News updates from June 14: French stocks notch big weekly drop over fears of far-right election win; Apple set to face EU digital law charges

Wall Street’s two main equities indices advanced over the past week, hitting record highs along the way, amid renewed debate about the outlook for interest rates.

The S&P 500 chalked up its biggest weekly gain since mid-May, while the Nasdaq Composite’s weekly rise was its biggest since late April. Each index notched its seventh weekly advance of the past eight weeks.

Investors this week have juggled important inflation data, which showed price pressures eased more than forecast in May, against the Federal Reserve’s latest policy decision and projections.

The inflation data initially prompted traders to bet the US central bank would cut interest rates twice this year, but policymakers hours later released a “dot plot” projecting just one.

The Russell 2000, an index composed of smaller-cap stocks that are regarded as more economically sensitive, had its first back-to-back weekly drop since mid-April.

Ukraine and Moldova will start EU accession negotiations this month after EU27 countries gave the green light late on Friday.

The decision to formally start talks with Ukraine had been delayed by Hungary, which relented after obtaining reassurances on the treatment of minorities by Kyiv, said two people familiar with the negotiations.

EU finance ministers are due to formally sign off on the decision next Friday. The Dutch parliament also had to formally approve it on Thursday. 

The Belgian presidency of the Council will host the first formal intergovernmental conference on June 25.

The recent rally in US stocks paused on Friday, even as chip designer Nvidia continued its march higher.

The S&P 500 pulled back marginally from the record high it closed at in the previous session, dipping less than 0.1 per cent. The tech-dominated Nasdaq Composite added 0.1 per cent, helped by the heavier weighting of companies like Adobe, which surged almost 15 per cent after reporting strong results, and Nvidia.

Nvidia, which has single-handedly driven around a third of the S&P’s advance so far this year, added a further 1.8 per cent to bring its gains for the week to 9 per cent.

Italy’s federal football prosecutor has dismissed a case into alleged irregularities over AC Milan’s 2022 sale by US hedge fund Elliott Management to New York private equity group RedBird. 

The ruling on Friday by Italy’s supervisory authority FIGC, the country’s football federation, spares the club from any penalties in the upcoming Italian Serie A league and European Uefa Champions League tournament. It may separately weaken another probe into the sale led by Milan’s financial prosecutor.

FIGC and AC Milan confirmed the ruling, declining to comment further.  

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UK supermarkets have started removing some products possibly linked to the E.coli outbreak that has led to people being admitted to hospital in recent weeks.

The UK’s Food Standards Agency said Greencore Group, the country’s biggest sandwich maker, had recalled sandwiches, wraps and salads as a “precautionary step”.

Although it was unclear on Friday afternoon which other items were being taken off shelves or if they were definitely contaminated, some retailers were taking “swift action” to prevent the products from being sold as a precaution, according to the British Retail Consortium, which represents the sector.

Andrew Opie at the BRC said that following investigations by the FSA and the UK Health Security Agency, a number of food manufacturers in the supply chain were taking precautionary measures and recalling a small number of products.

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European stocks fell sharply on Friday, ending the week at their lowest level since early May as the prospect of a far-right French government unnerved investors.

The region-wide Stoxx 600 lost 0.9 per cent, taking its decline for the week to 2.3 per cent. Germany’s Dax fell 1.3 per cent and London’s FTSE 100 lost 0.1 per cent.

French stocks fared worst after four leftwing parties late on Thursday struck a unity pact for the election — a fresh blow to President Emmanuel Macron, whose centrist alliance is also under threat from Marine Le Pen’s rightwing Rassemblement National.

The Cac 40 in Paris lost 2.7 per cent, capping its worst week in more than two years. The index is trading at its lowest level since late January. 

Brussels is set to charge Apple over allegedly stifling competition on its mobile app store, the first time EU regulators have used new digital rules to target a Big Tech group.

The European Commission has determined that the iPhone maker is not complying with obligations to allow app developers to “steer” users to offers outside its App Store without imposing fees on them, according to three people with close knowledge of its investigation.

The charges would be the first brought against a tech company under the Digital Markets Act, landmark legislation designed to force powerful “online gatekeepers” to open up their businesses to competition in the EU.

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The US on Friday blacklisted an Israeli rightwing extremist organisation it says has been blocking deliveries of humanitarian aid to Gaza. 

The group, Tzav 9, has for months “repeatedly sought to thwart the delivery of humanitarian aid to Gaza, including by blockading roads, sometimes violently, along their route from Jordan to Gaza, including in the West Bank”, state department spokesperson Matt Miller said.

