Weekly market commentary

This week equity markets have been driven by short‑term easing in macro pressures that improved risk appetite into key earnings. A key macro impulse came from a sharp fall in oil prices, with Brent Crude oil down around 4%, on renewed optimism around a potential US–Iran agreement, alongside a pullback in sovereign yields led by lower inflation readings from the UK. After a large rise in yields last week, UK gilt yields fell by approximately 10 basis points after the lower than expected inflation reading for April and US 10‑year Treasury yields fell in concert by 8 basis points. This combination supported an equity rally, with the S&P 500 up 1.1% on the day, the Nasdaq up 1.5%, and semiconductor stocks outperforming ahead of major technology earnings.

Against this macro backdrop, NVIDIA earnings became the focal point for assessing whether fundamentals could extend the rally. NVIDIA reported 85% year on year revenue growth, with quarterly sales of $81.6bn, gross margins of around 75%, and guidance for current quarter revenue of roughly $91bn versus an $87.4bn consensus. Despite these very strong headline numbers, the market reaction was described as mixed. NVIDIA shares fell about 1% in post market trading, following a strong run up beforehand, highlighting that expectations going into the print were already elevated. The results validated that AI linked earnings momentum remains intact, but they also showed that perhaps strong growth alone is no longer sufficient to push certain stocks higher after substantial pre-positioning.

Globally, however, NVIDIA’s earnings still carried important thematic weight, as the earnings release led to positive spillovers into Asian equity markets, particularly in Japan and Korea, where stocks rallied on both the earnings confirmation and management commentary around longer‑term upside in physical AI and robotics. However, a weak spot in Asia was China, with weaker than expected retail sales, industrial production and some disappointing earnings leading to the MSCI China falling by 3% over the week.