New semester, new state of mind

On this first day of July, let's get ready for a week full of twists and turns, marked by the results of the early parliamentary elections in France revealed last night. We're off to a strong start this morning, with leading indicators rising sharply in Europe. This date also marks the start of the second half of the year, so it's a good time to take stock of the first half, which was largely dominated by American technology giants.

The first half was undoubtedly dominated by the remarkable performance of US technology stocks. A quick glance at the MarketScreener page dedicated to index rankings shows just that. The Nasdaq 100 soared by over 17%, with its main components linked to artificial intelligence and semiconductors, particularly Nvidia and others, posting stratospheric gains. These companies are obviously benefiting from the accelerated adoption of disruptive technologies in various economic sectors while the broad US index, the S&P500, followed with a gain of 14.50%. In contrast, European indexes are struggling to keep up with this frenetic pace, weighed down by the lack of candidates who can truly benefit from the rise of artificial intelligence. Half-year gains remain respectable, with the Stoxx Europe 600 Net Return up 9.10%. However, this performance conceals a wide disparity in the performance of European indexes. The performance gap is impressive between the Dutch AEX (+17.42), richly endowed with semiconductors with its heavyweights ASML and ASM International, the Danish OMX (+26.56%), with its focus on Novo Nordisk, and the Danish OMX (+26.56%), with its focus on Novo Nordisk. Novo Nordisk, and the French CAC40 (-0.68% and +2.50 for its reinvested dividend version), which notably underperformed, especially at the end of the day with the political upheavals. I'll end this quick overview with Japan. The Nikkei 225 has also come off the firing line, posting a handsome +18.28% half-yearly return (take that from the Nasdaq!).

Having said that, let's dive into the heart of the hot news. The results of the first round of early parliamentary elections in France, announced last night, are the main focus of interest this morning. The results confirm the polarization of the French political landscape, with two blocs emerging: the "Rassemblement National" came out on top, ahead of the "Nouveau Front Populaire". In other words, the presidential party suffered major setbacks, while extreme parties on both left and right consolidated their positions. So much for my high-flying analysis of the situation, to each his own sphere of competence. On a more serious note, the large number of triangular contests in the second round leaves open a number of scenarios for the future composition of the National Assembly. The most likely outcome, however, remains an ungovernable Assembly, with no clear majority. From a political point of view, this is not ideal, but it eliminates the risk of a major slide in public finances caused by the economic programs of France's two leading political forces. This seems to be the market's view, given the direction of today's European trading.

On the statistics front, the week will be rich in economic data likely to set the tone for the rest of the week, starting today with a busy session featuring the final reading of manufacturing PMIs in the eurozone and the United States. Inflation makes a comeback tomorrow with the Eurozone's June consumer price index, in tandem with the JOLTS employment survey in the US. There'll be no let-up on Wednesday with the final PMIs again, but for services, which will share the spotlight with ADP employment and the Fed minutes. Finally, the weekend will revolve around the NFP report on monthly US employment. In the background, the European Central Bank will be holding its annual forum this week, accompanied by several speeches by central bankers.

As on every Monday, here is a summary of the economic and financial news not to be missed.

• Democratic Party officials rule out replacing Biden as candidate.
• Manufacturing activity in China contracted for a second consecutive month in June.
• Also in China, Beijing regulates rare earths to protect its supplies.
• Brussels-bashing Viktor Orban takes over as head of the EU Council.
• Japanese industrial production rose in June for the first time in over a year.

Asian markets start the new half-year with a small rise. Japan's Topix is up by around 0.35%, South Korea by 0.1% and India's Sensex by 0.32%. Mainland China also gained ground, while Hong Kong was closed for a public holiday. Leading indicators are bullish in Europe, especially in France.

Today’s economic highlights:

The final manufacturing PMI readings will be published throughout the day. In addition, Germany will publish its first estimate of June inflation. Construction spending in the US (10:00 am) completes the program. For the full agenda, click here.

