(MS) Nokia : Scope For Further Cash Returns and Beating Cost Targets:

We have analysed scope for cash returns and synergies, and believe expectations of the bulls look too high. We think Nokia has a good strategic position, but expect the industry to remain challenged on a 2-3 year view, and would stay on the sidelines for now.

We think bulls are holding out for big synergy upgrades and capital returns. 
Nokia has been proactive on both fronts in the past, distributing €1.4bn in dividends in 2014 and €1.5bn this year, alongside share buybacks. The previous restructuring plan also saw material upgrades to savings targets, which we analyse below. However, we think expectations may be too high on both counts. Capital will be constrained by additional external requirements on funds, and we think upgrades to synergy targets last time round were largely
due to business exits. Prospects for the industry are weak until the 5G upgrade cycle starts in 2018/19, so we prefer to sit on the sidelines.

Nokia could have latitude for a further €3bn of cash returns, but this may be lower than expectations. 
We think distributions of this order would leave Nokia with an effective net cash position of ~€2bn in early 2017, and we believe management would want to maintain this buffer, given the potential for capital-intensive swap-outs at former Alcatel customers. Management has also been explicit about several factors that reduce the funds available –
factoring unwind, restructuring commitments, and buybacks/dividends already committed – but bulls may not have reflected this in numbers.

Scope for synergy-driven upgrades looks more limited than in the last restructuring plan. 
Investors tend to also perceive Nokia to have materially outperformed its last restructuring plan – undertaken following the buy-out of Nokia Siemens Networks (NSN). However, we believe a substantial portion of the increases resulted from business exits (which de facto resulted in cost declines), rather than being driven by material organic outperformance. This time, we expect Nokia to reach its €900m net savings target. We believe upgrades to this figure would be dependent on business exits in Submarine, RF Systems, and potentially other businesses.

A further €3bn would represent €0.5 per share of cash returns, reducing the effective PE multiple by around 1.5 turns - not enough to turn bullish in our view. 
Factoring in this €3bn of potential capital returns we think Nokia would trade on 14.2x 2017e earnings and 12.2x - still a 25% premium to Ericsson on 2017e. This may be warranted given Nokia's business mix has a stronger growth profile, but with two years of organic topline decline and weak industry prospects, we would stay on the sidelines in both cases.

(BofA-ML) The Flow Show - London Calling

* Redemption day followed by post-BREXIT "buy signal"
Monday saw 7th largest day of global equity redemptions ($9.5bn) in past 10 years…largest week of outflows since 8/15 CNY devaluation...BofAML Bull & Bear Indicator triggers “buy” signal

* The BREXIT bounce
Best explained by Positioning, Policy & Price-action...peripheral rates and IG credit (Spain, Italy yields at all-time lows, iTraxx EUR back down from 100 to 85), UK gilt yields (<1% now), US staples, utilities at all-time highs, reveal hardened max liquidity-minimal growth belief; & GBP slump = key "automatic stabilizer" for UK.

* Asset Class Flows
- Equities: $20.7bn outflows (largest since Aug’15) (outflows in 11 of past 12 weeks) (note $13bn mutual fund outflows and $8bn ETF outflows)
- Bonds: $1.4bn outflows (largest since Jan’16)
- Precious metals: $2.1bn inflows (largest since Feb’16) (inflows in 23 of past 25 weeks)
- Money-markets: $3.8bn inflows

* Equity Flows
- Europe: largest outflows since Oct’14 ($5.3bn) (21 straight weeks of outflows)
- UK equity funds see $0.6bn outflows (outflows in 9 of past 10 weeks)
- EM: $1.3bn outflows (outflows in 7 of past 9 weeks)
- Japan: $0.3bn inflows (inflows in 6 of past 8 weeks)
- US: $11.6bn outflows (largest in 8 weeks)

* Fixed Income Flows
- $3.4bn outflows from HY bond funds (largest since Jan’16) (outflows in 8 of past 9 weeks)
- $0.4bn outflows from bank loan funds (largest since Feb’16)
- 17 straight weeks of inflows to IG bond funds ($1.8bn)
- Small $53mn outflows from EM debt funds
- 41 straight weeks of inflows to Munis ($0.7bn)
- Outflows from Govt/Tsy funds in 17 of past 19 weeks ($0.1bn)

