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Markets Stabilizing on Shaky Grounds

Barry Sadovsky

June 1, 2026

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US

Having dropped briefly below resistance at 98.90 on Friday, markets are awaiting Monday’s opening for more dollar direction, although it’s worth mention a marked bearishness on the part of trader commitments.

Last week’s durable goods report provided room for optimist, and Friday’s Chicago PMI was the best in 4 years. But there’s always a downside. Thursday’s Q1 GDP reading increased (1.6%) but by nearly half a percent less than expected (2%), and the outlook on a rate cut remain low.

Seema Shah in Seekingalpha claims that consistently high inflation and a resilient US economy means that a deal with Iran and the gradual opening of the Homuz straits will have little to no effect on the Fed’s next decision to cut rates in June. Indeed, at least two Fed officials, including outgoing head Powell, have reported a hawkish concern – not good news considering the financial stress of the American consumer as described in Zerohedge, according to which, even higher-income households are hying trouble making payments on their debt. Loan delinquencies and defaults are quickly becoming mainstream – even in the sub-prime market…

Prop traders this week should prepare for the 2PM GMT reading on the ISM manufacturing PMI for May, which is expected to increase by a point and a half, and Tuesday’s JOLTs Job Openings at 2PM, expected to drop slightly. On Thursday, the labor bureau will publish May’s US initial jobless claims – expect a very slight increase on the previous week.

EU

European investors have their eyes more closely averted towards geopolitics, with major benchmarks closing optimistically up on Friday. The previous day’s published ECB policy meetings have the hawks in the ascendancy, here too, as energy prices continue to take a healthy bite out of the union’s economy. German unemployment fell by a 1/10th of a percent; Italy’s GDP rose by the same; and the UK’s shop price inflation rose by an unexpected 1.2% YoY.

On Friday, the EU decided to move towards more centralized capital markets supervision in order to aid investment and weaponize trillions of Euros, currently deposited in savings accounts.

Traders should expect a 3.4% YoY increase in Tuesday’s Eurozone Inflation readings at 9AM GMT – better than last month’s reading of 3%. And then, on Thursday morning, the UK’s construction PMI for May – also expected to rise from 39.7 to 40.3.

Asia

China has for some years now been trying to boost implementation of its digital Yuan, which it sees – in a global economy gone crypto – as fair replacement for fiat currencies – primarily the US dollar. Reuters reports that it has recently been incentivizing banks to boost eCNY trade, and local governments to implement the currency into salary payments, healthcare disbursements, lotteries, electrical bills, and more. Meanwhile, on the economic front, and after flat readings for factory activities stemming in part from Middle East tensions and rising prices, China’s RatingDog will be publishing its PMI on at 1:45AM GMT, for any prop traders active in China-related assets. Analysts expect a fall from last month’s 52.2 to 51.9.

And, across the seas, Japan’s equity markets shot up by 4.72% throughout the week, after YoY inflation readings came in at a 1/5th% less than the month before. And South Korean equities seem to be optimistic, reflecting the growth in the global AI sector

Commodities

After dropping 11% over the week, Oil is currently at the bottom of its 3-month range, though large traders are still bullish (see COT levels below). The news will tell. Prop traders should look out for Tuesday’s API reading at 8:30PM GMT, and the EIA’s report, the following day at 3:30PM. Last week’s reports show a considerable drop in inventories.

Meanwhile, gold is at a crossroads. After hitting resistance at 4606 Friday, we may have entered bear country. Breaking below the 4570 band will be a good bearish indicator.

Equities & Indices

US markets continue to be optimistic despite general dismay over last week’s launchpad explosion and consequent lowering of expectations towards SpaceX’s IPO, with both the NASDAQ and the S&P boasting RSIs over the expansionary 70 mark – fueled primarily by the AI industry.

Indeed, the AI market is increasingly becoming a rallying point for market pundits and, after last week’s 30% hike in Snowflake, Dell and other associated big-tech stocks, semiconductor giant Broadcom quarterly earnings report on Wednesday will surely provide some indicator of the industry’s strength. The company has consistently beaten expectations over the past 4 quarters, and analysts are expecting an 88% increase in earnings on a $3b. increase in revenue.

In general terms, Seekingalpha has reported an upscaling in the AI infrastructures sector and opportunities in related industries – from tech to real estate… even banking – as borrowing within the AI sector becomes rife. Prop traders are warned to distinguish between legitimate endeavors and speculative hype, with FOMO on the horizon. AI related layoffs, electricity shortages and similar restrictions seem to be delaying the implementation of about half of AI-related data centers; and the technology is getting increasingly expensive, with large companies like Microsoft, Amazon and Uber burning through their tokens allotment much faster than expected.

Hewlett Packard – another company that has also been beating expectations for the past year (though in choppier waters) – will be reporting its quarterly earnings on Monday. Prop traders should expect a slight drop in EPS on a 5% increase in revenue.

The Prop Prospective

Finally, a quick look at the prop trading industry, which certainly deserves some news space – if not here, then where.

Australia’s Proactive, reporting on the UF Awards in Dubai earlier this year, claims that the prop industry is shifting from the fringes of the financial markets industry into focus. It names three pillars upon which growing regulatory scrutiny is stacked, and also the success of individual companies: financial and technological stability, compliance and transparency, and (only in 3rd place) speed to market. With an industry that has grown in unprecedented leaps, clearly speed and simplicity drive adoption, but these mustn’t be built on fragile tectonics. Infrastructure must be seen as a strategic asset rather than a back-end cost, and firms will have to adopt institutional standards on all levels.