Morning wrap (29.05.2025)

Wall Street closed in the red yesterday ahead of Nvidia’s earnings report (S&P 500: -0.56%, DJIA: -0.58%, Nasdaq: -0.51%, Russell 2000: -1.08%). However, results confirming strong demand for AI are driving a 1.3% rebound in U.S. index futures.

Nvidia (NVDA.US) is gaining nearly 5% in after-hours trading following a strong earnings release. In Q1 2025, the company's revenue rose 69% year-over-year to $44.1 billion, while EPS beat Wall Street consensus ($0.81 vs. $0.73 expected ). The company forecasts an increase in gross margin from 61% to 72% in Q2.

The U.S. Court of International Trade unanimously blocked most of the tariffs introduced by Donald Trump, ruling they were illegally enacted through emergency law. The verdict mainly concerns the 10% global tariff, China tariffs, and the so-called fentanyl tariffs (on China, Canada, and Mexico). The only path to re-validate the tariffs would be a successful appeal by Trump's administration.

Minutes from the latest FOMC meeting, released yesterday, confirm that the Fed is in a good position with current interest rates to respond to any risk factors that may emerge in future data. The risk of sticky inflation is elevated due to U.S. trade policy, whose scale and uncertainty have been weighing on the dollar.

The positive signals from tariffs and Nvidia sparked euphoria in Asia-Pacific markets. The biggest gains are seen in South Korea (Kospi: +1.8%), Japan (Nikkei 225: +1.67%), and China (HSCEI: +1.3%). Australia is also in the green (S&P/ASX 200: +0.2%), while India saw a slight correction (Nifty 50: -0.1%).

Some of the biggest gains are being recorded by Chinese processor-related stocks after the Trump administration instructed key semiconductor and electronics suppliers to reduce shipments to China.

Forex market: The U.S. dollar is strengthening against all G10 currencies following news of the tariff ruling (USDIDX: +0.43%). The biggest losses are seen in traditional safe-haven currencies: the Swiss franc (USDCHF: +0.68%), the yen (USDJPY: -0.7%), and the euro (EURUSD: -0.43% to 1.124).

Commodities: The tariff ruling is also supporting oil, which has recently been under pressure due to oversupply amid global economic concerns. Brent and WTI futures are extending gains by 1.5% and 1.6%, respectively, while NATGAS futures are also in the green (+0.45%). Gold, however, is correcting (-0.6% to $3,267 per ounce).

Crypto market: Broad optimism is visible. Bitcoin is up 0.3% to $107,700, Ethereum up 3.6% to $2,730. Gains are also seen in contracts for Sushi (+4.8%), Apecoin (+3.8%), Dogecoin (+2.5%), Polygon (+2.3%), and Chainlink (+1.1%).