Stocks rally as US, Iran agree to resume talks

Good morning. Here’s what happened overnight and what you need to know today.

1.

Tech rebound: US stocks rallied overnight, with the Dow Jones Industrial Average closing at a record above 52,000 and the Nasdaq jumping 2.07% to break a five-session losing streak, as weekend hostilities between the US and Iran eased and beaten-down technology shares rebounded. The S&P 500 rose 1.2%, capping the best quarter for equities in six years. The gains followed the US and Iran agreeing to halt tit-for-tat strikes over the Strait of Hormuz and resume peace talks, even as Brent crude rose about 1.6%. Treasury yields were little changed after the Supreme Court ruled Fed governor Lisa Cook could keep her job, reinforcing the central bank’s independence. Besides big moves at Comcast and Rocket Lab (see below), SpaceX rose 7.15% after Nasdaq confirmed the rocket and AI company would join the Nasdaq 100 on 7 July, and Alphabet closed 4.96% higher on its first day as a Dow component, replacing Verizon, which fell 5.30% after a joint venture deal with Britain’s BT. Strategy, Michael Saylor’s bitcoin-hoarding company, rose 12.2% after unveiling an overhaul of its financing model, including stock buybacks and bitcoin sales, to stem a slide that has left the stock down more than 40% in June. (WSJ)(Bloomberg)(Reuters)

2.

Space race: US-New Zealand space company Rocket Lab has agreed to buy satellite communications provider Iridium Communications for USD54 ($78.4) a share in a cash-and-stock deal valuing it at about USD8 billion, as space industry players try to compete with SpaceX’s Starlink. The move combines Rocket Lab’s launch capabilities and satellite manufacturing with Iridium’s low-Earth orbit network, its globally licensed spectrum and more than 2.5 million subscribers spanning government, defence, aviation, maritime and commercial markets. Building those assets itself could have taken several years and billions of dollars, Reuters noted. Founder and chief executive Peter Beck told Reuters the all-important spectrum was central to the strategy, giving Rocket Lab a foothold in direct-to-device, the emerging market of connecting satellites directly to smartphones. Iridium shares soared 25.4% and Rocket Lab rose 15.9%. The deal follows Amazon’s USD11.6 billion move to buy Globalstar in April and SpaceX’s roughly USD17 billion EchoStar spectrum deal last September. Rocket Lab has lined up a USD3.6 billion bridge loan from Deutsche Bank and Wells Fargo and expects to close in mid-2027. (Bloomberg)(Reuters)

3.

Cut the cord: US cable and media giant Comcast plans to spin off NBCUniversal and its European pay-TV arm Sky into a separate publicly traded company, unwinding a 15-year bet on combining content with the pipes that distribute it, as audiences shift from traditional broadcasters to streaming. The tax-free spin-off will hand existing shareholders stock in both Comcast and the new standalone media company, expected to be completed within a year. NBCUniversal (home to the Universal film and TV studios, theme parks, the NBC and Telemundo networks and Peacock streaming) will be led by current co-chief executive Mike Cavanagh, while former finance chief Michael Angelakis returns to run a slimmed-down Comcast focused on broadband, wireless and cable. Co-CEO Brian Roberts, whose family controls the group, said it was “not about separating what we built together” but positioning two businesses to move with greater focus and agility. Comcast shares rose 4.5%, while broadband rival Charter Communications (seen as a potential Comcast merger partner) rose 9.4%. The move follows Comcast’s spin-off of cable channels including CNBC into Versant in January, and comes amid a wave of media dealmaking in the US, including Paramount’s acquisition of Warner Bros Discovery. (Comcast)(FT)(WSJ)(Bloomberg)

4.

Trade diplomacy: The EU and China agreed to three months of talks to try to avoid a trade war over the bloc’s EUR360 billion ($596.9 billion) annual trade deficit with Beijing, after weeks of threats and recriminations. EU trade commissioner Maros Sefcovic, speaking after meeting Chinese commerce minister Wang Wentao in Brussels, said he wanted “tangible results” by October, when he plans to visit Beijing. The two sides issued a joint statement (their first of its kind since 2019) launching Trade and Investment Consultations covering four areas: rebalancing trade and investment, export controls including those on rare earths, intellectual property rights and WTO reform. They also set up an import monitoring mechanism that would trigger high-level talks if either side detected a destabilising surge. The talks come amid EU alarm over a flood of Chinese goods with Eurostat reporting Chinese exports to the bloc outweigh imports by EUR1 billion a day. Separately, opening the ECB’s annual Sintra conference, president Christine Lagarde said the euro zone had built greater resilience to shocks, allowing the ECB to raise rates more easily without setting off financial stress. She said the bank no longer needs to fight inflation with “the same force” it did in 2022 and 2023, and pushed back on characterisations of this month’s quarter-point rise to 2.25% as an “insurance hike”, saying it was based on the bank’s projections. Markets expect one further increase by October. (ECB)(FT)(Guardian)(Reuters)

5.

