Equity markets were subdued on Friday, but that didn't stop them from posting a positive weekly performance. However, the dominant narrative that had enabled Wall Street to break records took a beating. Friday’s robust monthly employment data reawakened doubts and reduced short-term rate cut forecasts. Bond yields, which reflect market expectations fairly well, rose sharply again.

All eyes are now on Wednesday’s Fed meeting. The central bank could reiterate its stance, or refine its views on the evolution of key rates. We wish it the best of luck, because it will have at its disposal all the divergent data published recently, as well as May’s US inflation data, which will be published on Wednesday and will provide new clues. Or not! The Fed's June 11-12 meeting will come with the forward-looking document published every quarter and containing the dot plot, which shows the position of FOMC members' expectations (the central bankers who vote on rate changes) on rates for the current year, the next two years and the long term. Economists use them to determine whether the central bank has changed its mindset, for example by adopting a more flexible (dovish) or more severe (hawkish) vision. Obviously, investors prefer the soft view, which suggests lower rates and therefore a lower price of money. There's a very good article in the Wall Street Journal about Americans' visceral aversion to inflation, which complicates the Fed's task.

Let's leave the financial world and talk a little about politics. The European elections delivered a verdict in line with expectations: the so-called moderate parties retained their majorities, while the far right made inroads, notably at the expense of the Greens and centrists. It was in France that the election caused the most upheaval, since the very high score achieved by Marine Le Pen National Rally led Emmanuel Macron to dissolve the National Assembly. There will therefore be legislative elections in France in the very near future, with a first round scheduled for June 30 and a second round on July 7. On the economic front, the euro has lost a little ground, more because of the dissolution in France than the verdict of the ballot box at European level. This morning, it is trading at a one-month low of USD 1.07, compared with 1.0897 at the end of last week. In the heat of the moment, the electoral verdict could have economic consequences for certain market segments, notably renewable energies and companies carrying high levels of debt.

In other news, Benny Gantz resigned from Israel's emergency government and called for elections, criticizing Prime Minister Benjamin Netanyahu for his handling of the war against Hamas.

Joe Biden and Emmanuel Macron discussed current geopolitical tensions, in the wake of the ceremonies marking the 80th anniversary of the Normandy landings.

In addition to the Fed, the Bank of Japan is also scheduled to take stock of its monetary policy on Friday morning. Rates are likely to remain unchanged, but the market will be watching for indications of a continuation of the tightening cycle timidly sketched out this year, as well as comments on the yen.

There aren't many corporate results on the agenda, but investors will be focusing on those from Oracle, Broadcom and Adobe, which could act as barometers of the appetite for artificial intelligence.

In Asia Pacific, markets are closed for a public holiday in mainland China, Hong Kong, Taiwan and Australia. Tokyo nevertheless took advantage of the holiday to recover 1%, while Seoul lost 0.5%. India, meanwhile, is not far from equilibrium. European indices are bearish, and futures on Wall Street are just under zero.

Today's economic highlights:

The dollar is up 0.3% against the euro to EUR 0.9305 and 0.1% against the pound to GBP 0.7869. The ounce of gold is worth USD 2300. Oil rebounds slowly, with North Sea Brent at USD 80.08 a barrel and US light crude WTI at USD 75.78. The yield on 10-year US debt has risen to 4.46%. Bitcoin is trading at around USD 69,500.

In corporate news:

