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Good evening,
Wednesday was quiet in regards to trade war headlines and equities closed lower by 0.5% across the board with every US sector either weaker or flat on the day with no significant moves among S&P 100 index members. Today’s negative catalyst was the demand by the White House to US companies that provide software used to design chips to stop selling to Chinese groups.
Traders waited for signs from Nvidia’s Q1’25 earnings report after the close. Several software and cloud data companies reported after the close including Salesforce, Veeva Systems and Agilent with all beating estimates and trading higher in after-hours. S&P 500 futures edged higher following these results. Synopsys (mcap $71bn) shares plunged 10% during the session but partially recovered in after hours trading when it reported results.
In earnings, Nvidia (mcap $3.3tn) reported a 69% YoY (and +12% QoQ) revenue increase to $44bn and a net income of $19bn (EPS +$0.96), 26% higher than a year ago as the giant chipmaker delivered an upbeat outlook for Q2 despite China’s slowdown with sales reaching ~$45bn. Data-center revenue soared 73%. Shares gained 3% after ending 0.5% lower during the day session.
On the macro front, bond yields advanced 3bp across tenors with 10-yr UST closing at 4.48% and 30-yr Treasuries at 4.98%. In the past four weeks the long end of the yield curve has shifted up by 33bp while six months Bills have added 13bp in the same period. The $ appreciated modestly with the DXY index moving upwards towards the 100 pt level. The $ remains 8% weaker this year against majors.
In commodities, crude oil edged slightly higher on the day of an uneventful online OPEC+ meeting, during which members agreed to establish a mechanism for setting production baselines for 2027. Another meeting will take place on Saturday to decide on potential output adjustments for July. It was a volatile day for US Nat Gas prices (July) which rallied earlier in the session on the back of reduced production figures but plunged towards the close to end 5% lower due to a large fund liquidation ahead of the June expiration.
Economic data: the MBA 30-yr mortgage rate reached 6.98%, the highest since January. The 5-yr Treasury auction was priced at 4.07%, marginally higher than the previous auction.
The Fed Minutes showed policy makers were worried about ‘long-lasting’ effect of the market turmoil generated by Trump’s trade war and the weakening of America’s safe-haven status.
Corporate deals: Cantor Fitzgerald is acquiring UBS’s $11bn AUM hedge fund unit O’Connor but details have not been released yet. (Reuters)
In secondary equity listings, Canadian energy co Emera Inc (EMA, mcap $13bn) began trading on the NYSE. In upcoming IPOs, Chinese fast-fashion giant Shein is considering a listing in Hong Kong over London after initially planning to land in New York 2-yrs ago. (FT)
Tomorrow will be a busy day for Fed officials’ speeches, the central banks of South Africa (25bp cut to 7.25% exp) and Korea (25bp cut to 2.5% exp) hold policy meetings.
See you tomorrow.
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