Equity markets generally resumed their upward trend yesterday, allowing one major index to reach an important milestone. In the US, the S&P 500 closed up 0.6%. It is technically in a bull market, since it has broken through the 20% barrier since October last year. By the smallest of margins, since if my calculations are correct, we're on +20.04%. The problem is that not everyone has the same definition of a bull market or its consequences. To paraphrase Winston Churchill, "if you put two economists in a room, you'll get two opinions, unless one of them is Lord Keynes, in which case you'll get three opinions". But the fact is, that 20% mark is a real psychological milestone, which can promise a bright future (i.e. a continued rise). Except when it doesn't work out, which also happens. As a result, there's been a lot of debate on this topic in the past few hours. The strong-minded generally insist that the current bull market has been supported by a small number of stocks, and that a broader base is needed for the rest to go well.

Back to yesterday’s session, US indices were dragged down by the release of higher-than-expected weekly jobless claims, which raised fears of an economic slowdown. The market's main bet is still that the Fed will have to pause rate hikes as inflation continues to cool. So, any negative macroeconomic data is rather welcome, especially when it’s related to the labor market. The latest unemployment data eased the nervousness generated by the unexpected rate hikes decided by the Bank of Australia and the Bank of Canada earlier this week. This renewed optimism on monetary policy was of particular benefit to the Nasdaq 100, which rebounded by 1.3%.

In other news, Donald Trump signs a new first: a federal indictment for keeping confidential documents at his home after his term of office ended. The former president cries foul. Joe Biden for the USA and Rishi Sunak for the UK reiterated the declarations of friendship between their two countries and made a few trade commitments, but the free trade agreement hoped for by London after the Brexit is still not on the agenda. In China this morning, inflation figures for May came in slightly higher and in line with expectations. Consumer prices gained just 0.2%, China’s National Bureau of Statistics said. Producer prices, on the other hand, continue to fall by more than expected.

US equity futures were little changed this morning as investors increasingly adopt a wait-and-see attitude ahead of next week's consumer price index report for May and the Federal Reserve's monetary policy meeting.

 

Economic highlights of the day:

The dollar/euro pair is stable at EUR 0.9280, while the pound is worth USD 0.7954. The ounce of gold rebounds to USD 1969. Oil is stable, with North Sea Brent at USD 75.98 a barrel and US light crude WTI at USD 71.42. The yield on 10-year US debt stands at 3.73%. Bitcoin is little changed at USD 26,600.

 

In corporate news:

  • After Ford, General Motors is to adopt Tesla’s electric vehicle charging system, giving its customers access to Elon Musk's Supercharger network. In pre-Wall Street trading, GM gained 4.3% and Tesla 6.2%.
  • Coinbase was down 1.2% in pre-market trading, as Moody's revised its credit outlook from "stable" to "negative" following the prosecution by the
  • Docusign climbed 7.4% in early trading after raising its annual sales target above market expectations.
  • Lordstown Motors announced its intention to take legal action against Foxconn to ensure that the Taiwanese subcontractor honors a planned purchase of nearly 10% of its capital.

 

Analyst recommendations:

  • Corning: Morgan Stanley upgrades to overweight from equal-weight. PT up 20% to $38.
  • Hammerson: Barclays upgrades from Underweight to Overweight, targeting GBp 30.
  • Imperial Brands: Jefferies remains "Hold" with a price target reduced from 1993 to 1680 GBp.
  • Target: Citi downgrades to neutral from buy. PT down 1% to $130.
  • Wizz Air: Concorde Securities upgrades to reduce from sell. PT down 11% to 2,390 pence.