  • Tesla - Elon Musk, the carmaker's CEO, said on X on Saturday that the group would not launch an update of its Model Y in 2024, while adding that Tesla was continually improving its cars.
  • The Norwegian Sovereign Wealth Fund, Tesla's eighth-largest shareholder, also said on Saturday that it would vote against ratification of Elon Musk's compensation plan, which will be put to a shareholder vote on Thursday.
  • Gamestop was up 3.6% in pre-market trading, after plummeting 39.38% on Friday with the return of the “Roaring Kitty” YouTube influencer. Other meme stocks, including AMC Entertainment and Koss Corp , were down 15.1% and 17.4% on Friday.
  • Meta, Alphabet - The state of New York passed a law Friday prohibiting social media platforms from offering “addictive” algorithmic content to minors without parental consent, becoming the latest state to take steps to limit online risks for children.
  • Microsoft kicked off its annual Xbox Games Showcase on Sunday, unveiling a new all-digital version of its Xbox X and S Series consoles, as well as trailers for more than a dozen games, including the next instalment of “Call of Duty”.
  • Noble - The US oil drilling group is to buy rival Diamond Offshore Drilling in a deal worth around $1.59 billion, the two groups said in a joint statement on Monday.
  • KKR - The private equity firm's shares are up nearly 10% in pre-market trading, as the group joins the S&P 500 index.
  • Cybersecurity company CrowdStrike and Internet service provider GoDaddy, also set to join the SPX index, gain 5.2% and 2.6% respectively, as part of the index's quarterly rebalancing.
  • Humana - A lawsuit filed by Humana to block a Joe Biden administration regulation allowing Medicare to recover billions of dollars from insurers for overbilling can proceed in Fort Worth, Texas, a federal judge ruled Friday, rejecting the administration's attempt to adjourn the trial or relocate it to Dallas.
  • Virgin Galactic - The space tourism group sent four passengers to the edge of space on Saturday for a flight lasting just over an hour, and brought them back aboard its spaceplane. This was its second flight of the year.
  • Berkshire Hathaway, the company of American billionaire Warren Buffett, purchased 2.57 million common shares in Occidental Petroleum between June 5 and 7, according to a securities filing, and now owns approximately 250.6 million shares in the energy producer.
  • Southwest Airlines - Activist investor Elliott Investment Management has amassed a stake of nearly $2 billion in the U.S. airline and plans to push for changes to reverse the group's underperformance, the Wall Street Journal reported Sunday.

Analyst recommendations:

  • Amd (Advanced Micro Devices): Morgan Stanley downgrades to equalwt from overwt with a target price of USD 176.
  • Adobe Inc.: Citigroup remains neutral recommendation with a price target reduced from USD 554 to USD 529.
  • Air Products & Chemicals, Inc.: Barclays maintains its equalweight recommendation and raises the target price from USD 245 to USD 290.
  • Lithia Motors, Inc.: JP Morgan upgrades to overweight from neutral with a target price raised from USD 270 to USD 280.
  • Mohawk Industries, Inc.: Raymond James upgrades to strong buy from market perform with a target price of USD 140.
  • Pg&E Corporation: JP Morgan upgrades to overweight from neutral with a price target raised from USD 19 to USD 22.
  • Apollo Global Management A: TD Cowen maintains its buy recommendation and raises the target price from USD 137 to USD 146.
  • Estee Lauder: Deutsche Bank maintains its hold recommendation with a price target reduced from USD 147 to USD 132.
  • General Motors Company: HSBC maintains its buy recommendation with a price target raised from 48 to USD 56.
  • Planet Fitness, Inc.: Jefferies upgrades to buy from hold with a price target raised from USD 62 to USD 100.
  • Walmart Inc.: JP Morgan upgrades to overweight from neutral with a price target raised from USD 66 to USD 81.
  • First Solar, Inc.: BMO Capital Markets maintains its outperform rating and raises the target price from USD 224 to USD 311.
  • Nvidia Corporation: Huatai Research maintains its buy recommendation and reduces the target price from USD 1350 to USD 150.
  • Planet Fitness, Inc.: Jefferies upgrades to buy from hold with a price target raised from USD 62 to USD 100.
  • Tesla, Inc.: BNP Paribas Exane maintains its underperform recommendation and reduces the target price from 113 to USD 105.
  • Computacenter Plc: Peel Hunt upgrades to buy from add with a target price of GBX 3195.
  • M&G Plc: JP Morgan upgrades to overweight from neutral with a target price raised from GBP 2.25 to GBP 2.50.