The sanctions are the first from Washington directly connected to Gaza aid deliveries. The US began sanctioning Israeli settler groups earlier this year for violence against Palestinians in the West Bank.

Barclays has suspended its sponsorship of some of the UK’s largest music festivals this summer after bands threatened to boycott the events given the bank’s links to defence companies working in Israel.

The bank said it had withdrawn from festivals organised by Live Nation such as Download, Latitude and the Isle of Wight. It said protesters had intimidated its staff and carried out repeated acts of vandalism of branches as well as online harassment. 

“The only thing that this small group of activists will achieve is to weaken essential support for cultural events enjoyed by millions,” said a spokesperson for the bank. “It is time that leaders across politics, business, academia and the arts stand united against this.”

Private equity group Ardian and Saudi Arabia’s sovereign wealth fund have entered a revised agreement to acquire a roughly 38 per cent stake of London’s Heathrow airport.

Saudi Arabia’s Public Investment Fund and Ardian negotiated a deal last November to buy infrastructure group Ferrovial’s 25 per cent stake in the airport’s parent company for £2.4bn.

However, the deal was complicated by some of Heathrow’s other shareholders, who in January used “tag along” rights to sell a portion of their holdings alongside Ferrovial.

In the deal announced on Friday, Ardian will acquire a 22.6 per cent stake while PIF will acquire 15 per cent of Heathrow. 

Ardian said it was “pleased to have worked closely with the parties to find this revised agreement and reiterates its strong commitment to investing the UK.”

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A measure of US consumer sentiment in June unexpectedly weakened to its lowest level since late 2023, owing to “modestly rising concerns” over high consumer prices and weakening income.

The University of Michigan’s consumer sentiment index registered a preliminary reading of 65.6 in June from 69.1 in May, according to figures published on Friday. It was the lowest reading since November and below economists’ expectations for an increase to 72.

A reading for current conditions also fell — to 62.5 per cent, against 69.6 in May. 

While inflation expectations for the next year were unchanged at 3.3 per cent, longer-run expectations of price pressures inched up to 3.1 per cent from 3 per cent.

UMich said, though, the changes in the benchmark consumer sentiment index and poll of longer-run inflation expectations should not be seen as a major weakening, and should be “interpreted as essentially unchanged”.

US stocks slipped from record highs at the end of a week in which cooler than expected inflation raised expectations of early interest rate cuts. 

Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq Composite both fell 0.2 per cent in early trading in New York. 

Industrials and utilities were among the worst performing stocks. Tech group Adobe jumped 14.1 per cent after raising its annual revenue forecast.

Data released on Wednesday showed US inflation fell to 3.3 per cent in May. Markets are now pricing in two quarter-point rate cuts from the Federal Reserve this year, even after the central bank’s dot plot indicated officials currently anticipate cutting rates just once over the same period.

UK fashion retailer Superdry has managed to avoid insolvency after shareholders backed a £10mn lifeline on Friday.

The results of the meeting with investors follows the company’s warning in April that it could go bust unless it launched a sweeping overhaul of the business, including negotiating rent reductions with landlords, and saying it would delist from the London stock market.

Superdry chair Peter Sjölander described the outcome of the meeting as “a crucial step” for Superdry’s survival, with co-founder and chief executive Julian Dunkerton saying it was “a turning point for the business” pending court approval for the restructuring plan next week. 

Dunkerton will inject “a significant amount of his own money” in the £10mn equity raise as the brand prepares to delist.

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Elon Musk’s pay package that was once valued at $56bn was approved by about 77 per cent of votes cast at Thursday’s Tesla shareholder meeting, according to an SEC filing released on Friday. 

The proposal to reincorporate the electric-vehicle maker in Texas from Delaware garnered about 63 per cent of votes cast. 

The result of the vote does not supersede a Delaware court’s decision in 2018 to void Elon Musk’s package of stock options — the largest in US history — due to concerns about its value and the independence of the board. However it could persuade the judge to reverse the decision. 

Vladimir Putin has said Russia will immediately cease fire and begin negotiations to end the invasion of Ukraine if Kyiv withdraws troops from four frontline regions, including areas Moscow has never controlled during its two-year invasion or subsequently withdrew from.

The Russian president’s demands, made during a speech on Friday, were the most specific conditions Putin has set for a possible end to the war – but made it clear he would set out a maximalist position in any peace talks.

Ukraine is highly unlikely to accept Putin’s conditions, which would in effect give Russia control of four regions: Donetsk, Kherson, Luhansk and Zaporizhzhia.

