incumbent European manufacturers watch the competitive landscape tighten around them.---The investment marks a significant step in Chinese automakers' strategy of manufacturing inside the EU to sidestep import tariffs and gain direct access to European consumers, with MG-brand vehicles already demonstrating strong regional demand. Spain is emerging as the preferred landing zone for this push, with both SAIC and Chery now committed to production facilities on the Iberian Peninsula. For the broader European auto industry, the arrival of Chinese manufacturing capacity on home soil raises competitive pressure beyond the trade measures Brussels has deployed against Chinese EV imports. This article was written by Eamonn Sheridan at investinglive.com.

Canada's trade minister says US talks are unfrozen and a meeting with USTR Greer was positive, but warned the road to conclusions is not always a straight line.Summary:LeBlanc described a meeting with US Trade Representative Jamieson Greer as positive, with a follow-up planned for next weekCanada raised concerns over US tariffs on autos, steel, aluminum and softwood lumberLeBlanc said Canada has made what it considers significant submissions addressing US trade concerns, and has been preparing for potential US Section 301 tariff investigationsHe characterised US-Canada trade talks as having been unfrozen for a number of monthsBilateral USMCA discussions with Mexico are ongoing, with LeBlanc expressing confidence that three-way talks on auto rules of origin will proceedCanada's minister responsible for trade with the United States, Dominic LeBlanc, described a meeting with US Trade Representative Jamieson Greer as positive on Tuesday, while signalling that the path to resolving the two countries' tariff disputes remains long and non-linear.Speaking after the meeting, LeBlanc said Canada had raised its concerns over US tariffs across four key sectors: autos, steel, aluminum and softwood lumber. He said Ottawa had submitted proposals it considers significant in addressing the concerns Washington has raised, and confirmed that Canada has been actively preparing for potential US Section 232 and Section 301 tariff investigations.LeBlanc said the two sides would be in contact again next week, and characterised the broader bilateral trade dialogue as having been unfrozen for several months. The phrasing was notable: it suggested an acknowledgement that talks had previously stalled, and that the current engagement, while active, has yet to produce binding outcomes.On the multilateral front, LeBlanc confirmed that Canada is engaged in bilateral USMCA discussions with Mexico and expressed confidence that a three-way conversation on auto rules of origin, covering all three USMCA signatories, would take place. Auto rules of origin have been a persistent flashpoint in USMCA negotiations, with the US pushing for higher North American content thresholds that Canada and Mexico have resisted.LeBlanc was careful to temper expectations. His observation that the road to conclusions in these conversations is sometimes not a straight line read as a deliberate signal to domestic audiences and markets that a deal is not imminent, even if the direction of travel is positive.The talks come against a backdrop of elevated Canada-US trade tensions that have persisted since the first Trump administration's tariff offensive, with the USMCA review process adding further complexity. Ottawa's engagement across multiple tracks simultaneously, bilateral with Washington, bilateral with Mexico City, and preparation for formal US trade investigations, underlines the breadth of the trade relationship at risk. ---The tone from Ottawa is constructive but deliberately measured, with LeBlanc's "not a straight line" framing a soft warning against reading too much into the positive optics. Markets sensitive to Canada-US trade dynamics, particularly in autos, steel, aluminum and softwood lumber, will note that talks are active and submissions have been made, but no concrete outcomes have been announced. The USMCA auto rules of origin discussion, which now draws in Mexico, adds a trilateral dimension that complicates and potentially extends the timeline to resolution. This article was written by Eamonn Sheridan at investinglive.com.

