Morning Wrap: Nvidia and Microsoft are electrifying the markets this morning ⚡

🌍 Geopolitics

• The U.S.-Iran conflict is entering its fourth month with no breakthrough in sight. Trump said he is "in no hurry" to reach an agreement and warned that military action could resume if talks break down. On Truth Social, he urged politicians to be patient, assuring them, "It will all end well."

• Reports of Iranian President Pezeshkian’s resignation sent shockwaves through the markets. He reportedly informed the Supreme Leader that the IRGC had taken control of decision-making, rendering the presidency a ceremonial role. Iranian state media dismissed the report as “foreign propaganda,” but the markets took the news seriously—since the U.S. had been negotiating with Iran’s civilian Foreign Ministry, which may not have had the IRGC’s mandate, any agreement is now in question.

• The U.S. and Iran are accusing each other of new strikes. The U.S. military carried out "self-defense" strikes against Iranian radar sites and drones, and Iran responded with an attack on an airbase. Rubio spoke with Lebanese President Aoun and Netanyahu about “gradual de-escalation,” but the US claims that Hezbollah blocked the agreement on Tehran’s orders. Another attempt to shoot down a ballistic missile near the Ali Al Salem base in Kuwait has been reported.

• Strait of Hormuz: The U.S. Navy quietly escorted about 70 commercial vessels over a three-week period, an average of three per day—compared to the pre-war norm of over 100 per day. The ships sailed "under the radar." This is a managed, minimal flow, not a return to normal trade.

📊 Economy and Central Banks

• ECB's Schnabel signals rate hikes. Inflation caused by the Iran conflict is "too widespread to ignore" — it has already spread beyond energy to the entire supply chain. Schnabel declined to specify an upper limit on the number of hikes and added that the ECB will be data-driven. EUR/USD is down slightly to 1.1651 (-0.05%).

• Fed: Markets are already pricing in rate hikes, not cuts. Powell warned on Sunday against the "politicization of the Fed," while Kashkari noted that even if the Strait of Hormuz were to reopen, supply chains and inflation could normalize much more slowly than the market expects. Speeches by Logan, Hammack, and Daly are scheduled for this week. The key NFP report is set for Friday, June 5—forecast: 85,000 new jobs, unemployment at 4.3%.

• Japan: Q1 capex came in at 0.0% y/y (vs. an expected +4.0%), raising the prospect of a downward revision to GDP. Japan’s Manufacturing PMI fell to 54.5 in May, while production costs reached a 32-month high. BOJ Governor Ueda will speak on Wednesday—the market is looking for signals regarding a rate hike in June, though there is no consensus yet within the BOJ.

• China: The Caixin/S&P Global Manufacturing PMI fell to 51.8 in May (from 52.2 previously), while the official PMI dropped to the 50-point mark as export orders contracted. Beijing has further tightened regulations on foreign investment to limit the transfer of technology and data.

📈 Stock markets – contracts and sentiment

• S&P 500 futures +0.29%, Nasdaq 100 futures +0.57%  — Wall Street kicks off June at record highs. The S&P 500 has posted nine consecutive weeks of gains—its longest streak since late 2023—and rose 5.2% in May. The Nasdaq rose more than 8% in May.

• The Q1 earnings season was one of the strongest in years. Approximately 85% of S&P 500 companies beat estimates (5-year average: 78%), and earnings exceeded expectations by 16.7%—more than double the historical average of 7.3%.

🌏 Asia

• South Korea: The KOSPI jumped 1.31% to a record high.  Semiconductor exports rose to record levels in May (the highest increase in total exports in over four decades). Samsung Electronics gained 9.5%, with its market capitalization exceeding 2,000 trillion won—driven by expectations surrounding Nvidia CEO Jensen Huang’s meetings with Korean officials.

• LG Electronics rose 28% following reports that Huang will meet with LG Group Chairman Koo Kwang-mo to discuss partnerships in AI and robotics. Nvidia has scheduled a "Korean Partner Night" during COMPUTEX in Taipei; SK Hynix and other companies will also be in attendance. Nvidia is set to supply over 260,000 of its most advanced chips to Korean companies—including Samsung and Hyundai Motor.