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Rishi Sunak has defended Joe Biden after the US president appeared to wander off from fellow G7 leaders as the group watched a parachute display at a summit in Italy.

The UK prime minister spoke out on Friday after Republicans leapt on footage of Biden strolling off and being ushered back to the group of leaders by Italian Prime Minister Giorgia Meloni, suggesting it cast doubt over the 81-year-old’s mental capacity. 

Asked whether Biden was OK after the episode on Thursday, Sunak said: “Yes. I think he went to talk to the parachute jumper . . . he went to go and shake all their hands.”

The UK prime minister added: “They all landed and he was being very polite.”

Democrat campaigners have pointed out that footage shared by Biden’s critics on social media did not show the parachute jumper whom the US president was approaching when he walked away from his fellow leaders.

UK Prime Minister Rishi Sunak has suggested he and German Chancellor Olaf Scholz are hatching a plan to watch the Scotland vs Germany football match while attending the G7 summit in Italy.

The opening game of the Euro 2024 tournament, which Germany is hosting, could be shown on the margins of the meeting on Friday evening, Sunak indicated.

“I was talking to Olaf about it yesterday,” the UK prime minister told reporters, adding they were “trying to figure out” how it could be broadcast during the international gathering.

Sunak added that he had also discussed the matter with his Italian counterpart Giorgia Meloni, the host of the summit. “I said to Giorgia, we should try to figure out where we can put a TV somewhere around this thing this evening,” he said.

US consumer sentiment: The University of Michigan’s consumer sentiment index is forecast to report a preliminary reading of 72 in June, up from 69.1 in May. Last month’s reading showed overall sentiment at a six-month low, but a six-month high for expected inflation.

Fedspeak: Chicago Fed president Austan Goolsbee will participate in a fireside chat at the Iowa Farm Bureau Economic Summit. Fed governor Lisa Cook will deliver a speech at the 50-year celebration of the American Economic Association Summer Program in Washington.

Europe must become less “passive” in defending its economic interests and be prepared to use more tariffs and subsidies in areas where other countries have “unfair advantages”, former Italian prime minister Mario Draghi has said.

Draghi’s comments, coming only days after the EU announced sharply higher tariffs on Chinese electric vehicle imports, signal he is likely to favour a more interventionist industrial policy in a report he is due to deliver next month on Europe’s faltering competitiveness.

“We do not want to become protectionist in Europe, but we cannot be passive if the actions of others are threatening our prosperity,” Draghi said in a speech in Spain.

Shares in microcomputer maker Raspberry Pi jumped once again as retail trading began in London on Friday, in a fresh boost for the UK stock market. 

The group’s shares climbed 14 per cent on their first day of open trading, extending gains from earlier “conditional dealing” that began on Tuesday.

The current share price of 470p — an almost 70 per cent premium on the company’s initial public offering price — gives Raspberry Pi a market valuation of about £909mn.

Demand for the stock is a boost for a UK market struggling to attract interest from high-growth technology companies, which often prefer to list in New York. 

Japan’s securities watchdog has sought a penalty against the banking and brokerage units of Mitsubishi UFJ Financial Group after a probe found alleged unauthorised sharing of client information involving the sale of shares and merger deals.

On Friday, the Securities and Exchange Surveillance Commission recommended that the Financial Services Agency take “administrative action” — a phrase which often implies a business improvement order or a temporary suspension of operations — against MUFG Bank and the group’s two brokerage ventures with Morgan Stanley. The SESC did not clarify what type of administrative penalty it was seeking.

The SESC found violations of rules that prohibit sharing of non-public information between banks and brokerages without the consent of clients, between 2019 and 2023. 

The companies were not immediately available for comment.

The UK public’s expectations for inflation have fallen to the lowest level in nearly three years, according to official data that will provide welcome news for policymakers ahead of next week’s Bank of England interest rate decision.

In May, the average Briton expected the rate of price growth in the next 12 months to be 2.8 per cent, down from 3 per cent in February, according to a quarterly BoE survey published on Friday.

This is the lowest reading since August 2021, and well below the peak of 4.9 per cent in August 2022.

Rate setters will welcome the news as inflation expectations affect wage negotiations, a key factor in domestic price pressures, and consumer spending.

Big share price moves in Europe today include German defence company Rheinmetall, UK housebuilder Crest Nicholson and British supermarket chain Tesco: 

• Rheinmetall: Shares in the German defence company led losses on the region-wide Stoxx 600 index, falling 7.7 per cent after it agreed to take up to 100 employees from German tyremaker Continental in an effort to cover Rheinmetal’s “fast-growing personnel requirements” over the coming years. 