Bitcoin has lost its coolCopper prices are nearing records as analysts get increasingly bullishTrump to Iran: It is time to make a dealCrude oil prices move above the 200 hour MA at $92.48Hezbollah will not accept partial ceasefire with Israel - reportBank of England's Greene: Risk of acting is less severe than the risk of failing to actRubio: We are in talks with IranBOE's Bailey: The inflation overshoot is entirely due to events in the Persian GulfUS April JOLTS job openings 7.618m vs 6.88m expectedFirst they came for the free cash flow, then the came for the equityFed's Hammack: We may need to act soon if inflation trends don't coolUSD is mixed to kickstart NA trading on June 2. What are the technicals telling traders?investingLive European FX news wrap: Optimism continues to prevail in the marketsECB policymaker Rehn says June rate move would be an "insurance" hikeMarvell Technology stock soars as Nvidia CEO says it's "the next trillion-dollar company"The April JOLTS report was stronger than expected, with job openings rising sharply to 7.62 million, the highest level since May 2024 and well above forecasts. The increase suggests labor demand remains resilient despite concerns about slowing economic growth. While hiring eased somewhat, job openings and quits both moved higher, indicating workers remain confident about employment opportunities. Overall, the report provides evidence that the labor market remains relatively healthy and may reduce some of the pressure on the Fed to consider near-term rate cuts, although one month's data is not enough to signal a broader shift in the labor market trend.ECB policymaker Olli Rehn suggested that a June rate hike should be viewed as an "insurance" move designed to guard against potential future inflation risks rather than the start of a sustained tightening cycle. Rehn emphasized that inflation expectations remain well anchored, but argued that a modest policy adjustment would help ensure inflation stays under control amid heightened uncertainty. His comments imply that the ECB is likely to present any June hike as a precautionary measure rather than a signal of multiple rate increases ahead. As a result, the market may be overestimating the chances of a follow-up hike in July, with policymakers more likely to pause and assess incoming economic data and geopolitical developments, including the evolving US-Iran situation, before considering any further action later in the year.Cleveland Fed President Beth Hammack reinforced her hawkish stance, arguing that it is reasonable to keep interest rates unchanged for now given ongoing uncertainties, but warning that waiting too long could allow inflation pressures to become more deeply embedded in the economy. She said her primary concern is the growing risk of persistent inflation, noting that monetary policy may not be restrictive enough to return inflation to the Fed's 2% target. Hammack emphasized that inflationary pressures are broadening across the economy, while the labor market remains near full employment. As a result, she remains firmly committed to restoring price stability and signaled that policymakers should remain vigilant against the risk that inflation becomes entrenched, requiring tighter policy for longer.Major US stock indices closed higher with the Dow industrial average leading the way with a gain of 0.45%. The S&P index is up 0.13% and the NASDAQ index was unchanged. Despite the rise in the Dow, 14 of the 30 stocks were higher while 16 or lower. The Dow's biggest winners today were led by Cisco, which surged 5.50%, followed closely by Caterpillar, up 5.16%. The strong gains in those two stocks helped drive broader strength within the index. Apple added 2.91%, continuing to benefit from investor interest in large-cap technology shares, while IBM climbed 2.75% on solid buying interest. Goldman Sachs rounded out the top performers, rising 1.53%. The Dow's biggest losers were led by Nike, which fell 4.79%, making it the weakest performer in the index. Microsoft and Salesforce each declined 4.18%, weighing on the technology sector despite strength elsewhere in the market. Boeing dropped 2.94%, giving back earlier gains and adding pressure to the industrial segment, while Amazon slipped 1.83% as investors took profits in the e-commerce and cloud-computing giant. The losses were concentrated in consumer discretionary and technology names, with Nike, Microsoft, and Salesforce accounting for the bulk of the downside among Dow components.Alphabet shares fell 3.86% after the company announced an $80 billion equity raise, a move that will dilute existing shareholders by roughly 1.7% and highlights the enormous costs associated with the AI arms race. Over the past year, major technology companies have shifted from generating substantial free cash flow to spending aggressively on AI chips, talent, and data centers, followed by large debt issuances. After already raising about $85 billion in debt, Alphabet is now turning to equity markets, with the offering including $10 billion sold directly to Berkshire Hathaway, approximately $30 billion in public offerings, and up to $40 billion through an at-the-market share issuance program. The move is being viewed as a watershed moment, signaling that AI investment demands are becoming so large that even the biggest tech firms are seeking new sources of capital, while also increasing competition for investor dollars ahead of expected IPOs from companies such as SpaceX, Anthropic, and OpenAI.The fall was felt by a number of large cap names with:Nvidia: -0.69%Amazon -1.81%Microsoft -4.17%Other losers included:Shake Shack -8.37% to its lowest level going back to November 2023Dell fell -6.54% as traders replaced Dell which was up 300% from the February low, with Hewlett-Packard Enterprise (up 19.47% after its earnings beat).Strategy (Microstrategy) tumbled by -9.15% as Bitcoin tumbled by -5.7%Figma fell by -10.53%. Remember when it went public in July 2025 trading as high as $142.92. In reached a low in April at $16.60 before rebounding recently to $27.74. Today's decline took the price to $24.29 at the closePalantir-5.28%What did not go down and helped to balance the overall indices:Marvell surged by 32.52% after Jenson Huang of Nvidia touted the company as a future $1T company. The capitalization is abour $200-$250M.Hewlett-Packard enterprise rose 19.47% after earningsCisco rose by 5.5% Apple rose by 2.90%IBM rose by 2.75%US yields are marginally laureth the front-end with the two-year down -0.4 basis points at 4.047%. The 10 year fell by -2.4 basis points to 4.453% while the 30 year fell by -2.6 basis points at 4.965%. Looking at the US dollar, it was mixed with the EUR, CHF and CAD within 0.05% of the closing level from yesterday. The USD was the strongest vs the JPY at 0.18% and weakest vs the AUD at -0.36%. The USDJPY moved to a high of $159.98, just short of the 160.00 level that traders are worried about with regard to intervention threats. Overall the USD index (DXY) is ending the day near unchanged. Bitcoin is currently down $-4300 or -6.01% at $67,033. The low price reached $66,303. The high price was at $71,310. The close today is the lowest since early April. The low close for the year was in February at $62,795. The high for the year is at $97,939 (from January 14).Crude oil is trading up $1.22 at $93.40. The high price reached $94 while the low price was at $90.12.Progress on the Middle East continues to remain muddied and full of unsubstantiated rumors mostly. Israeli and Lebanon continue to add to the headwinds for the opening of the Straits of Hormuz and a cease-fire. What was interesting is that prospects for resumption of peace talks on Ukraine are linked to the end of the conflict around Iran (according to Tass at least). This article was written by Greg Michalowski at investinglive.com.

