US equity futures were little changed this morning, hovering around zero, ahead of a shortened week, as Wall Street will be closed Wednesday for the Juneteenth holiday.

Most of the time, the stock market is on a gentle upward slope, and the regional blocs are operating fairly homogeneously. On Western markets, for example, every index has risen over the last 30 years, despite the dotcom bubble, the subprime crisis and the covid crash/bounce. That's the big picture. Zooming in, the picture shows more granularity. Tech-rich US markets generally do better than average. The UK's FTSE 100 has lagged since Brexit. Greece's ATHEX has been Europe's best performer for two years, but is still down 50% on 2009 due to the country's debt crisis.

Wall Street continues its ascent, boosted by tech stocks. The Nasdaq 100 gained 0.4% on Friday to set a new record, and 3.5% over the week. At the same time, the Dow Jones and Russell 2000 indexes of small and medium-sized US companies lost ground over five sessions. The pattern remains one where the front-runners win big, while the rest of the market flounders. This is surprising, given that the Fed has confirmed that the rate-cutting cycle will start this year. Perhaps Wall Street has finally stopped overplaying the easing of monetary policy and is waiting to see concrete action instead of getting too carried away. In the meantime, the big names are gorging themselves: after gains of between 4% and 9% last week, Microsoft, Apple and Nvidia are each within a handkerchief of $3.3 trillion in market capitalization. This new triumvirate has largely widened the gap with Amazon, Alphabet and Meta. But all six have made significant gains since January 1, crushing everything in their path.

In France, the announcement of the dissolution of the National Assembly after the European elections took everyone by surprise. The fear is that extreme parties, from the far left or the far right will win a majority. So, logically, investors are wondering whether the political turmoil in France is likely to be a "black swan" for the country – an unforeseeable event which has major and often severe consequences.

At this stage, everyone is reduced to making plans. So, while waiting for a clearer picture, investors are applying an additional risk premium to France and reducing their exposure. Hence the sharp contraction in the CAC40 last week: -6.3% in five sessions.

In China, May retail sales were a little more robust than expected, but the rise in industrial production disappointed expectations. The same old story: ups and downs, but no clear acceleration.

On the weekly agenda, there are few major events, including the second reading of European inflation in May will be of interest, and speeches from many US central bankers. They’ll be giving their views on rate trends, which promises a few bouts of volatility.

Markets in Singapore, India and Indonesia are closed today for public holidays.

In the Asia-Pacific region, the week got off to a sluggish start in Tokyo, where the Nikkei 225 lost 1.9% by the end of the day. Chinese indices are hovering around equilibrium in Hong Kong and Shanghai. South Korea and Australia lost some ground. European indices are mixed, with the Stoxx EU 600 near zero. 

Today's economic highlights:

Eurozone labor costs and the US Empire Manufacturing index are the main indicators today. The full agenda is here

The dollar is worth EUR 0.9335 and GBP 0.7895. The ounce of gold is trading at USD 2318. Oil is firm, with North Sea Brent at USD 83.01 a barrel and US light crude WTI at USD 78.48. The yield on 10-year US debt is stable at 4.26%. Bitcoin is trading at USD 65,600.

In corporate news:

  • Microsoft - OpenAI, the Microsoft-backed start-up behind ChatGPT, is considering changing its governance and abandoning its non-profit status, CEO Sam Altman told some shareholders, according to The Information on Friday evening.
  • Autodesk - Activist investor Starboard Value has acquired a stake of around $500 million in Autodesk and is pushing for changes at the design software maker, The Wall Street Journal reported Sunday, citing sources close to the matter.
  • Discover Financial Services, Visa - The two groups unveiled an unspecified agreement on Friday evening, putting an end to their 2014 dispute over the payment card network. Pulse Network, the Discover Financial Services division, accused Visa of hindering competition in this market.
  • Gamestop holds its annual general meeting on Monday as the video game retailer's shares have fluctuated wildly over the past month after stock market influencer Keith Gill, known as "Roaring Kitty", resurfaced and revealed a significant position in the group.
  • Cisco - The US networking equipment and software manufacturer said on Monday that it would set up a cybersecurity center in Taiwan and work with the government to train more people to work in the sector.

Analyst recommendations:

  • Msc Industrial Direct Co., Inc.: KeyBanc Capital Markets downgrades to sector weight from overweight.
  • Toll Brothers, Inc.: Goldman Sachs downgrades to neutral from sell with a price target raised from USD 112 to USD 124.
  • Union Pacific Corporation: Loop Capital Markets downgrades to hold from buy with a price target reduced from USD 276 to USD 238.
  • First Solar, Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 250 to USD 325.
  • Nvidia Corporation: Bernstein maintains its outperform recommendation and reduces the target price from USD 1300 to USD 130.
  • Crest Nicholson Holdings Plc: Peel Hunt upgrades to add from hold with a price target raised from GBX 220 to GBX 260.
  • International Consolidated Airlines Group, S.a.: Mirabaud Securities upgrades to buy from hold with a price target raised from EUR 2.20 to EUR 2.60.
  • Ssp Group Plc: Goldman Sachs downgrades to sell from neutral with a target price reduced from GBX 255 to GBX 160.
  • Canadian Natural Resources Limited: Evercore ISI maintains its in-line recommendation and reduces the target price from 115 to CAD 58.