>>> What to look at today - 1st of July 2016 ( 1st day of Q3 & H

Dow +1.33% S&P +1.36% Nasdaq +1.33% Russell +1.79%
Q2 Performance:
Dow +0.77% S&P +1.26% NAsdaq -1.46% Russell +3.06% BRazil +1.91% Nikkei -3.6% Hnag Seng -0.3% Shanghai -2.65% EuroStoxx -3% FTSE +5.83% Dax -1.17% CAC -1.96% Ibex -5.10% MIB -8.88% SMI +4.32%
US Market closed higher and erased all Brexit losses. Comments of easing measures from the Bank of England and European Central Bank helped the sentiment. M&A news in the US also helped mkt to perform. (MDLZ/HSY), Volume continue to be strong for the last day of Q2 & H1. ISM Will be published tomorrow. USAfter Hours WING +3.8% following special cash dividend news... MU -7.8% on earnings/guidance/restructuring plans, MBLY -3.1% and TSLA -2.5% on NHTSA investigation. Asian equity markets are firmer yet again, entering the new quarter with momentum of 3 straight sessions of solid gains despite the mixed economic data. China manufacturing PMIs were disappointing, In Japan, the quarterly Tankan topped forecasts, but CPI dive into deflation territory persisted.

Nikkei +0.44% Hang Seng +1.75% CSI -0.08% Shanghai -0.01%

Eur$ 1.1085 CNH 6.6704 CNY 6.6547 JPY 102.79 GBP 1.3307 CHF 63.9223 RUB$63.9223 WTI$48.62(+0.6%)

S&P -0.13% EuroStoxx +0.77% Dax +0.54% SMI +0.55%

Macro :
- ECB Said to Weigh Looser QE Rules as Brexit Depletes Asset Pool
- Greek Parliament Approves Bill Attached to Piraeus Sale to Cosco
- JPM’s Kolanovic Says VIX Hasn’t Seen Its Post-Brexit Highs Yet
- Trichet Says U.K. Has ‘Enormous Problem’ After Brexit Vote: Echo

Keep an eye on :
- AREVA FP : Areva to Give Progress Report on Plant Audits by End-July
- MAERSKB DC : AP Moller-Maersk could sell Maersk Oil in the event of a split
- BARC LN : Barclays to Expand Lending to Small U.K. Firms After Brexit Vote
- BARC LN : Barclays Doesn’t Need More Capital Even With Brexit, Staley Says
- BARN SW : Supplier Barry Callebaut May See Move on Hershey-Mondelez Deal
- BATS LN : Bats Likely to Establish Presence in EU After Brexit, WSJ Says
- BAYN GY : Monsanto Conf. Call Suggests Co. Sees Remaining Independent: JPM
- BLT LN : BHP Says Brazil Court Issues Order to Suspend Samarco Agreement
- BIM FP : Biomerieux Gets FDA Clearance to Expand Use of Procalcitonin
- BMPS IM : Monte Paschi Must Pay EU46m Interest on Past Aid in Cash
- DIS US : Disney Said to Buy Stake in MLB Advanced Media Unit for $3.5b
- ECP FP : EuropaCorp Posts FY Loss on Decline in Film Distribution
- EUCAR FP : HTZ +1.9% (Hertz Global completes separation of its equipment rental business, will receive proceeds of ~$2 bln)
- FCA IM : Fiat Chrysler Recalling Estimated 26,211 Vehicles in U.S.
- FDPA FP : Fonciere De Paris Board Recommends Gecina Offer: Les Echos
- GSK LN : GSK Sees Asia Growth Opportunities in Broadening Access
- HSY US : Hershey Board Rejects $23 Billion Takeover Bid From Mondelez
- HSBA LN : HSBC to Keep HQ in London After Brexit: Independent (Yday)
- OR FP : L’Oreal Signs Accord to Buy Atelier Cologne; No Terms Disclosed
- LSE LN : Deutsche Boerse Director Says ‘Creative’ Answer Needed for LSE
- LSE LN : Euronext CEO Doubts Success of LSE/Deutsche Boerse Merger: BZ
- MBLY US : Mobileye Sinks Post-Mkt as Regulators Look at Tesla Fatal Crash
- MDLZ US : Mondelez Bid for Hershey Probably ’Defensive Move’: Susquehanna
- SAF FP : Safran Said to Have Shortlisted 5 for Morpho Purchase: Tribune (Oberthur, Advent, Gemalto, Astorg/CVC, Adrian/Bain/Predica/KKR) more than €2bn valuation
- GLE FP : SocGen CEO Oudea Says Brexit Is ‘Stress Test’ for Banks: Echos
- TSLA US : Tesla Drops Post-Mkt as NHTSA Opens Review on Fatal Crash
- TIT IM : Tel. Italia: Still Reviewing How Best to Create Inwit Value
- TIT IM : Telecom Italia refutes Cellnex claims over liquidity issues; Inwit options under analysis
- HO FP : Thales Signed Accord With Raytheon to Cut Scope of Joint Venture
- UCG IM : UniCredit Says Ghizzoni to Get EU5m Gross Severance Payment
- UCG IM : UniCredit New CEO Very Good Fit, Wait for Visibility: Mediobanca
- CSS FP : Vivarte to Sell Kookai, Chevignon, Pataugas: AFP
- VIV FP : Apple Said to Be in Talks to Buy Jay Z’s Tidal: WSJ