Data yesterday suggested Australia's GDP is going to come in under the expectations showing in the screenshot below at 0.5% and 2.7%. A new survey has not been done, but I'd be around 0.3% and 2.4% now. Also on the agenda, China private services PMI. Official PMIs for May were mixed, while the private manufacturing PMI fell to 51.8. This article was written by Eamonn Sheridan at investinglive.com.

Trump on TruthSocial is saying Trump says reports that the U.S. and Iran stopped communicating are false. He claims discussions between U.S. and Iranian officials have continued without interruption, including over the past several days. He emphasizes that talks were active four days ago, three days ago, two days ago, one day ago, and today. Trump acknowledges uncertainty about the outcome, stating, "Where they lead, one never knows." He reiterates his message to Iran that it is time to reach a deal. Trump argues that the current situation has persisted for 47 years and can no longer continue. The post suggests diplomatic channels remain open despite media reports to the contrary. Market viewThe comments are likely to be viewed as modestly risk-positive because they signal that diplomatic engagement between the U.S. and Iran remains active. Markets generally prefer evidence of ongoing negotiations over signs of a breakdown in talks, as continued dialogue can reduce the perceived risk of further escalation in the region. The NASDAQ index is up 0.23% while the S&P index is up 0.21%Crude oil prices are modestly lower and $93.03. The 200 hour moving averages at $92.45. Getting below that level would take some of the bullishness out of the short-term This article was written by Greg Michalowski at investinglive.com.

Goldman Sachs is speaking at the Economic club of New York and to CNBC. I believe AI is going to unleash a growth moment, productivity boom Demand for community is not going to go in straight line everybody is currently projecting I do not believe we are going to have massive structural unemployment due to AI, but AI is going to interrupt jobs, dislocateAlphabet shares are trading quite well despite the $80 billion equity raise. This is the first concrete data point for bringing something like this to the market.We are at a moment where there is more greed than fear. The capital is available. When capital is available, take the capital if you know you are going to need it.These are unprecedented in the terms of size but there is also unprecedented liquidity in the market. Greed can turn into fear very quickly, but that doesn't mean it willthere is enormous opportunities to invest in these industries.. There is a good chance that we are early in the cycle.Regarding the macroeconomy, in January I was in support of higher nominal growth After the war started we have higher inflation.It hasn't yet impacted the consumer, but we could see more shift in consumer behavior in the second half of the year. Supply chain pressures may increase prices because of energy.David Solomon comments reflect a generally optimistic long-term outlook, but with several important risks that investors should not ignore. He believes artificial intelligence will drive a significant productivity boom and support stronger economic growth over time. However, AI is also expected to disrupt industries and displace workers, creating periods of job dislocation and uncertainty even if it does not lead to widespread structural unemployment. The view is that the opportunities from AI are enormous and that the investment cycle may still be in its early stages.At the same time, Soloman notes that market sentiment currently reflects more greed than fear, even with abundant liquidity and readily available capital. That is one reason why companies such as Alphabet are choosing to raise capital now, while financing conditions remain favorable. The warning is that investor sentiment can change quickly, and what is currently a supportive environment could become much more challenging if confidence deteriorates.On the macroeconomic front, the biggest risks stem from inflation and the impact of the war on energy prices. While consumers have not yet materially changed their spending habits, there is concern that higher energy costs and supply-chain pressures could push prices higher and lead to weaker consumer demand in the second half of the year. As a result, the key risks are tied to AI-related labor disruptions, a potential shift in investor sentiment, rising inflation pressures, and the possibility that consumers become more cautious if higher prices persist.Overall, the comments are optimistic but being true to fiduciary duty, there are risks that could turn the story line around. This article was written by Greg Michalowski at investinglive.com.

Hezbollah rejects a partial ceasefire with Israel, AFP reports.Yesterday, a report citing Lebanon's parliamentary speaker said Hezbollah was ready for a ceasefire. What Israel appeared to offer -- via Bibi -- was that they wouldn't strike Beirut in exchange for Hezbollah standing down. I ridiculed the suggestion at the time because it included Israel continuing to expand its gains in Southern Lebanon.Given that, I don't see how this can be a surprise.Update, here is the official line from Hezbollah, with Al Jazeera citing a senior member:"Any cease-fire must be complete and include the entire territory of Lebanon. It cannot include freedom of movement for the enemy or allow any violation on his part. We will determine our position regarding the cease-fire in accordance with the enemy's commitment in the shadow of non-respect of the previous agreements." This article was written by Adam Button at investinglive.com.

There have been various reports about whether the US and Iran are talking. Now Rubio says that talks are continuing.Another notable line from him is that "there is a prospect that Iran has agreed to negotiate aspects of nuclear program that they previously refused to mention in discussions".So that's potentially positive. WTI crude oil is down 25 cents to $91.91 but is up from the session low of $90.12. This article was written by Adam Button at investinglive.com.