The dollar falls to 0.9308 EUR and 0.7884 GBP, while the ounce of gold stabilizes at USD 2,335. Oil continues to perform well, with North Sea Brent at USD 85.50 a barrel and US light crude WTI at USD 81.67. The yield on 10-year US debt reached 4.39%. Bitcoin rallied to 62,800 USD.

In corporate news:

• Boeing, Spirit AeroSystems - Boeing announced on Monday the acquisition of Spirit AeroSystems for $4.7 billion after months of negotiations between the aircraft manufacturer and one of its key, struggling suppliers. Additionally, according to two people familiar with the matter, the U.S. Department of Justice is set to charge Boeing with fraud in connection with two fatal accidents and will ask the aircraft manufacturer to plead guilty or face trial.
  
• Apple - The group's smartphone shipments in China increased by nearly 40% in May compared to the same period last year, extending the rebound observed in April, according to data from a government-affiliated research firm released on Friday.
  
• Meta - The European Union (EU) is preparing to accuse Facebook's parent company of violating the bloc's digital rules with its "pay or consent" business model, the Financial Times reported on Monday, citing people familiar with the matter.
  
• Lockheed Martin - The U.S. Army has awarded the group a multi-year contract worth $4.5 billion for its Patriot air defense missile system, the Pentagon announced on Friday.
  
• Nike plunged 19.98% on Friday after announcing it expects a decline in revenue for the fiscal year 2025; UBS downgraded its recommendation on the sportswear company from "buy" to "neutral."
  
• HubSpot - A spokesperson for the software company said on Friday that it was investigating a cybersecurity incident that had targeted a limited number of its customers.

Analyst recommendations:

• Americold Realty Trust: Wolfe Research upgrades to outperform from peerperform with a target price of USD 31.
  
• Broadcom: Haitong International Research Ltd upgrades to outperform from neutral with a price target raised from USD 1620 to USD 1850.
  
• Cognizant Technology Solutions: Ambit Capital Pvt Ltd. maintains its sell recommendation and raises the target price from USD 73 to USD 74.
  
• Comcast: KeyBanc Capital Markets maintains its overweight recommendation and reduces the target price from USD 51 to USD 45.
  
• Commercial Metals Company: Baptista Research maintains its hold recommendation with a price target reduced from 63.10 to USD 61.90.
  
• Dow: Wells Fargo maintains its overweight rating and reduces the target price from USD 68 to USD 65.
  
• Draftkings: Oppenheimer maintains its outperform rating and reduces the target price from USD 60 to USD 58.
  
• Elanco Animal Health: Piper Sandler & Co maintains a neutral recommendation with a price target reduced from USD 19 to USD 16.
  
• Eqt Corporation: Jefferies maintains its buy recommendation and raises the target price from USD 48 to USD 49.
  
• Illumina: RBC Capital maintains its outperform rating and reduces the target price from USD 249 to USD 242.
  
• Moody's: Oppenheimer maintains its outperform rating and raises the target price from USD 424 to USD 454.
  
• Nvidia: Morgan Stanley maintains its overweight rating and raises the target price from USD 116 to USD 144.
  
• Ovintiv: Jefferies maintains its buy recommendation and reduces the target price from USD 69 to USD 68.
  
• Pilgrim's Pride: Baptista Research maintains its underperform recommendation and raises the target price from 33 to USD 37.60.
  
• Progressive Corporation: Zacks maintains a neutral recommendation with a price target raised from USD 215 to USD 218.
  
• Reynolds Consumer Products: Baptista Research maintains its hold recommendation with a price target reduced from USD 32.50 to USD 32.
  
• S&P Global: Oppenheimer maintains its outperform rating and raises the target price from USD 482 to USD 486.
  
• T-Mobile: KeyBanc Capital Markets maintains its overweight recommendation and raises the target price from USD 185 to USD 190.
  
• Texas Roadhouse: Truist Securities maintains its buy recommendation and raises the target price from USD 181 to USD 183.
  
• Walgreens Boots Alliance: TD Cowen maintains its buy recommendation and reduces the target price from USD 35 to USD 22.
  
• Wingstop: Truist Securities maintains its hold recommendation with a price target raised from USD 345 to USD 393.