• Crest Nicholson: Shares in the UK housebuilder surged 7.5 per cent after it rejected a £667mn takeover offer from rival Bellway. The move follows Crest’s swing to a £30.9mn pre-tax loss in half-year results on Thursday, with the group warning it expected profits to be lower than forecast this year. Bellway’s shares, meanwhile, slipped 3.3 per cent in early trading.
  

  

• Tesco: Shares in the UK supermarket group rose 1.8 per cent on buoyant quarterly sales data.

European stocks slipped early on Friday after falling sharply in the previous session as the prospect of a far-right French government continued to rattle markets.

The region-wide Stoxx 600 fell 0.1 per cent, having on Thursday recorded its biggest one-day decline in two months. Germany’s Dax lost 0.2 per cent and London’s FTSE 100 was steady.

France’s Cac 40 fell 1 per cent, having on Thursday fallen to its lowest level in four months. Banks were the worst performers in early trading: Crédit Agricole fell 1.2 per cent, Société Générale fell 1.4 per cent and BNP Paribas fell 1.4 per cent.

The risk premium on France’s debt continued to surge on Friday as investor worries grew that President Emmanuel Macron’s centrist alliance could face a wipeout in upcoming snap elections. 

The gap between benchmark French and German yields rose to 0.77 percentage points in early trade on Friday, according to LSEG data, the highest level since 2017. The shift follows new projections suggesting only about 40 of Macron’s MPs would qualify for the second-round vote on July 7, with most of the 589-strong assembly looking poised to be a battle between France’s far right and leftwing blocs.  

Concerns in French markets “range from a stalling of the reform process, possible rating downgrades, to increasing concerns over talk of a break-up in the Euro area”, said Mohit Kumar, chief economist for Europe at Jefferies.

UK housebuilder Crest Nicholson has rejected a takeover offer from rival Bellway, in the third major deal push in the sector this year.

Bellway late on Thursday confirmed it had made an all-share offer for the smaller company following a report by React News. But despite a 19 per cent premium to its most recent share price, Crest Nicholson on Friday said the proposal “fundamentally undervalued Crest Nicholson and its future prospects”.

The struggle follows Barratt’s successful bid for Redrow earlier this year, a deal that would consolidate its position as the UK’s largest housebuilder. L&G is also marketing Cala Homes, a private home builder.

Hong Kong equities dropped on Friday while other Asian stock markets edged up following softer than expected US employment figures and producer price data.

The Hang Seng index shed 0.7 per cent, with Chow Tai Fook, one of the world’s largest jewellers, falling 9 per cent after the company reported disappointing earnings. Rising gold prices led to unrealised losses of HK$2.5bn ($320mn) as a result of short positions the company used as a hedge against holding large amounts of the precious metal.

Japan’s benchmark Topix led gains as it climbed 0.5 per cent following the Bank of Japan’s announcement to hold interest rates steady and scale back its purchases of government debt.

Tesco said on Friday that it was winning market share from other grocers “more than at any other time in the past two years” as it posted an increase in sales in its first quarter. 

Like-for-like retail sales rose 3.4 per cent to £15.3bn in the 13 weeks to May 25, driven by fresh food and clothing. 

Chief executive Ken Murphy said the business was “well positioned for the months ahead” and maintained its guidance for the full year. Customers were “switching to us from other retailers, shopping with us more often and with more in their baskets”. 

Tesco’s annual meeting with investors is later today.

Hong Kong shares of Chow Tai Fook, one of the world’s largest jewellers, fell more than 9 per cent on Friday after the company reported weak full-year earnings as a result of lossesbecause of volatile gold prices.

The company reported a profit attributable to shareholders of HK$6.5bn ($832mn) in the year ended March 2024, ahead of HK$5.4bn for 2023 but falling short of a Bloomberg consensus analyst forecast of HK$7.7bn.

Core operating profit was affected by “unrealised loss on gold loans arising from gold price volatility”, which the company said amounted to HK$2.5bn as of March 31.

The company also voiced concern over the impact of geopolitics on gold prices and supply.

EU employment data: The bloc publishes labour market figures for the first quarter.

Euro 2024: The football tournament kicks off in Munich with a game between the host nation and Scotland.

Superdry: Shareholders vote on proposed capital and restructuring measures.

Corporate results: Tesco releases its first-quarter trading statement.

