But let’s start this column with yesterday's session. Wall Street roared with delight after converging announcements by Democrats and Republicans on the need to find a way out of the debt ceiling problem quickly, to avoid a catastrophic impasse. Promises are only binding on those who listen to them, but in this case, no one believes that the American political establishment will take the risk of playing with a US default, even if it is technical. So, the three main Wall Street indices jumped on these announcements.

The Nasdaq 100 erased its one-year highs by gaining 1.8% to 13,835 points. The S&P500 rose 0.9% and the Dow Jones, which was more sluggish due to its defensive players, rose 0.3%. The new dominant scenario is a variation of the previous one: the US debt ceiling issue is resolved in the short term and the Fed has finished its rate hike cycle. Not all investors agree on this last point, but a majority of them support this scenario. Roughly one-third of the market sees a rate hike and two-thirds a pause on June 14. A week ago, the probability of a rate hike was only 11%. In between, US macroeconomic data has shown resilience, some Fed members have spoken for a more dovish policy and the regional bank crisis has tended to subside. The change in the forecast is visible in the performance of the dollar, which has risen back above 1.08 against the euro, and in the yield on the US 10-year bond, which jumped to 3.63%. Fed boss Jerome Powell is due to later today and likely to provide some additional guidance.

The other highlight of the day was the release of 3.4% annual core inflation in Japan in April, in line with expectations. The country seems to be coming out of the rut it has been in the last few decades, as illustrated by the performance of the local stock market indices, which are currently setting records.

In China, it is rather depressing with the CSI300 slipping slightly and the Hang Seng losing 1.2%, weighed down by its technology companies, notably Alibaba, following poorly received results. The inability of the Chinese economy to maintain strong momentum despite the boost from the end of covid restrictions at the end of 2022 is worrying.

In premarket trading today, the Dow Jones Industrial Average futures were up 0.3%, S&P 500 futures were 0.3% higher, and Nasdaq futures were gaining 0.1%.

 

Economic highlights of the day:

The dollar is down to EUR 0.9254 and GBP 0.8036. The ounce of gold fell to USD 1962. Oil is firm, with North Sea Brent at USD 77.12 a barrel and US WTI light crude at USD 73.20. The yield on US 10-year debt is 3.63%. Bitcoin is trading at USD 26,900.

 

In corporate news:

  • Alphabet gained 1% in pre-market trading after the Wall Street Journal reported that Samsung Electronics would not replace Google as the default search engine on its phones with rival Bing, developed by Microsoft. This prospect had weighed on Alphabet's stock last month.
  • Walt Disney fell 0.6 percent in premarket trading after Bloomberg reported that the company had decided to reduce its video-on-demand service. In addition, according to an email sent to the group's employees on Thursday, Disney will abandon a project to build a campus worth nearly a billion dollars in Florida. The company also announced Thursday that it will close its Star Wars-themed luxury hotel in Orlando in September, less than two years after it opened.
  • Apple has limited the use of ChatGPT and other outside artificial intelligence for its employees as the company develops similar technology, the Wall Street Journal reported Thursday, citing a document and sources.
  • Microsoft - Twitter says Microsoft violated an agreement to use the social network's data, according to a letter seen by Reuters. A Microsoft representative said on Thursday that it had received questions from a law firm representing Twitter and would investigate and respond appropriately.
  • Applied Materials fell 1.4% in premarket trading despite a better-than-expected third-quarter revenue forecast.
  • Deere & Co, the agricultural equipment specialist, raised its net profit forecast for 2023 on Friday on the back of a full order book for the rest of the year and strong farm revenues. The stock gained nearly 4% in pre-market trading.
  • Yandex has received two separate bids from Russian billionaires for a roughly 50 percent stake in its Russian subsidiary, valuing it at more than $7 billion, Bloomberg reported Friday. Yandex declined to comment.
  • Foot Locker is down 18 percent in premarket trading after the sports equipment maker lowered its annual revenue and profit forecasts in the face of slowing demand. The profit warning also affects rivals Nike and under Armour both of which are down 3% in premarket trading.
  • Northrop Grumman - NASA is expected to announce on Friday the name of the second private company - after SpaceX, which will be chosen in 2021 - to build the shuttle that will take astronauts to and from the moon, ending a tight competition between groups such as Blue Origin, Jeff Bezos' space company, and Northrop Grumman.
  • Lazard - CEO Ken Jacobs is expected to step down and be replaced by Peter Orszag, who currently runs the financial advisory division, according to a source close to the matter.
  • Newmont - The gold mining group announced on Thursday the appointment of Karyn Ovelman from ArcelorMittal as its new CFO.
  • Occidental Petroleum - Berkshire Hathaway said Thursday it has acquired more shares of Occidental Petroleum, raising its stake in the oil company to 24.4%. Occidental Petroleum shares gained 1% in pre-market trading Friday.

 

Analyst recommendations:

  • Amphenol: Credit Suisse downgrades to neutral from outperform. PT up 1.1% to $77.
  • Aston Martin: Mediobanca upgrades from Underperform to Outperform targeting GBp 360.
  • ASOS: Citigroup upgrades from neutral to buy targeting GBp 600.
  • The Carlyle Group: Citi initiated coverage with a recommendation of buy. PT set to $40.
  • Planet Fitness: RBC Capital Markets initiated coverage with a recommendation of outperform. PT set to $86.
  • NewtekOne: B Riley Securities initiated coverage with a recommendation of buy. PT set to $15.
  • Nike: CICC initiated coverage of Nike Inc. Class B with a recommendation of outperform. PT set to $151.87.
  • Shake Shack: Morgan Stanley upgrades to equal-weight from underweight. PT down 5.6% to $63.
  • Target:  Punto Casa de Bolsa upgrades to buy from hold. PT up 17% to $180.
  • TE Connectivity: Credit Suisse upgrades to outperform from neutral. PT up 12% to $138.