• Nikkei 225 +0.17%, Hang Seng +0.73%, CSI 300 -0.32%, ASX 200 -0.21%, KOSDAQ -1.58%.  Mixed sentiment in the region — caution over the lack of a breakthrough in U.S.-Iran negotiations. SoftBank Group +5% following the announcement of a €45 billion investment in AI infrastructure in France over five years.

💱 Currencies

• AUD is by far the strongest currency of the day — The Currency Strength Meter (7:10 a.m. CEST) shows the AUD well ahead of the GBP, USD, and EUR. The NZD and CHF are clearly losing ground.

• The US dollar remains stable after a weekly decline.  Dollar Index (DXY) +0.04% to ~99.05, EUR/USD -0.05% (1.1651), USD/JPY +0.07% (159.44), GBP/USD +0.08% (1.3461). The yen is weak — USDJPY is hovering around 159.48.

• EUR/PLN +0.07% (4.2293), USD/PLN +0.10% (3.6297). The zloty remains stable despite geopolitical tensions.

🛢️ Commodities

• Oil prices surge.  WTI +1.69% to $89.52, Brent (OIL) +1.23% to $92.95 — following reports of further Israeli military attacks on Lebanon and tit-for-tat strikes between the U.S. and Iran. Meanwhile, in May, oil recorded its largest monthly decline since April 2025 (nearly -17%), when hopes for a deal were high.

• Gold -0.63% (US$4,516.69/oz). Silver up slightly (+0.12%, US$75.58/oz). Natural gas +1.83% to US$3.34.

🏢 Companies

• Nvidia + Microsoft = "a new era for PCs". As early as next week, at COMPUTEX and Microsoft Build, the first Windows PCs powered by Nvidia (ARM) chips are set to debut. Manufacturers: Surface, Dell. Microsoft is also developing software for local AI agents.

• Nvidia is officially entering the PC processor market.  During his keynote at COMPUTEX in Taipei, Jensen Huang unveiled the new N1X chip (ARM architecture, manufactured by MediaTek) and the RTX Spark superchip—a combination of the Blackwell GPU and N1X CPU with 128 GB of unified memory, manufactured using TSMC’s 3-nm process. Huang compared this change to the invention of the smartphone: “This is the first complete reinvention of the PC in 40 years.”

• Nvidia also announced that its Vera data center CPU is now in full production. Vera generates tokens 1.8 times faster than x86 and is key to "AI factories" — it supports agent inference, which requires general-purpose CPU computing rather than just parallel GPU processing. Huang called Vera the company’s “new main growth engine.” The first customers include OpenAI, Anthropic, SpaceX/xAI, Dell, Oracle, and CoreWeave — availability starting in fall 2026.

• Samsung has sent samples of its HBM4e chips to customers, beating its competitors to the punch. Nvidia has closed the export loophole: The U.S. Department of Commerce has blocked the flow of Nvidia and AMD chips to Chinese companies via overseas subsidiaries—hundreds of thousands of advanced chips could have made their way to China through this channel over the past year.

• Berkshire Hathaway is acquiring Taylor Morrison for $8.5 billion—all in cash—representing a 24% premium over Friday’s closing price; the transaction is expected to close in the second half of 2026.

🔐 Cryptocurrencies

• Bitcoin -0.52%, trading at around $73,293. 

🔑 What should you watch out for today?

• U.S. ISM Manufacturing PMI (afternoon release) (forecast: 53.0 vs. 52.7 previously) — the first significant macroeconomic release of the week.

• Any news regarding the U.S.–Iran situation could cause sharp fluctuations in oil prices and financial markets — analysts say a "sell the news" scenario following a potential agreement is a real possibility.

• Shares of Nvidia, Microsoft, Samsung, and LG serve as a barometer of sentiment surrounding AI and tech during COMPUTEX and Jensen Huang's meetings.