>>> Europe Brokers Upgrades & Downgrades - 1st of July 2016

>>> Up
*ABERDEEN RAISED TO BUY VS UNDERPERFORM AT BOFAML
*DIGNITY RAISED TO BUY VS HOLD AT BERENBERG
*FONCIERE DES REGIONS RAISED TO OUTPERFORM AT EXANE
*GENUS RAISED TO BUY VS HOLD AT LIBERUM
*KINGFISHER UPGRADED TO NEUTRAL FROM UNDERPERFORM AT DAVY
*MARR RAISED TO OUTPERFORM VS NEUTRAL AT EXANE
*TELECOM PLUS RAISED TO SECTOR PERFORM AT RBC CAPITAL
*WYNNSTAY GROUP RAISED TO HOLD VS SELL AT INVESTEC

>>> Down
*AKZO NOBEL CUT TO NEUTRAL AT JPMORGAN
*BANK OF IRELAND CUT TO NEUTRAL VS OUTPERFORM AT EXANE
*CAPGEMINI CUT TO REDUCE VS ADD AT ALPHAVALUE
*AKZO NOBEL CUT TO NEUTRAL AT JPMORGAN
*INTERSERVE CUT TO HOLD VS BUY AT BERENBERG
*KLOECKNER & CO CUT TO UNDERPERFORM AT JEFFERIES
*KOMERCNI BANKA CUT TO NEUTRAL VS BUY AT CITI
*MEDICAL PROPERTIES CUT TO MARKET PERFORM AT JMP SECURITIES
*PERMANENT TSB CUT TO UNDERPERFORM VS NEUTRAL AT EXANE
*PHOSAGRO CUT TO SELL AT GOLDMAN, ADDED TO CEEMEA FOCUS LIST
*STAFFLINE CUT TO HOLD VS BUY AT BERENBERG
*SIG CUT TO NEUTRAL FROM OUTPERFORM AT DAVY
*TELEFONICA DEUTSCHLAND CUT FROM OUTPERFORM TO NEUTRAL AT CREDIT SUISSE
*TRAVIS PERKINS CUT TO UNDERPERFORM FROM NEUTRAL AT DAVY

>>> PT Change


>>> Initiation
*DE’LONGHI RATED NEW NEUTRAL AT UBS; PT EU22.5
*JUST EAT RATED NEW OUTPERFORM AT MACQUARIE, PT 531P
*RIGHTMOVE RATED NEW NEUTRAL AT MACQUARIE, PT 3606P
*SCOUT24 RATED NEW OUTPERFORM AT MACQUARIE, PT EU40.41
*SISTEMA RATED NEW OUTPERFORM AT CREDIT SUISSE; PT $10
*ZOOPLA RATED NEW OUTPERFORM AT MACQUARIE, PT 309P