Prior revised to 6.887 millionJob openings 7.618 million (+731K), highest since May 2024Vacancy rate 4.6% vs 4.2% priorHires 5.116 million vs 5.60 million priorPrior hires revised to 5.535 millionSeparations 5.270 million vs 5.377 million priorQuits 3.053 million vs 2.773 million priorLayoffs and discharges 1.620 million vs 1.507 million priorThis is a big jump and the highest reading since May 2024. There is some variance in this data set so I wouldn't take it as an indication of a reversal in trend just yet, though it's obviously positive.At face value, this report takes away one big argument from the dovish camp, at least in the short term. The jump was driven by professional and business services which saw +668K job openings, mostly in health services. That's a good sign that AI isn't replacing jobs, though health care is relatively shielded anyway.For background, the Job Openings and Labor Turnover Survey (JOLTS), published monthly by the U.S. Bureau of Labor Statistics (BLS), is a crucial economic indicator that provides a comprehensive view of the labor market's health. While standard employment reports focus on net job creation and unemployment rates, JOLTS digs deeper into the underlying dynamics of workforce turnover. It measures total job openings, hires, and separations, including quits, layoffs, and discharges. Policymakers, particularly at the Federal Reserve, closely monitor JOLTS data to gauge labor market tightness and inflationary wage pressures. A high number of openings relative to available workers typically signals strong corporate demand, whereas high "quit rates" suggest workers feel confident in their ability to secure new employment.Recent data underscores this ongoing labor market narrative. According to the March report released in May, job openings came in at 6.866 million, slightly edging out market estimates of 6.835 million. This modest beat highlights a continued, resilient demand for labor. By outpacing expectations, the March JOLTS data suggests that employers are still actively looking to fill roles, providing critical insight into the current balance of labor supply and demand driving broader macroeconomic trends today. This stability remains a key focus for economists everywhere. This article was written by Adam Button at investinglive.com.

Shares of Alphabet are down 2.9% after the company announced it's diluting existing shareholders by 1.7% via an $80 billion equity raise.To me, this marks a new chapter in the AI arms race and is the strongest sign yet that it's an arms race of the likes never seen before in corporate history. Just over a year ago, the hyperscalers were gushing free cash flow and in the past year, they've flipped to spending it all on buying chips, competing for talent and building data centers. Once that well ran dry, they began to issue debt, tainting the once-pristine balance sheets of the biggest companies in the world.In the previous year, Google had raised $85 billion in debt, including a 100-year bond. The problem, is that with the war in Iran, the market was increasingly looking for higher yields on debt.Now Alphabet is going down the stack and tapping equity, a watershed move that includes:$10 billion sold directly to Berkshire Hathaway in a private placementApproximately $30 billion in public offeringsUp to $40 billion through an at-the-market (ATM) issuance program during the second half of 2026The latter means that if you're buying shares in H2, they could be directly from the company rather than another shareholder. It's also another dollar of competition for equity markets that is going to get increasingly crowded with IPOs upcoming from SpaceX, Anthropic and OpenAI.The fear now is that equity raises are going to come from the others in the AI race, or the companies scrambling to supply them. The problem, is that eventually this needs to make money. If you're selling shares -- including to Berkshire Hathaway -- at $261, then those buyers need to expect a positive return. Berkshire is an impressive stamp of approval and Google has many incredible business lines and products.The problem right now is the one that Sam Altman highlighted yesterday: "I know some great stuff is happening but there is also a tonne of waste. How long do I have to wait for it to show up in revenue? How long do I have to wait to really get costs under control? I assume the industry will figure that out pretty quickly but that is a fair issue... I would bet that by a year or two from now there is a much better rationalization of company spend relative to outcomes."What he's saying is that companies are spending huge amounts of cash on AI projects that won't make a return. That's the kind of thing that becomes endemic in a mania (like the one we're in) and leads to a bubble. This article was written by Adam Button at investinglive.com.