The Bank of Japan said it would begin scaling back its ¥6tn ($38bn) monthly bond-buying programme, a critical milestone in unwinding its ultra-loose monetary policy.

The central bank said it would lay out a plan for reducing its bond purchases following discussions with market participants, saying the decision was “to ensure that long-term interest rates would be formed more freely in financial markets”.

The yen fell against the dollar after the announcement, with investors disappointed that the BoJ did not specify by how much it planned to reduce monthly purchases of Japanese government bonds.

In a widely-expected decision, the BoJ also announced it would hold rates steady between zero and 0.1 per cent.

Japanese equities rose ahead of the Bank of Japan’s interest rate announcement, leading major Asian stock indices during early trading on Friday.

The country’s benchmark Topix index rose 0.3 per cent, while the exporter-oriented Nikkei 225 shed 0.2 per cent. The BoJ is expected to hold interest rates at 0 to 0.1 per cent on Friday.

Other Asian equity markets were more muted, with the benchmark Hong Kong and mainland Chinese indices each dropping 0.5 per cent.

In currency markets, the South Korean won and Japanese yen weakened 0.2 per cent against the dollar to Won1,378 and ¥157.27, respectively.

Events: The G7 summit in Italy concludes. South Korea’s President Yoon Suk Yeol travels to Uzbekistan following a three-day visit to Kazakhstan.

Central banks: The Bank of Japan announces its interest rate decision. It is expected to hold rates at a range of 0 to 0.1 per cent, but investors will be watching for signs of reduced government bond purchases.

Economic data: Sri Lanka releases first-quarter gross domestic product figures and India announces wholesale price index figures for May.

Corporate updates: Chinese food delivery group Meituan and Japanese robotics powerhouse Keyence hold their annual meetings. Indian vehicle manufacturer Mahindra & Mahindra hosts an investor day.

US stocks climbed to record highs for the fourth straight session after data showed inflation fell to 3.3 per cent in May, raising expectations of early interest rate cuts.

The S&P 500 closed 0.2 per cent higher on Thursday, despite 60 per cent of stocks in the benchmark index declining on the day. The tech-focused Nasdaq Composite rose 0.4 per cent, as four Magnificent Seven stocks rose.

The S&P 500 most recently had a four-day winning streak earlier this month, but it was the Nadsaq’s first such streak since late March.

The steady gains in US equities pushed Wall Street’s Vix index — the so-called “fear gauge” — to its lowest level in three weeks.

Small-cap stocks performed worse, with the Russell 2000 falling 0.9 per cent.

Treasuries prices rose, pushing down yields. The yield on the two-year note was down 0.05 percentage points to 4.70 per cent, while the yield on the 10-year note fell 0.05 percentage points to 4.25 per cent.

Donald Trump told a gathering of US chief executives on Thursday that he would slash taxes and regulations while pushing up tariffs, as he tried to win backing for his populist economic agenda from the country’s business leaders.

Trump made the remarks at a Business Roundtable event in Washington, which was attended by about 100 corporate leaders, including Citigroup’s Jane Fraser, Apple’s Tim Cook, Bank of America’s Brian Moynihan and longtime JPMorgan Chase boss Jamie Dimon.

The meeting came just weeks after Trump became the first former president to be convicted of a felony when a jury found him guilty in a New York “hush money” trial. He also met Republicans on Capitol Hill.

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Tesla shareholders voted in favour of chief executive Elon Musk’s $56bn pay and to reincorporate the electric-car maker in Texas, handing significant victories to him as he seeks to reassert his control over the company.

The result, announced at Tesla’s annual meeting in Austin on Thursday, will strengthen the company’s hand as it attempts to overturn a January decision by a Delaware court to void the award — the largest in US history — over concerns about its size and the independence of the board.

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Adobe upgraded its full-year sales and profit outlooks, sending shares in the Photoshop software maker surging in extended trading.

The company forecast full-year revenue between $21.4bn and $21.5bn, raising the low end of its previous guidance. It now expects adjusted earnings of between $18 and $18.20 a share, compared with the $18.03 a share analysts polled by a Reuters forecast.

“Our highly differentiated approach to [artificial intelligence] and innovative product delivery are attracting an expanding universe of customers,” Adobe chief executive Shantanu Narayen said.

Adobe reported $5.3bn in revenue in the three months ending in May, a record high. Both sales and net income in the quarter increased year on year and exceeded consensus estimates.

Shares in the company rose more than 14 per cent in after-hours trading on Thursday.