>>> Call

>>> Asian Update

Asian Mid-session Market Update: China PMIs, Japan inflation slow further

***Economic Data***
- (CN) CHINA JUN CAIXIN PMI MANUFACTURING: 48.6 V 49.2E; 16th straight contraction; 4-month low
- (CN) CHINA JUNE MANUFACTURING PMI (GOVT OFFICIAL): 50.0 (4-month low) V 50.0E; NON-MANUFACTURING (SERVICES) PMI: 53.7 (3-month high) V 53.1 PRIOR
- (JP) JAPAN Q2 TANKAN LARGE MANUFACTURING INDEX: 6 V 4E; MANUFACTURERS OUTLOOK: 9 V 3E; ALL-INDUSTRY CAPEX: 6.2% V 5.3%E
- (JP) JAPAN MAY NATIONAL CPI Y/Y: -0.4% (3rd straight decline, 3-year low) V -0.5%E; CPI EX FRESH FOOD (CORE) Y/Y: -0.4% (3-year low) V -0.4%E
- (JP) JAPAN JUN TOKYO CPI YOY: -0.5% V -0.4%E; CPI EX-FRESH FOOD YOY: -0.5% (6th straight decline, 3-year low) V -0.5%E
- (JP) JAPAN JUNE FINAL PMI MANUFACTURING: 48.1 V 47.8 PRELIM
- (JP) JAPAN MAY JOBLESS RATE: 3.2% V 3.2%E
- (JP) JAPAN MAY OVERALL HOUSEHOLD SPENDING Y/Y: -1.1% V -1.1%E; 3rd straight decline
- (AU) AUSTRALIA JUNE CORELOGIC RPDATA HOUSE PRICES M/M: 0.5% V 1.6% PRIOR
- (AU) AUSTRALIA JUNE AIG MANUFACTURING INDEX: 51.8 V 51.0 PRIOR; 12th month of expansion
- (KR) SOUTH KOREA JUNE TRADE BALANCE: $11.6B V $9.1BE; Exports Y/Y: -2.7% v -8.2%e (18th straight decline); Imports Y/Y: -8.0% v -10.0%e
- (KR) SOUTH KOREA MAY CURRENT ACCOUNT BALANCE: $10.4B V $3.4B PRIOR; GOODS BALANCE: $10.7B V $9.6B PRIOR
- (KR) SOUTH KOREA JUN CPI M/M: 0.0% V 0.1%E; Y/Y: 0.8% V 0.8%E; CPI CORE Y/Y: 1.7% V 1.6%E
- (ID) INDONESIA JUN CPI M/M: 0.7% v 0.5%e; Y/Y: 3.5% v 3.4%e; CPI CORE Y/Y: 3.5% v 3.5%e

***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.8%, S&P/ASX +0.5%, Kospi +1.0%, Shanghai Composite +0.2%, Hang Seng closed, Sep S&P500 -0.1% at 2,088

***Commodities/Fixed Income***
- Aug gold +1.0% at $1,333/oz, Aug crude oil +0.6% at $48.62/brl, Jul copper +0.1% at $2.20/lb
- USD/CNY: BOC SETS YUAN MID POINT AT 6.6496 V 6.6312 PRIOR; first weaker setting in 3 days
- (CN) PBOC to inject CNY50B in 7-day reverse repos; For the week, injects CNY180B v CNY340B in prior week
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥440B in 3-5yr JGBs, ¥430B in 5-10yr JGBs, and ¥2T in T-bills
- (AU) Australia MoF (AOFM) sells A$1.0B in 2.75% 2027 Bonds; avg yield: 2.065%; bid-to-cover: 2.27x

***Market Focal Points/FX***
- Asian equity markets are firmer yet again, entering the new quarter with momentum of 3 straight sessions of solid gains despite the mixed economic data. China manufacturing PMIs were disappointing, though the official Services print bounced higher. In Japan, the quarterly Tankan topped forecasts, but CPI dive into deflation territory persisted. Australia data were similarly mixed, with better AiG manufacturing against lower change in home prices. Among FX majors, USD/JPY fell about 50pips from the highs to 102.80, as improved Tankan diminished the likelihood of further BOJ easing next month. AUD/USD and NZD/USD traded within about a 30pip range above 0.7440 and 0.7120 respectively as traders eye Australia's national elections this weekend. After today's 200pip drop on BOE signal of policy easing, GBP/USD came off the US session lows of 1.3220 to rise above 1.3330.

- China official June manufacturing PMI slid to a 4month low of 50.0 as non-manufacturing rose to a 3-month high of 53.7. Among the key manufacturing PMI components, new orders fell to a 4-month low of 50.5 v 50.7 priorl, new export orders registered its first contraction in 4 months, input prices hit a 4-month low of 51.3 v 55.3 prior, and employment slowed to 47.9 from 58.2. Separate private survey Caixin PMI data saw manufacturing contract for the 16th straight month, missing expectations by the biggest margin since January. Caixin comments reflected on the fall in cost pressure faced by China producers, as employment in manufacturing has now fallen in each of the past 32 months. China Pres Xi spoke in the session, stating the economy is in transition. Fin Min Lou pledged continued use of fiscal policies to reduce overcapacity, help companies restructure debt, and reform tax system after yesterday's warning that the govt is struggling to meet annual fiscal targets.

