Joe Biden’s poor performance against Donald Trump in the presidential debate last week have sparked calls for him to step of the presidential election. Monday also saw the Supreme Court ruling on Trump's immunity from prosecution for acts committed while president. The lower courts must therefore determine which allegations cannot be prosecuted. This means a lengthy delay as the US presidential election draws ever closer.

In Europe, France is in the middle of a parliamentary election that saw the far-right take the lead in the first voting round, while Britain is heading to the polls on Thursday.

The atmosphere is still tense on stocks markets, although the rebound in US tech stocks is bringing a bit of relief. But political concerns, especially the prospect of Trump returning to the White House, are weighing heavily on bond markets, which is reflected in the steepening of long-term yield curves. The US 10-year yield just soared and is back near 4.50%.

The French 10-year OAT continues to rise. However, this rise has been accompanied by a narrowing of the spread with the German Bund for the same maturity. This narrowing of the spread can be interpreted as an initial sign of investor confidence in the financial stability of the eurozone, despite the challenges and uncertainties that remain. I'd like to take this opportunity to highlight a new feature on MarketScreener: you can now view the government bond yield curve directly on this link. 

The latest economic data seems to confirm that the US economy is cooling, which strengthens the case for a rate cut or two before the end of the year. The Institute for Supply Management's June survey showed manufacturing performance came below expectations. Traders are giving a 70% chance of a first cut in September, according to the CME Fedwatch tool.

Investors will be closely watching Jerome Powell’s speech at the European Central Bank's annual forum in Sintra, Portugal later today, to get more clues. Powell is likely to reiterate his firm stance on inflation, despite the deterioration in US economic vitality indicators visible yesterday in the ISM Manufacturing PMI, while Lagarde is likely to emphasize the divergence in monetary policies between the two sides of the Atlantic.

Yesterday, the S&P500 ended the session with a gain of 0.2%. The Nasdaq hesitated, but eventually returned to the green, thanks to big tech’s strong momentum. Tesla even rebounded by nearly 6%, even though investors continue to question the relevance of the automaker's strategy.

European stock markets started the week with a bang, boosted by the first-round vote in France's early parliamentary elections. Nothing is yet certain, but the two scenarios feared by the markets - a victory for the leftist alliance Front Populaire and an absolute majority for Marine Le Pen’s Rassemblement National - are tending to dissipate. However, the bullish momentum did not last all day, with some gains eroded during the session as profit-taking took its toll.

Back to today's session. Inflation is back on the agenda, but this time in Europe. After yesterday's lower-than-expected inflation figures for Germany, June's aggregate data for the region as a whole could take some of the pressure off the European Central Bank. We'll also be keeping an eye on the JOLTS employment survey in the US.

On the currency markets, the yen hit a new all-time low. The USD/JPY recorded a new annual high above JPY 161. The market's attention is once again focused on whether or not the Japanese central bank will raise rates in an attempt to slow the currency's decline.

In the Asia-Pacific region this morning, indices are holding their ground from the previous day. Tokyo is up 1.1%. The Chinese market is less buoyant. Hong Kong is up by around 0.3% after its public holiday, and Shanghai is up slightly. South Korea and Australia are losing ground. European leading indexes are bearish, and so are futures on Wall Street.

Today’s economic highlights:

Today's agenda includes inflation and unemployment figures for the eurozone and the JOLTS survey on US employment. The full agenda is here. 

The dollar is worth EUR 0.9318 and GBP 0.7896. The ounce of gold stabilizes at USD 2328. Oil continues to perform well, with North Sea Brent at USD 87.27 a barrel and US light crude WTI at USD 84.17. The yield on 10-year US debt stands at 4.43%. Bitcoin is treading water at USD 62,700.

