For much of 2025, Wall Street has lurched between despair and euphoria, its pulse tethered to the geopolitical tug-of-war between Washington and Beijing. This week’s meetings follow a tepid Geneva agreement and a long-overdue call between Presidents Trump and Xi - a call that generated more headlines than hope. The markets may be stable for now, but underneath the surface simmers a risk: the unpredictability of power politics.

Export controls, tariffs, and the delicate dance of rare-earth metals now function as the new levers of diplomacy. Investors have bet heavily on a thaw, buoyed by May’s robust earnings and the S&P’s return to the 6,000 mark. But one harsh word from either side could send those gains into a tailspin. As Citigroup ups its year-end target and AI-fueled exuberance inflates valuations, one wonders if the market is pricing in wishful thinking.

Wall Street's capacity for recovery remains consistent. The first week of June offered a clear illustration, as equity indices on both sides of the Atlantic recorded solid gains and risk assets - from equities to crude oil - benefited from a wave of investor confidence. However, beneath these headline figures lies a more nuanced reality, marked by persistent trade tensions and underlying economic contradictions.

Wall Street is staging an impressive revival. Since early April, the S&P 500 and Nasdaq have advanced 24% and 30% respectively. Technology stocks, though hardly a monolith, have been the engine of this rebound. The sector's internal divergence is particularly striking. Microsoft, Meta, Nvidia and Broadcom are all comfortably in the black. In contrast, Apple, Alphabet, and Amazon - three of the so-called ‘triple A' titans - are adrift in negative territory. Tesla, with its flamboyant 26.92% decline, appears to be less a stock than a referendum on Elon Musk's dalliance with Donald Trump. In Europe, the German DAX climbed 1.28% to a record high of 24,479 points. London too held its ground near historic peaks. The French CAC40, while up 0.68% last week, still lags far behind its own former glories.

This diversity of performance is, paradoxically, a source of reassurance. It suggests that investors are approaching the tech rally with discernment rather than desperation. No longer are they blindly herding into big tech out of FOMO; instead, they are differentiating between stories and strategies. Rationality, at last, is making a modest comeback.

Beneath the glimmer of rising indices lies the quiet hum of macroeconomic tension. The American jobs market, a traditional beacon of economic vigor, continues to deliver encouraging numbers. For Wall Street, that is reason enough to push higher. For the bond market, however, it's a cause for concern. A resilient labour market diminishes the likelihood of interest rate cuts by the Federal Reserve. Yields on 10-year US Treasuries have surged to 4.494%, suggesting a more cautious stance among fixed-income investors.

The week ahead promises a fresh test for the markets' newfound optimism. On Wednesday, the US will unveil its consumer inflation data for May. Expectations are for a year-on-year reading of 2.3% - a figure that, if realized, may calm some nerves without altering the policy calculus. Thursday brings producer prices, and Friday delivers the University of Michigan's consumer sentiment index. A sparse calendar, perhaps, but potentially potent in its implications.

On the corporate front, a few key names will step into the spotlight. Taiwan Semiconductor, Oracle, and Adobe are due to report earnings, each one a weather vane for investor appetite in artificial intelligence and beyond.

Amidst the financial flows, geopolitics continue to simmer. Sino-American trade envoys are meeting in London, a delicate backdrop to a week when China mulls expediting rare earth exports to the EU. The US, meanwhile, is tightening sanctions on Iran and weighing yet another reprieve for TikTok. 

Asian markets, for their part, have embraced the global cheer. Modest gains across Shanghai, Hong Kong, Tokyo, and Seoul suggest that risk appetite is not a Western preserve. In Europe, leading indicators are slightly down.

Today's economic highlights:

  • Dollar index: 99,060
  • Gold: $3,315
  • Crude Oil (BRENT): $66.91 (WTI) 64.40
  • United States 10 years: 4.49%
  • BITCOIN: $107,900

In corporate news:

  • Anglo American might receive just half of the $4.9 billion valuation of De Beers due to the diamond market downturn.
  • HSBC approaches former McKinsey CEO for chairman role.
  • Nvidia has announced new partnerships with British companies to enhance its AI capabilities.
  • Getty lawsuit against Stability AI poised to set a significant legal precedent in AI.
  • Nikola is recalling 209 vehicles in the US due to a possible fire hazard.
  • Meta could invest more than $10 billion in Scale AI, according to Bloomberg.
  • Starbucks reduced drink prices in China to compete amidst slowing export growth.
  • British Columbia Investment Management Corp acquired a minority stake in KKR's Pinnacle Towers.

Analyst Recommendations:

  • Premier Foods Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 250 to GBX 270.
  • Ssp Group Plc: RBC Capital maintains its sector perform recommendation and raises the target price from GBX 190 to GBX 200.
  • Pets At Home Group Plc: RBC Capital maintains its underperform recommendation with a price target raised from GBX 210 to GBX 220.
  • Dunelm Group Plc: RBC Capital downgrades to sector perform from outperform with a target price of GBX 1175.
  • B&M European Value Retail S.a.: RBC Capital maintains its outperform recommendation and reduces the target price from GBX 375 to GBX 360.