ECB policymaker Rehn says June rate move would be an "insurance" hikeMarvell Technology stock soars as Nvidia CEO says it's "the next trillion-dollar company"Euro area inflation continues to pick up in May, core prices nudge up as wellGold analysis shows it repaired higher. See my targets.UK mortgage approvals climbs in April, holds above six-month averageEuropean Parliament votes to remove import duties on US goods to comply with trade dealBoJ taper debate heats up as rising yields complicate exit strategyThe Japanese yen extends losses as June rate hike bets continue to look wrongPalladium is looking good for the bulls. See where PA can go & where that might changeGold nudges back up today but still caught in a bit of a technical bindWhat are the main events for today?Iran reportedly still discussing final text of agreement, no response sent to US yetFX option expiries for 2 June 10am New York cutOpenAI Florida Lawsuit: What AI Stock Investors Should Watch NextMarkets continue to stay on edge awaiting US-Iran dealCrude oil analysis today: oil futures fail near 94.20 resistance, testing lower valueIt's been a pretty calm session with limited data and news releases. The main highlight of the session was the release of the Eurozone Flash CPI report for May. The headline inflation rate rose to 3.2% Y/Y, matching expectations and accelerating from 3.0% in April. The increase was driven mainly by higher energy prices, while underlying inflation pressures also strengthened as Core CPI Y/Y climbed to 2.5% from 2.2% in the prior month. The data reinforced expectations that the ECB is going to raise interest rates at its June meeting but didn't change much in terms of total 2026 pricing.ECB policymaker Rehn confirmed that an interest rate increase at the June meeting should be viewed as an "insurance" move to guard against future inflation risks, even if current inflation expectations remain well anchored. The characterization of a June rate move as an "insurance hike" indicates that policymakers are unlikely to deliver a back-to-back rate hike in July as some analysts have been suggesting without a strong signal from the data. The ECB is most likely to frame the move as an insurance and then wait at least until September to see how the data and the US-Iran situation evolves over the summer.In terms of US-Iran news, Iran is reportedly still reviewing and discussing the final text of a proposed agreement with the United States and has not yet submitted an official response to Washington. While negotiations appear to be progressing, Tehran is seeking amendments and additional assurances before signing off, underscoring that significant details remain unresolved and that a final deal may not be as close as previously expected. Trump said that a deal could happen over the next week but we've heard this so many times before already.In the markets, optimism continues to prevail despite the extended US-Iran stalemate. Markets freaked out for a moment yesterday when Tasnim reported that Iran would stop message exchange with the US in protest against Israeli strikes on Lebanon but things got back to normal very quickly once Trump announced on Truth Social that there would be no troops going to Beirut, and that he had a very good call with Hezbollah which agreed that all shooting will stop.In the American session, the only highlight is the US Job Openings data for April. Job Openings are expected at 6.880M vs 8.866M prior. The data won't change anything for the Fed as all the more timely US jobs data has been pointing to a resilient/strengthening labour market. The market is pricing 15 bps of tightening for the Fed by year-end, with 47% chance of a rate hike in December. This article was written by Giuseppe Dellamotta at investinglive.com.

CPI +3.2% vs +3.2% y/y expectedPrior +3.0%Core CPI +2.5% vs +2.4% y/y expectedPrior +2.2%The headline estimate moves up in May, as expected, with energy price inflation being the standout once again. Even though energy prices were down 1.1% on the month, it is still up by 10.9% year-on-year (up from 10.8% in April). Besides that, the monthly estimates show a broadening in the increase in price pressures across the region.Of note, services inflation was up 0.4% on the month. Meanwhile, inflation for non-energy industrial goods also increased by 0.2% on the month. Food price inflation was flat in May compared to the month before.Overall, services inflation jumped up to 3.5% (previously 3.0%) with food price inflation holding at 2.0%. The mix sees core annual inflation move back up to 2.5%, in a worrying sign for the ECB.If the trend continues down this path in the months ahead, rate hikes will definitely have to be put on the table as policymakers have to deal with potential spillover risks from second-round effects. As mentioned before, interest rates in Europe are now still in neutral territory. And even with 50 bps of rate hikes, it barely puts policy into being marginally restrictive.So if the ECB really wants to bring down inflation, they will have to move more aggressively. The key risk in doing that though is that policymakers risk sinking the economy further. That especially since the US-Iran conflict is already raising the stakes and inviting stagflation risks, especially in the likes of France. This article was written by Justin Low at investinglive.com.

The latest money and credit data from the BOE shows that net borrowing of mortgage debt by individuals decreased to £4.4 billion in April. That follows from the £6.8 billion recorded in March. As for net mortgage approvals, that is seen increasing to 65,900 as compared to 64,000 in the month before. The figure is holding above an average of around 63,100 over the previous six months.Overall, that continues to indicate a solid benchmark for future borrowing. And if anything, it continues to suggest some added resilience in the housing market so far this year.And that comes despite the ‘effective’ interest rate - the actual interest paid - on newly drawn mortgages having increased to 4.08%.Looking to net consumer credit, that is seen mostly unchanged at £1.9 billion and keeping with the six-month average. The annual growth rate did slow to 8.8% in April, suggesting some tapering in overall economic momentum. Of note, the annual growth rate for credit card borrowing decreased to 11.8% (down from 12.3%) while the annual growth rate for other forms of consumer credit remained unchanged at 7.4%. This article was written by Justin Low at investinglive.com.

The European Parliament committee just voted in favour of the legislation to remove duties on many US goods and imports, essentially steering clear of another clash with the US on trade - such as the one last year.As a reminder, US president Trump set a deadline of 4 July for the EU to sort this out or risk incurring a further butting of heads on trade/tariffs once again.With the passing of the vote here, we are at least seeing the EU avoid another trade conflict with the US. And that's good news especially at a time when the fallout from the Middle East conflict is set to dampen the economy significantly in the coming months.Just a note though that the legislation above still needs to be approved by the full EU assembly. That is expected some time around mid-June but it should just be a mere formality. This article was written by Justin Low at investinglive.com.

