Europe as a whole lost ground yesterday due to the result of the European elections and the dissolution of France's lower house. France’s CAC40 lost 1.3%, while Germany's DAX, the UK's FTSE 100 and Belgium's Bel20 were down by 0.3%. On Wall Street, the turmoil on the Old Continent didn't prevent all three indices from ending in the green, with a new closing record for the Nasdaq 100. And without the help of Apple, which fell.

During its developer conference, the Californian group showed off its muscles, if not its thinking, in artificial intelligence. The group has communicated little on AI in recent months, partly because it has fallen behind its rivals, which has led to a depressed stock market performance, especially next to stars like Nvidia. Nvidia, incidentally, has overtaken Apple again in terms of market capitalization, after an initial overtake last week, followed by a reversal. The conference was therefore an opportunity to rectify the situation, at least on the assumption that there was something to tell. However, Apple didn’t unveil any in-house AI tools but turned to a specialist in generative AI, in this case OpenAI. For the iPhone's creator to resolve to a third-party technology, it had to be really out of its depth. The company is used to trying to do everything in-house, especially when it comes to the most innovative subjects. I also wonder if Apple had to sit on some of its principles regarding privacy and data access, but I don’t have any information on this yet. In any case, the iPhone will have AI functionalities, which look a bit like what the competition has announced, but in Siri sauce for the moment. Please note that “Apple Intelligence” features will only be available on high-end versions of the latest iPhone 15 series. ChatGPT features will arrive with updates later in the year.

Specialists thought Apple's presentation was really polished. The group has a knack for putting on a show in this respect, even when it doesn't have much to announce. It even took the liberty of trying to appear ahead of the game by using the acronym AI as the initials for Apple Intelligence instead of Artificial Intelligence. It's clever and a little overrated. You might even say it's a bit puffed up. As for investors, they weren't exactly fooled. First negative reaction: Apple lost 1.9% yesterday, the only decline among the nine largest US capitalizations. Last week, we wondered about the value of a contrarian bet on Apple ahead of the WWDC conference. On the face of it, it didn't work: the market still thinks the group is lagging behind other platforms at this stage.

And once again, in the end, OpenAI wins. Commentators are wondering whether this is a good or a bad thing. It has to be a bad thing to concentrate so much power in one tool. Elon Musk already announced that he'll ban Apple devices from his companies if the iPhone maker integrates OpenAI into the operating system (OS).

The resumption of trading after a public holiday is complicated in China this morning. Three sectors are dragging the indices down, particularly in Hong Kong, where the Hang Seng is down 1.5%. The first sector was real estate, despite further announcements of increased public support on Friday. The weakness was fueled by the liquidation order issued by the Hong Kong courts to Dexin China Holdings, a struggling property developer. This illustrates, according to people more knowledgeable than me on the subject, that the authorities are going the way of creditors ulcerated by the postponement of repayment deadlines, who are demanding the dissolution of companies to force the sale of assets. The electric vehicle sector is also under pressure, with the EU set to formalize surcharges on Chinese vehicle imports this week. Last but not least, the tourism sector is not doing so well, as the extended Dragon Boat Festival weekend was not as dynamic as expected. The Chinese economy is a bit like American monetary policy: every time you think it's going to get better, someone throws a boulder in the middle of the road.

In other news, confidence and hiring intentions among US small businesses saw an increase in May. The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index nudged up by 0.8 points to 90 last month, marking a rise for the second month in a row. Despite this uptick, the index has remained below the 50-year average of 98 for 29 consecutive months.

In the rest of Asia Pacific this morning, Japan's Nikkei 225, Korea's KOSPI and India's SENSEX are all slightly up. In Australia, on the other hand, the ASX plunged by 1.4% at the close, weighed down by mining companies, particularly gold, and financials. European indices and futures on Wall Street are bearish. Investors are focused on the Federal Reserve's upcoming policy meeting, with expectations that the Fed will maintain current interest rates. The Federal Open Market Committee (FOMC) meeting begins on Tuesday, with a decision expected on Wednesday. 

Economic highlights:

British employment figures were released at 8:00 am. The full agenda is here. 

The dollar is up 0.3% to EUR 0.9320 and is stable against the pound at GBP 0.7852. The ounce of gold stabilizes after dropping to USD 2314. Oil is slightly down, with North Sea Brent at USD 81.31 a barrel and US light crude WTI at USD 77.09. The yield on 10-year US debt is little changed at 4.45%. Bitcoin fell to USD 66,800.

In corporate news:

  • Apple unveiled its artificial intelligence (AI) news at its annual developer conference on Monday, including the integration of “Apple Intelligence”, its AI technology, into various applications and a partnership with OpenAI, the creator of ChatGPT. The share price is down 0.4% in pre-market trading.
  • Meanwhile, Tesla CEO Elon Musk said on Monday that he would ban Apple devices from his companies if the iPhone maker integrated OpenAI into its operating system, deeming it an “unacceptable breach of security”.
  • General Motors announced a new $6 billion share buyback plan on Tuesday, coming just over a month after the automaker raised its dividend on the back of optimistic annual forecasts.
  • Rocket Labs advances 0.4% in pre-market trading, as the US Department of Commerce announced on Tuesday its intention to grant the group a $23.9 million package to significantly increase the semiconductors used in satellites and spacecraft.
  • Sage Therapeutics - The laboratory gained 5.6% in pre-market trading after announcing on Tuesday that its experimental drug had proved safe and shown some effect in patients suffering from Huntington's disease, a rare genetic neurological disorder.
  • Tesla must answer charges by the California Department of Motor Vehicles that the automaker overstated the autonomous driving capabilities of its cars, a California judge ruled Monday.
  • Eli Lilly gained 2.6% in pre-market trading after its Alzheimer's drug, donanemab, received the unanimous support of a panel of experts from the U.S. Food and Drug Administration (FDA).

Analyst recommendations:

  • Cleveland-Cliffs Inc.: JP Morgan downgrades to neutral from overweight with a target price reduced from USD 23 to USD 17.
  • ManpowerGroup Inc.: BNP Paribas Exane upgrades to outperform from underperform with a price target raised from USD 73 to USD 92.
  • Nvidia Corporation: Punto Research downgrades to sell from buy with a target price of USD 1115.
  • Robert Half International, Inc: BNP Paribas Exane upgrades to outperform from underperform with a price target raised from USD 69 to USD 80.
  • First Solar, Inc.: Baird maintains its outperform recommendation and raises the target price from USD 246 to USD 344.
  • Healthcare Realty Trust: Citigroup maintains a neutral recommendation with a price target raised from USD 13 to USD 16.
  • Micron Technology, Inc.: Bernstein maintains its outperform rating and raises the target price from USD 105 to USD 140.
  • GE Vernova Inc.: Citi initiates a neutral recommendation with a target price of USD 183.
  • On Holding AG: Bernstein initiates an outperform recommendation with a target price of USD 50.
  • AppFolio, Inc.: Piper Sandler & Co initiates an overweight recommendation with a target price of USD 295.
  • Confluent, Inc.: Evercore ISI initiates an Outperform recommendation with a target price of USD 35.
  • Anglo American Plc: Morgan Stanley upgrades to equal weight from not rated with a target price of GBX 2270.
  • Hays Plc: BNP Paribas Exane downgrades to neutral from outperform with a target price of GBX 110.
  • PageGroup Plc: BNP Paribas Exane upgrades to outperform from neutral with a price target raised from GBX 450 to GBX 560.
  • Canadian Natural Resources Limited: Morgan Stanley maintains its market weight recommendation and reduces the target price from CAD 94 to CAD 47.