Power play: The US Supreme Court blocked Donald Trump from immediately firing Federal Reserve governor Lisa Cook, while in a separate ruling clearing the way for the US president to dismiss members of other independent agencies at will. The Cook decision, 5-4, found Trump had not given her an opportunity to refute unproven mortgage fraud allegations he cited in seeking her ouster, chief justice John Roberts wrote. The ruling does not bar Trump from trying again, and the court did not decide whether the allegations, if true, would justify removal. In a second case, the court voted 6-3 to uphold Trump’s firing of Democratic Federal Trade Commission member Rebecca Slaughter, overturning a 1935 precedent to end 90 years of removal protections across more than two dozen agencies. Justice Sonia Sotomayor, dissenting, wrote that “dozens of independent commissions are now likely to become purely executive agencies, shifting tremendous power over broad swaths of American life into the president’s hands”.  The rulings land amid Trump’s sustained campaign to bend the Fed to his will. The US president dismissed the Cook ruling as purely procedural and said “we will take appropriate action immediately to make sure that someone who has committed wrongdoing will not be making vital decisions concerning the welfare” of the USA. (Capital Brief)(SCOTUS)(Reuters)(Donald Trump)

6.

‘Tremendous loss’: The US Supreme Court is releasing decisions on the major cases it heard throughout the year before its summer recess. In a separate case, the court also rejected the US president’s final appeal in the E Jean Carroll case, declining to review the civil verdict that found Trump defamed and abused the writer and leaving him liable for the USD5 million ($7.3 million) in damages a New York jury awarded her in 2023. It was Trump’s last avenue to overturn the unanimous verdict. On Truth Social he vowed to keep fighting what he said was a “Weaponization and Lawfare Case". In a separate "tremendous loss” for Trump, the court also voted 5-4 to uphold a Mississippi law that lets officials count postal ballots received up to five business days after election day, as long as they are postmarked by then. Trump has long, and falsely, claimed the practice enables fraud. Roberts and Justice Amy Coney Barrett joined the three liberals, with Barrett writing that the federal statutes setting election day “say nothing about ballot receipt, and we cannot add to the words Congress chose”. The decision comes ahead of November’s midterm congressional elections and leaves similar laws in at least 18 other states and territories in place. (SCOTUS)(NYT)

7.

Best foot: Shareholders are betting UK billionaire Mike Ashley’s Frasers Group will have to stump up more cash to wrest control of Accent Group, with the Platypus and HypeDC retailer’s shares sitting above the takeover offer price since the bid was announced in mid-June. Ahead of the formal commencement of Frasers’ on-market offer worth 65 cents per share on Tuesday, the stock closed at 71 cents. TAMIM Asset Management head of Australian equities Ron Shamgar, whose fund holds Accent shares, said Frasers is “just trying to steal it for a bargain, and they’re not going to get it,” arguing Frasers will need to raise its offer to at least 90 cents to take full control. Accent yesterday reiterated the offer from its largest shareholder is “highly opportunistic”, offers no premium for control and is “materially inadequate”, with the independent board committee unanimously recommending shareholders reject it. Capital Brief understands the Frasers camp remains unmoved by the rebuttal, in part because governance concerns remain unaddressed, namely an ASIC insider trading investigation and an 82% rejection of the remuneration report in November. Accent also admitted a “real and heightened risk” of a goodwill impairment ahead of its August results. (Capital Brief)

8.

Hush job: The parliamentary committee investigating KPMG urgently took down video footage of a recent public hearing after one of the firm’s own executives unintentionally revealed identifying information about the whistleblower at the centre of the audit leaks scandal. The Parliamentary Joint Committee on Corporations and Financial Services summoned KPMG’s executives and lawyers on 19 June over its mishandling of whistleblower allegations that confidential client data was used to win contracts. The livestream drew as many as 6,000 viewers, but the hearing was set to private until the video was re-uploaded three days later with the deletion of information divulged by KPMG HR boss Dorothy Hisgrove, who was reminded twice not to reveal identifying information about the whistleblower. Capital Brief was initially told the takedown was down to technical issues. The whistleblower has said that in hindsight he would not speak out, alleging he was subject to retaliation including circulation of his identity inside KPMG. (Capital Brief)

9.

Fujimori redux: Conservative Keiko Fujimori has narrowly won Peru’s presidential election on her fourth bid for the office, becoming the first woman ever elected president of the copper-rich nation, according to the full count by electoral agency ONPE. Fujimori, the 51-year-old daughter of late former president Alberto Fujimori, took 50.14% of the vote after a lengthy review of thousands of disputed ballots from the 7 June runoff, finishing 49,641 votes ahead of leftist rival Roberto Sánchez on 49.87%. She will take office on 28 July for a five-year term, becoming Peru’s ninth president in a decade of political chaos. Sánchez had called for protests, alleged irregularities in the overseas vote and said he won’t recognise her government, though international observers said the election proceeded normally. Fujimori is expected to enjoy more stability than recent predecessors, with her party holding the largest bloc in the senate, which is enough to block initial impeachment attempts. She has won support from markets and business leaders, promising to slash red tape, boost private investment and preserve the central bank’s independence, while pitching a tough-on-crime platform that includes El Salvador-style mega prisons. (Reuters)(Bloomberg)