Usually, June is a month when things calm down on financial markets. After all, earnings season is now out of the way. Even statistically, June is a bit boring. It's neither particularly bad, nor particularly good. The average gain on the S&P500 since 1928 is 0.7%, the sixth-best statistical month, on a par with August. Right in the middle. June has seen 54 rises and 41 falls over the last 95 years (data courtesy of Edward Yardeni). This year, the month got off to a rather rocky start, until yesterday's more mixed session. Indices took a breather, with the exception of the Nasdaq 100, which held on to slight gains. The Dow Jones lost -0.6% and the S&P500 -0.2%.

Investors lack clarity. Artificial Intelligence continues to support the tech sector, but what Jerome Powell will do remains a mystery. With nine days to go before the Fed's next monetary policy decision, investors are starting to get nervous. Confidence that we’re nearing the end of the monetary tightening cycle is waning, even if the probability of a pause on June 15 remains dominant. This morning's unexpected monetary tightening by the Bank of Australia contributed to dampen the mood a little and all the main thre Wall Street indexes opened in the red today. Economists were expecting the RBA to leave its key rate at 3.85%. It raised it to 4.10%, pointing out that while inflation has passed its peak, it remains too high (at 7%) and will take time to subside. This situation is similar to that feared by the Fed: sticky inflation. Western central banks seem ready to return to the dogma of inflation close to 2%, but this requires price rises to return to more reasonable levels. The RBA has warned that further rate hikes may be necessary. This was also the gist of Christine Lagarde's speech yesterday. The ECB boss doesn't know whether core inflation has already peaked. Neither do we.

In other news, the SEC is turning up the heat on cryptocurrency trading giant Binance and its CEO Changpeng Zhao, suspected of multiple financial manipulations. In China, speculation has once again taken hold of property developers as rumors circulate of support measures for the sector. As I wrote yesterday, the rumor of a support plan from Beijing comes back every time the Chinese economy needs a boost.

On a completely different note, Apple has launched the world's most expensive scuba diving mask, an augmented reality headset that will go on sale in 2024. A real gamble for the group, in search of breakthrough innovations after the 15-year-old iPhone revolution.

Meanwhile, speculation about JPMorgan Chase boss Jamie Dimon's candidacy for the U.S. presidential election is gaining momentum. The bank has denied the rumors, but Bloomberg revealed that Dimon is scheduled to meet with Democratic politicians today to discuss the economy and banking, which has given a boost to the rumor mill. With Joe Biden showing signs of aging, Democrats may be tempted to look for a consensual alternative for the duel at the end of 2024.

 

Economic highlights of the day:

German factory orders and European retail sales are on the agenda.

The dollar is up 0.3% against the euro to EUR 0.9365 and up 0.2% against the pound to GBP 0.8063. The ounce of gold flirts with USD 1963. Oil is stable, with North Sea Brent at USD 75.44 a barrel and US light crude WTI at USD 70.79. The yield on 10-year US debt remains at 3.70%. Bitcoin retreats to USD 25,500.

 

In corporate news:

  • Apple was down 0.5% in pre-market trading, with D.A. Davidson lowering its recommendation to "neutral" from "buy", the day after the opening of the brand's Worldwide Developers Conference, during which the Californian group presented a new mixed reality headset priced at $3,499, entering a market dominated by Meta.
  • Exxon Mobil and Chevron each lost around 1% in pre-market trading on the back of a sharp fall in oil prices following Saudi Arabia's announcement of a further production cut in July.
  • Emirates Chairman Tim Clark said on Tuesday that the airline could place a new order with Airbus and Boeing for A350s, B777Xs and possibly B787s. He declined to specify the number of long-haul aircraft involved.
  • Ford Motor will recall more than 125,000 SUVs and trucks in the United States because of a fire hazard in the engine compartment, the NHTSA, the US road safety authority, announced on Tuesday. The share price was down 1% in pre-market trading.
  • Mobileye Global lost 4% in after-hours trading following Intel's decision to sell 35 million shares in the autonomous driving group.
  • GE Healthcare Technologies was down 3% in after-hours trading after its parent company General Electric decided to sell 25 million of its shares.
  • Novavax gained 1.2% in pre-market trading, as an executive said that new doses of its Covid-19 vaccine were likely to offer protection against the variants currently circulating in the US.

 

Analyst recommendations:

  • AMC Networks: Morgan Stanley downgrades to underweight from equal-weight. PT up 4.9% to $12.
  • Anglo American: RBC upgrades from Market Perform to Outperform, targeting GBp 2,700.
  • Apple: D.A. Davidson & Co downgrades to neutral from buy. PT up 3% to $185.
  • Asos: Berenberg remains Buy with a price target reduced from GBp 1000 to GBp 940.
  • Bango: Stifel initiates Buy coverage, targeting GBp 315.
  • Booking: Wedbush reinstated coverage with a recommendation of outperform. PT set to $3,060, up 15% from last price.
  • Burberry: HSBC upgrades its rating from light to hold, targeting GBp 2,200.
  • Cabot: J.P. Morgan downgrades to neutral from overweight. PT up 8.6% to $80.
  • Diageo: Jefferies remains on hold with a price target reduced from GBp 3800 to GBp 3600.
  • Dollar General:  Daiwa Securities downgrades to neutral from outperform. PT up 8.3% to $172.
  • Eaton Corp: J.P. Morgan initiated coverage with a recommendation of neutral. PT down 3% to $178.
  • Epam Systems: Barclays downgrades to equal-weight from overweight. PT up 8.2% to $220.
  • FedEx: Atlantic Equities initiated coverage with a recommendation of overweight. PT set to $265.
  • Lennox: KeyBanc Capital Markets upgrades to overweight from sector weight. PT up 20% to $355.
  • Lumen Technologies Raised to Market Perform at Raymond James
  • Nvidia: Guotai Junan Securities Co., Ltd initiated coverage with a recommendation of overweight.
  • Renew : Berenberg initiates Buy coverage, targeting GBp 950.
  • UPS: Atlantic Equities initiated coverage of United Parcel Service Inc. Class B with a recommendation of neutral. PT set to $162.