Why do investors attach so much importance to the figures of a single company? It seems ludicrous that the profits of a single company, even one at the heart of the artificial intelligence hype, can make or break the market. But we have to remember that financial markets work on narrative. A narrative that is generally positive. For some time now, several such narratives have been coexisting. For example, falling interest rates, artificial intelligence and China's recovery. AI is undoubtedly the most esoteric narrative, and therefore the most promising: central bankers are a pain in the ass, and China's recovery is becoming more and more elusive, hampered by the headwinds of protectionism.

AI also holds the promise of a new technological revolution comparable to that of the Internet. As was the case 25 years ago, there will be casualties, but also big winners. At this stage, Nvidia is unlikely to become Worldcom or Global Crossing. The Californian group is a real stock market powerhouse, capable of keeping investors smiling against all odds. Its results are insane: $14.9 billion in profits for the 1st quarter 2024/2025, seven times more than a year earlier, well above expectations. Naturally, the group has guided to a higher outlook than analysts were expecting. As long as this is the case, the techno-power of the stock market is sustained.

For those not interested in AI, another big news today came from Britain, with the decision by Conservative Prime Minister Rishi Sunak to dissolve parliament and call new general elections for July 4. This announcement comes as little surprise to observers, who had been expecting Labour to return to office after five very complicated years, marked by mediocre economic performance, galloping inflation and contested executive teams, from the short-lived Liz Truss to the disappointing Rishi Sunak, via the whimsical Boris Johnson. However, the date chosen is earlier than expected: there had been a sort of consensus that elections should be held in the autumn. In any case, these elections represent a major challenge for Sunak, who will be campaigning to retain his position as Prime Minister, despite Labour’s huge lead over the Conservatives in the polls. His supporters credit him with a certain panache, while his detractors believe he has fractured the Conservative party and shot himself in the foot.

On the macro agenda today are the leading PMI indicators for the major economies. These enable us to fine-tune our judgement on the economic outlook and interest-rate trends. Particularly in Europe, where the ECB is still betting on a rate cut in early June, and in the United States, where doubts remain about the trajectory of monetary policy and the robustness of the economy. In this respect, the minutes of the Fed's last meeting, published yesterday, were difficult to digest for investors, who found officials more anxious than expected about the evolution of inflation.

The eurozone PMI showed private sector activity grew at its fastest pace in a year in May, due to sustained demand for services and improving manufacturing activity. The composite “flash” PMI index climbed to 52.3 this month, above the 50 mark that separates growth and contraction in activity. This is the third consecutive month of expansion, after 51.7 in April and above the consensus of 52.0.

In Asia Pacific this morning, Nvidia did the job for investors in Japan (+1.2%), India (+0.4%) and Korea (+0.2%). Australia, on the other hand, fell by 0.5%, weighed down by BHP's 3% drop and the banks' malaise. China lost more than 1% in both Shanghai and Hong Kong, with the technology sector turning its back on Nvidia to worry about the price war between cloud services stars Alibaba and Tencent. Leading indices are bullish in Europe, and futures on Wall Street are well in the green especially the Nasdaq 100 at +1.2%.

Today's economic highlights:

Flash PMI indicators for May will be released throughout the day, notably in the eurozone and the United States. We also have New Home Sales. The full agenda. is here. 

The dollar is down to EUR 0.9215 and GBP 0.7851. The ounce of gold falls to USD 2366. Oil retreats slightly, with North Sea Brent at USD 82.58 a barrel and US light crude WTI at USD 78.23. The yield on 10-year US debt is stable at 4.42%. Bitcoin is trading at USD 69,800.

In corporate news:

  • Nvidia jumps 6.8% in pre-market trading. On Wednesday, the artificial intelligence (AI) chip giant announced a better-than-expected sales forecast for the current quarter and a ten-for-one stock split. Following in Nvidia's footsteps, AMD, Micron Technology, Broadcom and Arm Holdings gained between 2.2% and 3.8% in pre-market trading. Other AI-related stocks such as Super Micro Computer, C3.ai, Palantir Technologies and Soundhound Ai gain between 1.4% and 4.4% in pre-market trading.
  • Tsmc gains 3.2% in pre-market trading. The Taiwanese chipmaker, one of the main suppliers to Apple and Nvidia, announced on Thursday that it expected annual sales growth of 10% in the semiconductor sector, excluding memory chips.
  • Dupont De Nemours climbs 5.4% in pre-market trading, the group having announced its intention to split into three independent entities comprising electronics, water and industry.
  • Vf Corp fell by 11.4% in premarket trading, as the parent company of the Vans and The North Face brands reported quarterly sales below analysts' expectations on Wednesday, according to LSEG data.
  • Mondelez International - The manufacturer of Oreo cookies was fined 337.5 million euros by European competition authorities on Thursday for hindering cross-border trade.
  • Boeing - The US aircraft manufacturer's deliveries to China have been delayed in recent weeks due to a review by the Chinese aviation regulator (CAAC), a source familiar with the matter told Reuters. Boeing delivered 22 aircraft to China between January and April, but the group has been unable to continue its shipments.
  • Tesla has asked its suppliers to start manufacturing components and spare parts outside China and Taiwan as early as next year, the Nikkei daily reported on Thursday.
  • Microsoft - The president of the US technology giant, Brad Smith, said that the $1.5 billion deal signed in April with the UAE-backed artificial intelligence company G42 could eventually include the transfer of sophisticated chips and tools. Michael McCaul, a leading US congressman, believes this could have national security implications.
  • Amazon announced on Wednesday evening a partnership with artificial intelligence (AI) startup Hugging Face to facilitate the execution of thousands of AI models on its personalized chips.
  • Globalfoundries loses 6% in pre-market trading. The chipmaker's main shareholder, Abu Dhabi sovereign wealth fund Mubadala, announced that one of its divisions wished to sell $950 million worth of Globalfoundries shares.
  • Snowflake - The cloud computing specialist gains 4.7% in pre-market trading after announcing that it expects sales for the current quarter to be between $805 and $810 million, compared with Wall Street's forecast of $785 million, according to LSEG data.
  • Synopsys raised its annual sales and earnings forecasts on Wednesday, banking on strong demand for its advanced chip design software for artificial intelligence (AI) applications.
  • Pfizer and Moderna were up 1.3% and 2.4% respectively in after-hours trading. U.S. Department of Health officials said that the federal government is in “active discussions” with the two laboratories regarding a possible avian flu vaccine for humans.
  • Carlyle - The private equity firm has sold its entire minority stake in the Brazilian hospital chain Rede D'Or, local dailies Brazil Journal and Valor Economico reported on Wednesday.
  • Walgreens Boots Alliance has sold $400 million worth of shares in drug distributor Cencora, reducing its stake from 13% to 12%, the two companies announced on Wednesday.

Analyst recommendations:

  • Airbnb, Inc.: Baptista Research upgrades to outperform from hold with a target price raised from USD 163 to USD 172.
  • Best Buy Co., Inc.: Telsey Advisory Group downgrades to market perform from outperform with a target price of USD 95.
  • Conocophillips: Gerdes Energy Research LLC upgrades to buy from neutral with a target price of USD 145.
  • Hubspot, Inc.: Baptista Research downgrades to hold from underperform with a price target raised from USD 643.50 to USD 687.30.
  • Norfolk Southern Corporation: RBC Capital upgrades to outperform from sector perform with a target price of USD 270.
  • Nvidia Corporation: Punto Research upgrades to buy from hold with a price target raised from USD 735 to USD 1115.
  • The Trade Desk, Inc.: Baptista Research downgrades to hold from outperform with a price target raised from USD 99 to USD 104.
  • Analog Devices, Inc.: TD Cowen maintains its buy recommendation and raises the target price from USD 210 to USD 270.
  • Dupont De Nemours, Inc.: Mizuho Securities maintains its buy recommendation and raises the target price from USD 83 to USD 100.
  • Public Service Enterprise Group, Inc.: Mizuho Securities maintains its buy recommendation and raises the target price from USD 65 to USD 80.
  • Uber Technologies, Inc.: Evercore ISI maintains its outperform recommendation and raises the target price from USD 80 to USD 145.
  • Ford Motor Company: Bernstein initiates an Outperform recommendation with a target price of USD 16.
  • Ge Vernova Inc.: BNP Paribas Exane maintains its outperform recommendation and raises the target price from USD 177 to USD 197.
  • Broadcom Inc.: CITIC Securities Co Ltd initiates an Accumulate recommendation with a target price of USD 1580.
  • Unilever Plc: JP Morgan upgrades to overweight from underweight with a price target raised from EUR 41 to EUR 60.
  • Nutrien Ltd.: Baptista Research downgrades to hold from buy with a price target reduced from USD 66.30 to USD 65.80.
  • Power Corporation Of Canada: Scotiabank upgrades to sector outperform from sector perform with a target price of CAD 47.