The Bank of Japan's latest Summary of Opinions from meetings with market participants revealed differing views on the future pace of Japanese government bond (JGB) purchase reductions, highlighting the difficult balancing act the BoJ faces as bond yields continue to climb.Several participants argued that the need for additional tapering remains limited. One participant stated that the current pace of bond purchases, approximately ¥2.1 trillion per month, should be maintained, while another emphasized that the BoJ should continue purchasing a meaningful amount of JGBs to ensure sufficient liquidity is supplied to the economy as it expands.Others advocated for a more gradual reduction path. One participant suggested reducing purchases by ¥100 billion per quarter, which would bring monthly buying down to roughly ¥1.7 trillion over time.More hawkish views were also expressed. One participant argued that the BoJ's bond-buying program has already fulfilled its monetary policy objectives and that purchases should eventually be reduced to around ¥1.3 trillion per month. Another suggested that the central bank should continue tapering until bond purchases reach zero, while carefully monitoring market functioning throughout the process.The BoJ began reducing its massive bond purchases in 2024 as part of its broader normalization process following the end of negative interest rates and yield curve control.Under the current plan, the central bank is gradually reducing monthly JGB purchases by approximately ¥200 billion per quarter. The objective is to lower monthly purchases from around ¥5.7 trillion before the tapering process began to roughly ¥2.1 trillion by the first quarter of 2027.At its upcoming policy meetings, the BoJ is expected to review the tapering framework and determine the pace of reductions beyond fiscal 2026. The latest investor feedback suggests market participants remain divided between those favoring a cautious approach and those supporting a faster normalization of the BoJ's balance sheet.The debate comes at a time when Japanese government bond yields have risen sharply across the curve.Long-term yields have been pushed higher by several factors:Expectations that the BoJ will continue normalizing monetary policy.Reduced central bank demand as bond purchases are scaled back.Rising global bond yields.Concerns over Japan's large government debt issuance and fiscal outlook.Higher yields create a dilemma for policymakers. On one hand, continued tapering is necessary if the BoJ wants to restore normal market functioning and reduce its dominant presence in the government bond market. The central bank still owns more than half of all outstanding JGBs, a legacy of years of ultra-loose monetary policy.On the other hand, reducing purchases too aggressively risks triggering further increases in yields. A rapid rise in borrowing costs could tighten financial conditions, increase government financing costs, and potentially destabilize parts of the bond market.Recent episodes of volatility in Japan's super-long bond sector have heightened these concerns. Weak demand at some bond auctions and sharp moves in 20-year, 30-year, and 40-year yields have reinforced the argument of more cautious policymakers and investors who believe the BoJ should slow the pace of tapering.Overall, the opinions lean slightly dovish. While some participants favored eventually reducing purchases toward ¥1.3 trillion or even zero, several others argued that further tapering is not urgently needed and that the current pace of around ¥2.1 trillion per month should be maintained. This reinforces expectations that the BoJ may adopt a more gradual tapering path than some investors had anticipated, particularly given the recent surge in long-dated JGB yields. This article was written by Giuseppe Dellamotta at investinglive.com.

EUROPEAN SESSIONIn the European session, we have the Eurozone Flash CPI for May. The headline CPI Y/Y is expected at 3.2% vs 3.0% prior, while the Core CPI Y/Y is seen at 2.4% vs 2.2% prior. The data won't change much at this point as the ECB has already pre-committed to a rate hike at the upcoming meeting. It might influence the market pricing for the total tightening expected by year-end though. Right now, the market is pricing in 60 bps, which means traders are expecting at least another rate hike. Overall, given that things can change on a dime based on the developments on the US-Iran front, I wouldn't expect much from this report unless we get big deviations.AMERICAN SESSIONIn the American session, the only highlight is the US Job Openings data for April. Job Openings are expected at 6.880M vs 8.866M prior. The data won't change anything for the Fed as all the more timely US jobs data has been pointing to a resilient/strengthening labour market. The market is pricing 15 bps of tightening for the Fed by year-end, with 47% chance of a rate hike in December. CENTRAL BANK SPEAKERS12:30 GMT/08:30 ET - Fed's Hammack (hawkish - voter)13:35 GMT/09:35 ET - ECB's Vujcic (neutral - voter)14:00 GMT/10:00 ET - BoE Governor Bailey (neutral - voter)14:30 GMT/10:30 ET - Fed's Hammack (hawkish - voter)15:00 GMT/11:00 ET - ECB's Sleijpen (neutral - voter)15:00 GMT/11:00 ET - BoE's Greene (hawkish - voter) This article was written by Giuseppe Dellamotta at investinglive.com.

The report cites a source familiar with the situation, in saying that Iran's final text of the deal is still being discussed in Tehran at this juncture. Adding that there is no response yet that is sent to the US on that.There has been so much back and forth on the text/terms of the deal that it is easy to lose track of what is happening. However, the bottom line is that there is still some differences that require sorting out. And that has been the case for well over two weeks already.A reminder on what needs to be agreed between the two sides so that the deal can be signed off:And even then, all this does is to allow for nuclear discussions to take place next. In that lieu, the US is also demanding that Iran provide some baseline promises on nuclear/uranium. The language of it all will be tricky but I wouldn't expect Iran to abide to any "promises" no matter what. This article was written by Justin Low at investinglive.com.