- Japan saw 3-year lows in its national headline and core as well as Tokyo core CPI prints, with the upward inflection in JPY over the past 3 months weighing further on prices. Q2 Tankan data were resilient however, with weakness in machinery and energy balanced by strength in iron/steel segment. In non-manufacturing space, Real Estate and IT industries outpeformed while Hospitality and Utilities lagged. Japan spokesperson Hagiuda remarked that while the Tankan shows firms' cautious stance, the CAPEX component shows economy's firm footing.

***Equities***
US equities / ADRs:
- ARRY: Submits binimetinib New Drug Application to FDA; +5.1% afterhours
- NFLX: Afterhours strength attributed to positive comments from data intelligence firm 7Park Data that reportedly shows positive Q2 trend in international subscribers - financial press; +3.5% afterhours
- FC: Reports Q3 -$0.07 v +$0.08e, R$44.7M v $49.9Me; -2.5% afterhours
- TSLA: Model S vehicle in Autopilot mode has been involved in a fatal crash; US regulators to open investigation into automatic drive system - press; TSLA -2.8% afterhours; MBLY -3.1% afterhours
- ARNA: To shift focus on proprietary clinical stage pipeline; To cut 100 jobs; -6.4% afterhours
- MU: Reports Q3 -$0.08 v -$0.11e, R$2.90B v $2.95Be; To cut jobs; Guides Q4 -$0.24 to -$0.16 v $0.02e, Rev $2.9-3.2B v $3.2Be - earnings slides; -9.5% afterhours

Notable movers:
- ABC-Mart 2670.JP +1.5% (Q1 speculation)
- EVN.AU +9.0%, NCM.AU +4.5% (rising gold prices)
- MSB.AU +14.4% (update on heart failure trial and funding of operations)

>>> After Hours Summary: WING +3.8% following special cash dividen


After Hours Summary: WING +3.8% following special cash dividend news... MU -7.8% on earnings/guidance/restructuring plans, MBLY -3.1% and TSLA -2.5% on NHTSA investigation

After Hours Gainers:

Companies trading higher in after hours in reaction to news: ARRY +5.3% (submits NDA for binimetinib in patients with advanced NRAS-mutant melanoma to the FDA), WING +3.8% (declared special cash dividend of $2.90/share to shareholders), NFLX +3.6% (strength being attributed to 7Park Data - not confirmed), HTZ +1.9% (Hertz Global completes separation of its equipment rental business, will receive proceeds of ~$2 bln)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MU -7.8% (also announces restructuring plan, expects to incur charges of $70 million), FC -2.3%

Companies trading lower in after hours in reaction to news: CJES -8.7% (announces agreement in principle with its secured lenders on the key aspects of a proposed restructuring transaction), ARNA -6.4% (announces strategic shifting of priorities, will reduce workforce by 73%), MBLY -3.1% and TSLA -2.5% (reports of NHTSA investigation following a fatal-crash while a car was being operated in self-driving mode)

>>> US Close Dow +1.33% S&P +1.36% Nasdaq +1.33% Russell +1.79%

Closing Market Summary: Stocks Rally to End Second Quarter

The stock market capped off the second quarter with the S&P 500 (+1.4%) clawing its way back to a 2.7% gain on the year. The three-day rebound resulted in the benchmark index trimming its post-Brexit loss to a paltry 0.7%. Today's leg of the rebound can be attributed to rising expectations regarding further easing measures from the Bank of England and European Central Bank, the reclaiming of the 200-day simple moving average in the S&P 500, month-end/quarter-end re-positioning, and the outperformance of the heavily-weighted industrial (+2.0%) and financial (+1.6%) sectors. The S&P 500 (+1.4%) finished ahead of the Dow Jones Industrial Average (+1.3%) and the Nasdaq Composite (+1.3%).

Global equity markets sputtered at the start of the U.S. session as European bourses spun their wheels near their flat lines. The restrained action overseas followed two days of recouping steep Brexit-related losses. On that note, the Euro Stoxx 50 Index (+1.1%) recovered 5.0% of its 11.2% decline by the end of yesterday's session. A downturn in crude oil also added to the restrained tenor.

U.S. equity indices ticked higher after the first hour of trade as the consumer staples sector (+2.2%) climbed the leaderboard. The move in the space was prompted by Mondelez International (MDLZ 45.48, +2.51) offering to buy Hershey Foods (HSY 113.49, +16.35) for $107 per share in cash and stock. Hersey has since rejected the offer, but remains in talks with Mondelez. The ensuing rally in the broader market enabled the benchmark index to reclaim its 50-day simple moving average (2076.42).

