Stellantis will shift the focus of its capital allocation strategy to efficient investments and shareholder returns, and will target a higher dividend in 2025. The Netherlands-based maker of Jeep, Dodge and a dozen other brands said Thursday that it will set a liquidity target of 25% to 30% of revenue in the medium term to support shareholder rewards. For 2025, it will target the upper end of its 25%-30% dividend policy compared with 25% in recent years, the company said. The update came ahead of an investors’ meeting in Michigan. Stellantis still expects lower profitability in the first half, echoing previous warnings. The firm expects an adjusted operating income margin at 10%-11%, compared with a 14.4% margin in the first half of last year. The company expects an improvement in the second half on new model launches, cost-cutting measures and improvements in working capital.

The Switzerland market ended moderately lower on Thursday amid concerns the Federal Reserve will likely cut interest rate only once this year, as against earlier expectations of two or three reductions. The benchmark SMI ended down 71.60 points or 0.59% at 12,095.99. The index touched a high of 12,175.52 and a low of 12,072.74 in the session. Sika ended down 3.13%. UBS Group ened lower by about 2.5% and Straumann Holding drifted down 2.1%. VAT Group, Julius Baer, Richemont, ABB, Sonova, Swiss Re and Partners Group lost 1 to 2%. SIG Group, Lonza Group, Geberit, Holcim and Givaudan also ended notably lower. Sandoz Group and Roche Holding gained 1.26% and 1.19%, respectively. Swisscom, Lindt & Spruengli and Logitech International posted modest gains. On the economic front, data from the Federal Statistical Office said Switzerland's producer and import prices continued to decline in May, dropping by 1.8% year-on-year, the same as in the previous month. Prices have been falling since May 2023. The producer price index dropped 1.3% annually in May, and import prices registered a decrease of 2.9%. On a monthly basis, producer and import prices fell 0.3% in May versus a 0.6% rise in the prior month. It was the first decrease in four months.

Europe
European stocks closed lower on Thursday on concerns the Federal Reserve might not reduce interest rates more than one time this year despite soft consumer price and producer price inflation data. The Fed held interest rates steady but cautioned that inflation is still too high to start cutting policy rates. Closer home, European Central Bank Governing Council member Joachim Nagel warned that consumer price growth in the euro zone is proving stubborn and that he and his colleagues won't simply lower borrowing costs automatically. Governing Council Madis Muller is due to speak later in the session. In economic releases today, Eurostat said in a report that industrial output in the euro zone declined by 0.1% in April compared to March. Elsewhere, German wholesale prices continued to decline in May, albeit at a slower pace, Destatis reported. Wholesale prices registered an annual decline of 0.7% in May, which was slower than the 1.8% decrease in April. The pan European Stoxx 600 dropped 1.31%. The U.K.'s FTSE 100 ended down 0.63%, Germany's DAX ended down 1.96%, and France's CAC 40 lost 1.99%. Switzerland's SMI ended 0.59% down. Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Netherlands, Norway, Poland, Portugal, Spain and Sweden ended notably lower. Shares of automakers BMW, Renault, Mercedes Benz and Volkswagen fell today after the European Union announced a hike in tariffs on electric vehicles imported from China, potentially paving a way to trade war.

United States
The artificial-intelligence trade and Tesla powered the Nasdaq and the S&P 500 to fresh records Thursday, while the blue-chip Dow Jones Industrial Average continued to sputter. The mixed market came a day after the Federal Reserve indicated it is in no hurry to reduce interest rates despite Labor Department data this week that showed easing inflation for consumers and producers. Though Wall Street has dialed back expectations for the number and timing of rate cuts, traders have been bidding up riskier assets in anticipation of lower borrowing costs. The tech-laden Nasdaq Composite rose 0.3%. The S&P 500 added 0.2%, paced by a 1.4% rise in information technology stocks. The Dow Jones Industrial Average shed 0.2%, or 65 points, its third straight daily decline. Among individual stocks, Broadcom, which produces chips and software, led the S&P 500 gainers, rising 12% to close at a record of $1,678.99. Broadcom shares have more than tripled over the past two years, thanks to booming sales tied to the development of artificial intelligence. Late Wednesday, it said sales for its fiscal quarter ended May 5 were 43% higher than a year earlier and beyond Wall Street’s expectations. The Palo Alto, Calif., firm also said it would split its stock 10-for-1 next month in an effort to make its shares more affordable for investors and employees. Split stocks tend to outperform the broader market following their division, thanks to the wider pool of buyers for shares without a comma in the price. Rival chip-maker Nvidia split its stock at the end of last week. Shares are up 7.2% since, including a 3.5% gain Thursday. Super Micro Computer, another chip maker, climbed 12% Thursday, edging out Broadcom to pace the S&P 500 higher.

Asia
There was no uniform trend on the Asian stock exchanges on Friday. While prices on the Chinese stock exchanges largely crumbled, the Nikkei index in Tokyo rose significantly following the Bank of Japan's monetary policy meeting. The central bank left the key interest rate at the extremely low range of 0.0 to 0.1 per cent and did not announce any plans to raise interest rates. It merely intends to reduce its bond purchases somewhat, although the details will not be finalised until the next meeting in July.

Bonds
U.S. Treasury yields also declined for a third day in a row. The yield on the benchmark 10-year note slipped to 4.239%, down from 4.294% on Wednesday. Yields fall as prices rise.

Analysis
UBS raises Ionos target to EUR 23.80 (23) – Neutral
UBS lowers 1&1 target to 20.50 (21.40) EUR – Buy
JPM lowers Deutsche Lufthansa target to EUR 5.60 (5.70) – Underweight

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