In corporate news:

  • Tesla - The American carmaker's worldwide deliveries for the three months to June probably fell by 6% to 438,019 vehicles, against a backdrop of strong competition in China and weak demand, according to the consensus of analysts polled by LSEG. Meanwhile, according to the China Passenger Car Association (CPCA), Tesla's sales in China fell by 24.2% year-on-year in June to 71,007 units. Tesla, which will publish its results this Tuesday, is down 0.6% in pre-market trading.
  • Blackstone is close to concluding an agreement to sell Japanese dietary supplements manufacturer Alinamin Pharmaceutical to North Asian investment fund MBK Partners for 350 billion yen, a source with direct knowledge of the matter reported on Tuesday.
  • Paramount Global is up 2.8% in pre-market trading. A source told Reuters on Monday that billionaire Barry Diller's digital media conglomerate IAC was considering an offer to take control of Paramount.
  • Uber Technologies announced on Monday that it would offer a yacht service on the Spanish island of Ibiza and set up several shipping offers in other European cities to meet the strong demand for tourism on the Old Continent.
  • Microsoft is consolidating its distribution channels in mainland China, the US giant announced in response to press reports that it is closing its network of authorized physical distributors in the world's second-largest economy.
  • Gamestop - Investors in the video game distribution group have decided to withdraw their complaint against Keith Gill, known as "Roaring Kitty", for the time being. A complaint had been filed on Friday against this influencer, who is accused of stock fraud with the "meme stocks" rally.
  • Research firm Cox Automotive estimates that U.S. new vehicle sales volume in the second quarter will rise by 1% to nearly 4.2 million units. New vehicle sales were up by around 16% year-on-year during the same period in 2023.
  • Affirm Holdings - The American financial technology group announced on Monday that the personal data of Affirm card users may have been compromised in a cyber attack at Arkansas-based Evolve Bank and Trust.
  • Ge Aerospace has announced that it has extended the term of its CEO Larry Culp to the end of 2027, with the possibility of an additional one-year extension, shows a regulatory notice on Monday.
  • Spirit Airlines - The low-cost airline announced Monday that it has appointed Fred Cromer as CFO, effective July 8.

Analyst recommendations:

  • Aptargroup, Inc.: Baptista Research downgrades to hold from underperform with a price target raised from USD 147 to USD 158.40.
  • Adobe Inc.: Cmb International Capital Corp Ltd initiates a Buy recommendation with a target price of USD 645.
  • Atlassian Corporation: Piper Sandler & Co upgrades to overweight from neutral with a price target raised from USD 200 to USD 225.
  • Crowdstrike Holdings, Inc.: Piper Sandler & Co downgrades to neutral from overweight with a target price of USD 400.
  • Dentsply Sirona Inc.: Baptista Research downgrades to buy from outperform with a price target reduced from USD 37.10 to USD 32.20.
  • Ge Vernova Inc.: Redburn Atlantic initiates a neutral recommendation with a target price of USD 178.
  • Incyte Corporation: BMO Capital Markets downgrades to underperform from market perform with a price target reduced from USD 52 to USD 48.
  • Principal Financial Group, Inc.: JP Morgan upgrades to neutral from underweight with a target price raised from USD 88 to USD 96.
  • Alcoa Corporation: B Riley Securities Inc. maintains a neutral recommendation with a price target raised from USD 31 to USD 39.
  • Corebridge Financial, Inc.: JP Morgan maintains its neutral recommendation and raises the target price from 26 to USD 34.
  • Equitable Holdings, Inc.: JP Morgan maintains its neutral recommendation and raises the target price from 36 to USD 45.
  • Globus Medical, Inc.: Baptista Research maintains its hold recommendation with a price target raised from 59.40 to USD 72.80.
  • Lincoln National Corporation: JP Morgan maintains its underweight recommendation and raises the target price from 28 to USD 34.
  • Nike, Inc.: RBC Capital maintains its sector perform recommendation and reduces the target price from 100 to USD 75.
  • Solaredge Technologies, Inc.: Wells Fargo maintains its equalweight recommendation and reduces the target price from USD 62 to USD 29.
  • Walgreens Boots Alliance, Inc.: RBC Capital maintains its sector perform recommendation and reduces the target price from 22 to USD 13.
  • Welltower Inc.: KeyBanc Capital Markets maintains its overweight recommendation and raises the target price from USD 95 to USD 115.
  • Ibstock Plc: Davy upgrades to outperform from neutral with a target price raised from 1.73 to GBP 2.15.
  • Quilter Plc: Anchor Securities Stockbrokers downgrades to hold from buy with a price target raised from GBX 127.60 to GBX 133.70.
  • Spectris Plc: Shore Capital downgrades to hold from sell.