Equity market sentiment remains hostage to the artificial intelligence barometer. Yesterday, the mood in the United States was a little more subdued than in previous sessions, knocking the indices back from the records they had touched the day before. The results released after the Wall Street close did nothing to ease nerves, with a series of double-digit tumbles. Cybersecurity groups CrowdStrike and Netskope are down 11% and 20% respectively after failing to convince investors that their outlooks were bright enough. The market, admittedly, has become somewhat suspicious of software companies, which it sees as potential collateral damage from the rise of AI. More worrying, at least in the market’s eyes, was Broadcom’s update. The group is at the heart of the AI revolution and its financial performance is outstanding, but there is a wide gulf between good, excellent, exceptional and otherworldly. The market now wants otherworldly. Broadcom delivered exceptional. The result? A 14% fall in after-hours trading.

Those three releases have fed the undercurrent of doubt about AI and bubble risk. In recent weeks, that scepticism has been drowned out by the sector’s exuberant announcements, but it keeps resurfacing. The atmosphere has therefore deteriorated compared with the start of the week, despite the feverish mood on Wall Street as it gears up for what would be the largest initial public offering in history: SpaceX.

Tensions might have eased somewhat after the announcement of a conditional ceasefire between Israel and Lebanon, under pressure from the United States. Washington needs a truce on its western flank in order to negotiate with Iran to the east. The region remains a powder keg, which explains why oil, the best gauge of local tension, has only eased moderately. A new round of talks is expected to begin on reopening the Strait of Hormuz to shipping. We have heard this one before.

The problem is that, as time passes, the imbalances are becoming more deeply embedded. Monetary authorities are preparing their ground ahead of the mid-June interest-rate meetings. The inflation backdrop could push several central banks into restrictive territory. Traders expect the US Federal Reserve to strike a clearly hawkish tone, broadly: "beware, persistent high inflation could lead to a rate increase at some point this year". But they are not pricing in an actual hike. Often, words are enough to send the message without action being required. The closely followed Wall Street strategist Ed Yardeni has since yesterday been drawing attention to warnings from the heads of Exxon and Chevron about very low oil inventories, which could send prices above the levels seen in March and April. The longer the Hormuz choke point remains closed, the greater the risk of an oil-driven inflation shock.

The Fed is not the only central bank wrestling with the problem. The ECB, faced with an acceleration in inflation in May, is confronting the same familiar dilemma: hold off on rate increases to support growth but risk letting inflation run, or tighten policy to curb price rises and risk hurting the economy. In Japan, the matter is almost settled: Bank of Japan governor Kazuo Ueda has suggested that a rate rise will come at the end of the 16 June meeting.

Today’s session is set to begin on a cautious note after the poorly received updates from major US technology companies. The day will be shaped by fresh US employment data at 2.30pm, ahead of the official May figures due tomorrow, Friday. The latest indicators show that the US labour market remains robust, giving the Fed more room to act on rates if inflation gets out of hand. Elsewhere, Britain, Germany and France are reportedly working on a plan to bring Vladimir Putin to the negotiating table over Ukraine. Donald Trump has confirmed that he will attend the G7 in Evian from 15 to 17 June.

In Asia-Pacific, AI’s loyal foot soldiers are looking glum. Japan is down 1.3%, South Korea 1.7% and Taiwan 1.2%. Australia, down 1.1%, and Hong Kong, down 1.5%, are faring no better. Europe is expected to open slightly lower.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,472.23
  • Crude Oil (BRENT): US$97.02
  • United States 10 years: 4.49%
  • BITCOIN: US$64,150.5

In corporate news:

  • Canal+ debuts on the JSE in a secondary listing.
  • Commerzbank has filed a complaint with the German regulator following UniCredit's increase to a 34.4% stake, according to an internal memo.
  • ASML, with a market capitalization of €572 billion, has solidified its position as Europe's largest company by market capitalization and surpassed Novo Nordisk's historic record in 2024.
  • Pershing Square, Bill Ackman's firm, is considering selling its stake in Universal Music Group after its takeover bid was rejected
  • Novartis announces that Cosentyx demonstrates durable remission in a Phase 3 trial.
  • EQT signs a multi-year agreement to become the ATP's official partner in the private markets through 2030.
  • Lloyds Banking Group restores its online and mobile services following an outage.
  • Siemens Energy launches its share buyback program announced in May.
  • Centrica and Peyto sign a 10-year gas supply agreement.
  • Deme Group secures a €50 million contract to improve access to Tunisian ports.
  • Scope downgrades Tomra's credit rating.
  • SGS acquires a U.S. bioanalytical laboratory.
  • Broadcom plunges 14% in after-hours trading following its quarterly results.
  • CrowdStrike beats consensus and raises its guidance, but the stock drops 11% in after-hours trading.
  • Netskope (cybersecurity) falls 20% following quarterly results that were received negatively.
  • Alphabet has raised its fundraising target to $84.75 billion from the $80 billion announced two days earlier.
  • JPMorgan, through Jamie Dimon, will promote SpaceX's IPO to its high-net-worth clients. Morgan Stanley and Goldman Sachs have been selected to lead the IPO, according to multiple sources.
  • Stripe, Visa, Mastercard, and Coinbase plan to form a consortium to create a stablecoin, according to The Information.
  • The Glazer family is reportedly considering selling its stake in Manchester United, according to Bloomberg.
  • Alnylam and Inceptive sign a $2 billion AI-driven drug discovery agreement.
  • Innio raises $2.43 billion in its U.S. IPO.
  • Meta repeatedly delays the launch of its new AI model for developers, according to the WSJ. Meta accuses Australia of violating the free trade agreement.
  • The UK health regulator recommends AbbVie's treatment for ovarian cancer.
  • A subsidiary of Comcast begins construction of a theme park in Bedford.
  • Autodesk signs a collaboration agreement with Amazon Web Services to integrate AI capabilities into its software.
  • Hanwha Aerospace suspends production in South Korea for two days following a fatal fire.
  • The CEO of TSMC is optimistic, as the AI boom shows no signs of slowing down.
  • Today's key earnings reports: Ciena Corporation, Fastenal Company, Mitie Group, Ondine Biomedical Inc

See more news from UK listed companies here

Analyst Recommendations:

  • Howden Joinery Group Plc: Stifel maintains its buy recommendation and reduces the target price from GBX 1090 to GBX 962.
  • Serica Energy Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 350 to GBX 365.
  • Gb Group Plc: Berenberg maintains its buy recommendation and reduces the target price from GBX 290 to GBX 260.
  • Icg Plc: Berenberg maintains its buy recommendation and reduces the target price from GBX 2800 to GBX 2670.
  • Glencore Plc: Citi maintains its buy recommendation and raises the target price from GBP 6.70 to GBP 7.70.
  • Zegona Communications Plc: Barclays maintains its overweight recommendation and raises the target price from GBP 22.40 to GBP 25.
  • B&M European Value Retail Plc: JP Morgan maintains its underweight recommendation and raises the target price from GBP 1.70 to GBP 1.90.
  • Greatland Gold: Goldman Sachs maintains its sell recommendation and reduces the target price from AUD 12.90 to AUD 12.60.
  • Barclays Plc: Zacks maintains its neutral recommendation and raises the target price from USD 25.25 to USD 27.
  • Tate & Lyle Plc: Rothschild & Co Redburn maintains its neutral recommendation and raises the target price from GBX 470 to GBX 500.