The main talk of the town yesterday was US president Trump looking to broker a ceasefire between Israel and Lebanon. He confirmed that by saying that "all shooting will stop", allowing for the US to at least try and negotiate with Iran again on a broader framework agreement.As mentioned before, the Israel-Hezbollah ceasefire is a key precondition that Iran wants as part of the terms for the memorandum of understanding. However, the key question here is whether Israel will abide by that ceasefire. And as we have seen from a few hours ago here, it may not really be the case.If it cannot last a day, how is it expected to carry through for the next 60 days when the US-Iran deal is finalised?As a reminder, these are the other key terms that need to be agreed upon. Otherwise, the whole deal/memorandum of understanding may fall apart at any time once signed.For now, markets are still waiting on the US and Iran to strike a compromise on all fronts. Then, we'll see how things go with nuclear discussions.But as the wait continues, market players are pretty much being put on edge in the meantime. After pushing up yesterday, US futures are now pointing lower with S&P 500 futures down 0.4% on the day. Tech shares are leading declines with Nasdaq futures down 0.6%. The overnight comments by OpenAI CEO, Sam Altman here are perhaps worth looking over if anything else.Besides that, oil prices also posted its best daily showing since late April yesterday with WTI crude nearly touching $95. That fizzled late on and we're seeing a slight pullback now with prices down 1% to $91.20 on the day.In other markets, the US dollar continues to remain little changed in the major currencies space. There's no real conviction here as traders continue to wait on US-Iran developments before really committing to any moves.That being said, USD/JPY continues to hold at 159.70 and nearby intervention strike range so that is one to keep an eye out for.Besides that, bond yields are also being pushed down with 10-year Treasury yields now at 4.44% and 30-year yields at 4.96%. It's a cooling sign but it won't take much to reignite the flames, especially if any deal comes to naught between the US and Iran.And looking to precious metals, gold is back up today by 0.5% to $4,508. The push and pull in gold continues amid a mix of US-Iran optimism and worries about inflation, with the latter signaling a more hawkish outlook for major central banks. After so much action, gold is just down 0.7% when benchmarked to close from the last two weeks i.e. 15 May. This article was written by Justin Low at investinglive.com.

BOJ should hike in June and signal clear rate path, SMFG markets chief saysCiti reiterate forecast for a 25bp RBA rate hike at the Bank's August meeting.Nvidia's Huang says supply secured for robust AI growth despite constraintsAustralia's net trade and flat government spending cloud GDP outlookS&P 500 futures analysis today: ES JUN26 fails repair near 7632Japan one step from historic yen collapse, SMBC Nikko warnsAustralia widening current account deficit, inventory draw to weigh on Q1 GDPEthereum Analysis Today: ETH Repairs From Washout, But Bulls Need Acceptance Above 2020.5White House trims tariffs on farm and industrial gear, tweaks metals regimePBOC sets USD/ CNY central rate at 6.8187 (vs. estimate at 6.7720)RBA's hawkish Harper hints herald hikeTokyo and Washington closely monitoring forex markets together, finance minister confirmsJapan eyes sales tax cut from 2027 but bond market (and yen!) risks loom largeRBNZ risks crushing already weakened economy to contain oil-driven inflation Kiwibank warnCommerzbank lifts Brent to $90 on Hormuz closure, no return to pre-war pricesSouth Korea May 2026 inflation data higher than expected, keeps BoK on hike alertIsrael PM contradicts Trump, will continue operating against Hezbollah in Southern LebanonTrump says Hormuz deal is "looking good" but his credibility gap keeps markets on edgeBofA contrarian sell signal nears trigger as S&P optimism hits highest since February 2025Oil's biggest single-day gain in weeks as Middle East tensions flare againICYMI! Strategy sells Bitcoin for first time since 2022, breaking "never sell" pledgeRecord close for the major indices once againKey points:Trump told ABC News a Hormuz ceasefire extension and reopening deal could come within a week, but markets gave the remarks little credit given his track record on conflict timelinesWhite House cut tariffs on agricultural equipment including combines and harvesters, a rare Trump concession on tradeAustralia lifted its minimum wage by 4.75%; RBA board member Harper sounded a hawkish note on inflation, adding to the case for an August hikeAustralian Q1 data pointed to a soft Wednesday GDP print, with net trade subtracting 0.8 percentage points and government spending flatJapan is pursuing a food sales tax cut from 8% to 1% from April 2027, a move with bond market implications already demonstrated when Takaichi first floated the plan in JanuaryFinance Minister Katayama flagged close US-Japan forex coordination; USD/JPY was quiet around 159.70Alphabet announced an $80 billion equity raise for AI infrastructure, including a $10 billion private placement from Berkshire HathawayTrump told ABC News he thinks he will have an agreement with Iran to extend the ceasefire and reopen the Strait of Hormuz over the next week. Trump is credibility-challenged on this front, however, and his remarks went largely unheeded by markets. Further from the US, and in a welcome climbdown, the White House said it will reduce tariffs on agricultural equipment such as combines and harvesters to ease costs for American farmers and manufacturers.Australia lifted its minimum wage by 4.75%. Separately, Reserve Bank of Australia board member Ian Harper sounded a hawkish note, saying stronger-than-expected domestic demand and the return of capacity constraints have reopened the output gap, prompting markets to price in further policy action. Harper flagged persistent inflation as a genuine concern, noting that market-based inflation measures have moved higher, which he described as worrying. The RBA meets next on June 15 and 16, where a pause is widely expected, but the faster rise in award wages alongside Harper's comments on inflation expectations add to the case for another hike, most likely in August.Australian data today indicated the GDP print due Wednesday is shaping up as a soft one, with net trade subtracting 0.8 percentage points, well beyond the 0.5 points forecast, and government spending contributing nothing. Inventories adding 0.2 points provides only partial offset, leaving household consumption and business investment to carry the quarter.Japanese media reported that Japan's government is pursuing a food sales tax cut from 8% to 1% from April 2027 for two years. The proposal carries bond market implications that have already been road-tested: Prime Minister Takaichi's initial announcement in January caused a spike in yields as investors priced in further deterioration of Japan's already stretched fiscal position. A confirmed rollout would likely revive that pressure. Finance Minister Katayama subsequently weighed in with intervention warnings, confirming that Japan is closely coordinating with the United States on foreign exchange, with both sides actively monitoring conditions. USD/JPY did little on the session, sitting around 159.70, with the dollar quiet more broadly. It was a subdued day across markets generally, with South Korean and Japanese equities pulling back from recent record highs.On the corporate front, Alphabet announced a proposed $80 billion equity capital raise to expand AI infrastructure and compute capacity, comprising a $30 billion underwritten offering, a $40 billion at-the-market programme, and a $10 billion private placement from Berkshire Hathaway.--Australia's cash rate, inflation rate, and the wage hike above both: This article was written by Eamonn Sheridan at investinglive.com.