The benchmark index extended its rally through the afternoon, spurred on by promises of continued easing from central banks. Bank of England Governor Mark Carney pledged that the bank was ready to provide further stimulus in the wake of Thursday's surprise Brexit vote. Additionally, reports indicated that the ECB may loosen its regulations regarding quantitative easing purchases. The commentary was enough to fuel risk appetite through the end of the session. All ten sectors finished in the green with consumer staples (+2.2%), utilities (+2.2%), and industrials (+2.0%) leading the pack.

In the industrial sector (+2.0%), Dow component General Electric (GE 31.48, +0.93) finished at the top of the price-weighted index as participants ruminated over yesterday's decision to remove the company's nonbank Systemically Important Financial Institution designation. On the flipside, Deere (DE 81.04, -0.47) was pressured after the USDA released its quarterly grain stock report and acreage report.

The financial space (+1.6%) paced the advance as investors digested results from the Federal Reserve's supervisory stress test. The response was mixed as each institution's capital return program was weighed against recent expectations. Morgan Stanley (MS 25.98, +0.75) gained 3.0% after announcing an additional $3.5 billion in share repurchases and a dividend increase to $0.20 per share.

The U.S. Dollar Index (95.90, +0.13) ended modestly higher as the buck gained against the yen, euro, and pound. The dollar/yen pair finished higher by 0.4% (103.25) while the single currency lost 0.2% against the buck (1.1100). Separately, the pound fell 0.7% against the dollar (1.3337) as participants eyed potential stimulus from the Bank of England.

The Treasury complex finished modestly higher despite the rally in equities. The yield on the 10-yr note slipped three basis points to 1.49%.

Today's participation was above the recent average as more than 1.3 billion shares changed hands on the NYSE floor.

Today's economic data included weekly initial claims and Chicago PMI for June:  

  • The encouraging trend for initial jobless claims persists with claims for the week ending June 25 increasing by 10,000 to 268,000 (consensus 265,000).
    • Weekly initial claims have been running below 300,000 for 69 consecutive weeks.
    • This is the longest streak below 300,000 for initial claims since 1973!
    • The latest initial claims reading left the four-week moving average for initial claims unchanged at 266,750.
  • Continuing claims for the week ending June 18, meanwhile, decreased by 20,000 to 2.120 million.
    • The four-week moving average for this series fell by 13,000 to 2.134 million, which is the lowest since November 11, 2000.
  • The Chicago Purchasing Managers Index (PMI) sprung out of its contraction, surging to 56.8 in June from 49.3 in May.
    • The June reading is the highest reading since January 2015 and was well above the consensus estimate of 50.8.
    • The headline strength in June was nice to see, yet it most likely reflects inventory rebuilding after an extended period of destocking in an environment of sluggish demand.
    • One month here does not a trend make and the providers of the report implied as much, pointing out that the business barometer needs to be viewed in the context of the weakness seen in April and May.
    • On that note, it is worth pointing out that the three-month average of 52.2 for the second quarter is roughly flat with the three-month average for the first quarter. The line between contraction and expansion is 50.0.
    • There was a huge surge in new orders, which drove the strength in June. The New Orders Index spiked from 48.8 to 63.2.
    • Similarly, there was a big jump in the Production Index from 47.4 to 56.3, which also proved to be a driving factor behind the headline surprise.
    • Order backlogs reportedly rose to their highest level since March 2011, breaking a 16-month streak of below 50 readings.
    • The Inventory Index ended a seven month run in contraction and saw a double-digit increase from the 6 1/2 year low recorded in May
    • Strikingly, despite the big jump in new orders and order backlogs, there wasn't a pickup in employment.
    • That could be seen in the Employment Index, which fell from 48.3 to 45.0. The Prices Paid Index was little changed at 55.7 versus 56.5 in May.

Tomorrow's economic data will include the ISM Index for June (consensus 51.4) and Construction Spending for May (consensus +0.5%), which will cross the wires at 10:00 ET. Separately, Auto and Truck Sales figures for June will be released throughout the session. 

  • Nasdaq Composite -3.3% YTD
  • Russell 2000 +1.1% YTD
  • S&P 500 +2.7% YTD
  • Dow Jones +2.9% YTD