Today, the spotlight is on Jerome Powell, who begins his semi-annual hearings before US lawmakers at 10 am. These hearings are closely watched as they offer clues about the future direction of the Fed's monetary policy. Investors hope for more clarity on the timing and extent of any interest rate adjustments. For now, the Fed has maintained a cautious stance, hinting at a possible rate cut by the end of the year if economic conditions worsen. I'm expecting a non-event with remarks like: the economy is doing well, inflation isn't abating enough, we need to be vigilant, key rates are at the right level, and the Fed will act as needed based on upcoming data. Before and after Powell, other Fed members, Michael Barr at 9:15am and Michelle Bowman at 1:30pm, are also scheduled to speak. However, there's no indication they will address current monetary policy specifically, but we'll keep an eye on them.

The mood this morning is hard to understand, as the markets went in all directions yesterday. The color of the indexes at the close shows there was nothing to understand. Initially entrenched in negative territory, the CAC40 had a great morning rebound, only to lose it all again and end in the red, near the day's low. The Paris Bourse lost 0.63%, while the Dax closed at breakeven. The Footsie Mib gained 0.17%, but the British Footsie lost 0.13%. The SMI gained 0.38%, but the Bel20 shed 0.37%. Ubisoft gained nearly 8%, but LVMH lost 3%. Bitcoin gained, gold lost. You get the picture. In the US, the Nasdaq 100 (+0.23%) continued its ascent, while the Dow Jones (-0.08%) struggled.
 
Against all expectations, the tone on the bond markets was different. The feared tensions on the French OAT did not materialize. Instead, the yield on the French ten-year bond fell to 3.11%, compared with 3.3% after the first round of French parliamentary elections. There are no palpable signs of anxiety in this asset class, as financiers seem comfortable with the idea that even with France's opaque political context, the economic situation remains stable. Investors focus on the positive, despite negative factors like the political impasse in France, the potential trade war with China, or the uncertainty of the fast-approaching US presidential election. For now, the markets' central scenario is that monetary policy will support the economies and not hinder the advance of equities.
Among the news items attracting attention this morning is Boeing's ongoing issues with the 737. Oxygen generators on over 2,600 Boeing 737 family aircraft are due for inspection in the next 4 to 5 months. It feels like I'm writing bad news for the aircraft manufacturer daily. In Europe, Italy plans to spend 7.5 billion euros over the next eleven years to renew its fleet of fighter jets. Finally, ASML Holding's share price has touched the EUR 1,000 mark. The Dutch company's share price has risen by 46% since January 1. At the same time, Taiwanese giant TSMC broke through the $1,000 billion market capitalization barrier.

In the Asia-Pacific region, some stock market indices were delighted with the semiconductor industry's strong performance. This was the case in Japan, where the Nikkei 225 climbed 2.33% to new heights. The same cannot be said of the Chinese markets, although in Hong Kong, the Hang Seng is up 0.40%, while Shanghai is up around 1.20%. India is up 0.3%. Australia is up 0.84%. European leading indicators are neutral around 8:00 a.m.

Today's economic highlights

There will be no major indicators today. Jerome Powell will address the House Financial Services Committee at 10:00 am. Full agenda here. 

The dollar is slightly up to 0.9247 EUR and 0.7813 GBP, while the ounce of gold is down to 2358 USD. Oil loses ground, with North Sea Brent at 85.25 USD a barrel and US light crude WTI at 81.81 USD. The yield on 10-year US debt stands at 4.286%. Bitcoin is trading at around 57,300 USD.

In corporate news:

  • Disney unveiled on Tuesday its plan to launch a new cruise ship, resulting from a partnership with Oriental Land Company (OLC), the operator of Tokyo Disneyland, which will depart from the Japanese capital starting in 2028, adding a ninth ship to the group's growing fleet.
  • KKR - The private equity firm is considering selling half of its 43% stake in the Japanese semiconductor equipment manufacturer Kokusai Electric, according to two sources familiar with the matter.
  • Paramount - David Ellison, CEO of Skydance Media, outlined his vision of Paramount Global as a hybrid technology and media company on Monday during a presentation following the announcement of a merger agreement between the two groups, amidst increasing competition between Hollywood studios and tech giants entering the entertainment sector.
  • Boeing, United Airlines - A United Airlines Boeing aircraft lost a landing gear wheel upon takeoff from Los Angeles airport on Monday but landed safely in Denver, its intended destination, without causing any injuries, the airline stated.
  • Johnson & Johnson - The American group Emergent BioSolutions stated on Monday that Johnson & Johnson had agreed to pay $50 million to settle claims related to the termination of a manufacturing contract for its COVID-19 vaccine.
  • Eli Lilly - An analysis shows that Mounjaro, the group's weight loss treatment, leads to faster and more significant weight loss compared to Novo Nordisk's treatment.
  • Banking Sector - The US Federal Reserve is considering changing the rules for calculating systemic surcharge applied to the country's eight largest banks, allowing them to save billions of dollars in capital.
  • Lucid Group will recall 5,251 of its Air luxury sedans, the US National Highway Traffic Safety Administration (NHTSA) announced on Tuesday.

Analyst recommendations:

  • Airbnb: Wells Fargo maintains its underweight recommendation and raises the target price from USD 127 to USD 129.
  • American Express Company: Wells Fargo maintains its overweight recommendation and raises the target price from USD 275 to USD 285.
  • Applied Materials: Raymond James maintains its outperform rating and raises the target price from USD 235 to USD 275.
  • Booking Holdings: Wells Fargo maintains its equalweight recommendation with a price target raised from USD 3494 to USD 3497.
  • Chipotle Mexican Grill: Truist Securities maintains its buy recommendation and reduces the target price from USD 3520 to USD 74.
  • Crh Plc: Morgan Stanley upgrades to overweight from equal weight with a price target raised from USD 87 to USD 88.
  • Devon Energy Corporation: Truist Securities maintains its buy recommendation and reduces the target price from USD 67 to USD 64.
  • Expedia Group: Wells Fargo maintains its equalweight recommendation and raises the target price from 137 to USD 140.
  • Healthcare Realty Trust: Citigroup remains neutral recommendation with a price target raised from USD 16 to USD 17.
  • Kla Corporation: Raymond James maintains its outperform rating and raises the target price from USD 875 to USD 975.
  • Lam Research Corporation: Raymond James maintains its outperform rating and raises the target price from USD 1060 to USD 1250.
  • Marketaxess Holdings: Jefferies remains at hold with a price target reduced from USD 225 to USD 202.
  • Monday.com: Wolfe Research initiates an Outperform recommendation with a target price of USD 300.
  • Paramount: Evercore ISI maintains its in-line recommendation and reduces the target price from USD 13 to USD 11.50.
  • Regency Centers Corporation: Mizuho Securities upgrades to outperform from neutral with a price target raised from USD 61 to USD 67.
  • Schroders Plc: Barclays maintains its overweight recommendation and reduces the target price from 5.05 to GBP 4.60.
  • Shell Plc: JP Morgan maintains its overweight recommendation and raises the target price from GBP 35 to GBP 35.50.
  • Synchrony Financial: Wells Fargo maintains its equalweight recommendation and raises the target price from USD 45 to USD 49.
  • Synovus Financial: Wells Fargo maintains its overweight rating and raises the target price from USD 40 to USD 42.
  • Tradeweb Markets: Jefferies remains at hold with a target price raised from USD 105 to USD 109.