Australia's net trade will subtract ~0.8ppt from Q1 GDP as data centre and fuel imports surged and commodity exports fell, with government spending flat and the current account deficit wider than forecast. Earlier:Australia widening current account deficit, inventory draw to weigh on Q1 GDPRBA's hawkish Harper hints herald hikeSummary points:Net exports will subtract 0.8 percentage points from Q1 GDP, worse than the 0.5 point drag forecast, as trade in goods and services fell into deficit for the first time since December quarter 2017Imports of data centre equipment hit historic highs, driven by bulk AI server rack purchases for infrastructure build-out in New South Wales and Victoria, alongside a surge in fuel imports; mining commodity exports fellThe current account deficit widened to A$27.1 billion in Q1, from a revised A$23.0 billion the prior quarter, well above forecasts of A$23.2 billionGovernment spending was flat in Q1, with operational spending down 0.2% to A$159.3 billion and public fixed asset investment up 0.9% to A$38.9 billion; net contribution to GDP was zeroInventories are expected to add 0.2 percentage points to growth, providing partial offset; Q1 GDP forecasts centre on a 0.5% quarterly rise, slowing from 0.8% the prior quarterThe RBA has raised rates three times this year to 4.35%, fully reversing last year's easing; it forecasts growth slowing to 1.9% by Q2 and 1.3% by year-endAustralia's economy enters Wednesday's first-quarter GDP release carrying more drag than analysts had anticipated, with net trade set to subtract 0.8 percentage points from growth and government spending contributing nothing, leaving the headline figure heavily dependent on household consumption and business investment to avoid a sharp disappointment.Data from the Australian Bureau of Statistics confirmed the current account deficit widened to A$27.1 billion in the March quarter, from a revised A$23.0 billion previously, well beyond forecasts of A$23.2 billion. Trade in goods and services fell into deficit for the first time since the December quarter of 2017, as mining commodity exports declined and imports surged on two fronts: fuel, reflecting the global energy shock from the Hormuz closure, and data centre equipment, where imports hit historic highs driven by bulk purchases of AI server racks for infrastructure projects in New South Wales and Victoria.Government spending offered no relief. Operational expenditure edged down 0.2% in the quarter to an inflation-adjusted A$159.3 billion, while public fixed asset investment rose 0.9% to A$38.9 billion. The net contribution to GDP was zero, ending a run of strong outcomes from the public sector.Inventories are expected to add 0.2 percentage points, providing only partial offset. Forecasts centre on a quarterly rise of 0.5%, slowing from the 0.8% gain recorded the prior quarter, with annual growth seen around 2.6%.The broader backdrop is one of deliberate cooling. The Reserve Bank of Australia has delivered three rate increases this year, in February, March and May, returning the cash rate to 4.35% and fully reversing the prior easing cycle. Early signs suggest the tightening is beginning to bite: household consumption fell in April, home prices have flatlined, and unemployment has started to drift higher. The RBA projects growth slowing to 1.9% by the second quarter and 1.3% by year-end as the combined weight of policy tightening and the energy shock filters through. Forecast for GDP due tomorrow may be revised. Stay tuned. ---The GDP print due Wednesday is shaping up as a soft one, with net trade subtracting 0.8 percentage points, well beyond the 0.5 points forecast, and government spending contributing nothing. Inventories adding 0.2 points provides only partial offset, leaving household consumption and business investment to carry the quarter. The RBA's three rate hikes this year to 4.35% are already showing up in softer household spending, flat home prices and a drifting unemployment rate, and the bank's own forecasts see growth decelerating sharply to 1.3% by year-end. For the AUD, a weaker-than-expected GDP print Wednesday would add to existing downward pressure from the global energy shock. This article was written by Eamonn Sheridan at investinglive.com.