Global financial markets remained in focus as investor sentiment continued to be shaped by artificial intelligence enthusiasm, resilient economic data, and geopolitical developments. U.S. equities reached fresh milestones, while investors also monitored inflation trends, bond yields, and global trade discussions.
U.S. stocks extend gains on AI momentum
Technology stocks once again led Wall Street higher on Thursday, helping major U.S. indices finish at record levels. The Dow Jones Industrial Average climbed back above the 50,000 mark, while the S&P 500 and Nasdaq both closed at new highs.
The rally was largely fuelled by continued excitement surrounding artificial intelligence and semiconductor demand. Nvidia moved closer to a $6 trillion market valuation after reports suggested renewed approval for Chinese firms to purchase its H200 AI chips.
AI infrastructure company Cerebras also made a strong market debut following a blockbuster IPO, reinforcing investor appetite for AI-related businesses. Meanwhile, Cisco Systems jumped sharply after announcing job cuts and raising its annual revenue outlook, further supporting positive market sentiment.
Investor confidence was also supported by resilient U.S. consumer spending data, with retail sales rising for a third consecutive month despite higher inflation and fuel costs. Markets interpreted the figures as evidence that households remain willing to spend, underpinned by a solid labour market and stronger tax refunds.
However, some analysts cautioned that the rally could leave equities vulnerable to a correction as enthusiasm surrounding record highs draws more investors back into the market.
Outside equities, bond yields rose as the session progressed, particularly at the short end of the curve, while the U.S. dollar strengthened and gold prices eased slightly.
Latest market and economic update
Asian equities fell on Friday as inflation concerns and surging Treasury yields dampened sentiment. MSCI Asia ex-Japan dropped 1.2%, with Japan, China, Hong Kong and South Korea all weaker amid profit-taking and expectations of tighter monetary policy across the region, leading to broad declines in regional risk assets.
U.S. equity futures were lower this morning after Washington said recent talks with China did not address semiconductor export controls, tempering hopes for expanded chip sales to Beijing. Nasdaq futures led declines, while Nvidia slipped in after-hours trading. Investors also remained focused on ongoing Trump-Xi discussions covering trade, Taiwan and geopolitical tensions.
European equities closed sharply higher for a second session on Thursday, with the STOXX 50 up 1.2% and STOXX 60 gaining 0.7%, supported by earnings and easing geopolitical concerns. Positive U.S.-China summit rhetoric lifted sentiment, while tech led gains on AI demand hopes. ASML rose 3%, Infineon 5.8%, and Siemens added 2.6%.
The U.S. dollar strengthened on Thursday, with the dollar index rising 0.3% as investors increased expectations for further Federal Reserve rate hikes following firm inflation and retail sales data. Against the euro, the greenback gained 0.4%, pushing EUR/USD down to around 1.1670. Markets also monitored Trump-Xi talks covering trade, artificial intelligence and Iran.
Oil prices rose in Asian trading on Friday, leaving Brent and WTI on course for weekly gains of up to 7%, as disruption around the Strait of Hormuz continued to support supply concerns. Investors also monitored Trump-Xi talks on energy security and Iran, while falling U.S. crude inventories and IEA supply warnings added further support.
Consumer spending remains resilient
US retail sales rose 0.5% in April, matching forecasts, though gains were partly driven by inflation linked to higher energy prices amid conflict with Iran. Gasoline surged 12.3%.
While tax refunds have supported spending, they are fading and lower-income households are drawing them down faster, raising concerns about a potential slowdown in consumer demand.
Fed expectations remain in focus
Yardeni Research says the Fed’s easing bias is fading and may shift to tightening as inflation and labour strength persist. It sees no rate cuts in 2026, citing reaccelerating inflation, strong jobs and persistent price pressures.
PPI rose sharply, with freight and services costs surging, prompting expectations of a June FOMC shift and higher Treasury yields.
Semiconductor shares remain in focus
Nvidia has reportedly gained U.S. approval for around 10 Chinese firms, including Alibaba, Tencent, ByteDance and JD.com, to purchase its H200 AI chips, alongside distributors such as Lenovo and Foxconn. Each may buy up to 75,000 units. However, no orders have been finalised, as Chinese firms await clearer guidance from Beijing.
Applied Materials forecast third-quarter revenue above expectations after reporting record sales, driven by strong demand for AI and data-centre infrastructure. The semiconductor equipment maker said advanced AI chip production continued supporting investment in manufacturing technologies. Revenue rose 11% year-on-year to $7.91 billion, while earnings beat forecasts.
Wolfe Research reiterated a bullish outlook on AI chip equities, raising estimates for Nvidia and Broadcom and maintaining Outperform ratings on Nvidia, Broadcom and Marvell. It named Nvidia its top pick, citing strong hyperscaler AI spending driven by agentic AI demand. It said Nvidia’s underperformance reflects limited 2027 revenue visibility.
Macquarie raised its price target on SK Hynix by 61%, citing a prolonged memory shortage and surging HBM prices boosting earnings. It expects tight DRAM supply, strong AI-driven demand and higher 2027 contracts. The broker also highlighted long-term supply deals, share buybacks and a planned US ADR listing as additional catalysts.
European equities close higher
European equities closed sharply higher for a second session on Thursday, supported by earnings and easing geopolitical concerns.
The STOXX 50 gained 1.2%, while the STOXX 60 advanced 0.7%. Positive rhetoric surrounding the U.S.-China summit lifted sentiment, while technology shares led gains on optimism around AI demand.
ASML rose 3%, Infineon gained 5.8%, and Siemens added 2.6%.
Key European movers
Telefónica shares rose after first-quarter 2026 results beat expectations for revenue, adjusted EBITDA and cash flow, supported by strong performance in Spain and Brazil. Margins improved and churn hit record lows. Despite weaker performance in Germany, the group reaffirmed full-year guidance and confirmed dividend plans, while debt levels continued to decline.
Burberry shares fell after the group suspended its dividend, issued weaker-than-expected wholesale guidance and flagged a larger currency headwind. Full-year gross margin and adjusted operating profit beat estimates, supported by stronger pricing and cost control. Sales improved across regions, but weakness in EMEIA and a cautious 2027 outlook weighed on investor sentiment.
Renault CEO François Provost proposed a 10-year freeze on new EU car regulations to improve affordability and support Europe’s automotive industry. He argued that manufacturers face excessive regulatory pressure and a “tsunami of regulations”. He said a pause would allow firms to focus on electrification and help revitalise the European car market.
LVMH agreed to sell the Marc Jacobs brand to WHP Global, ending a nearly 30-year partnership since its 1997 acquisition. Marc Jacobs will remain creative director after completion. The deal expands WHP’s fashion portfolio alongside brands such as Vera Wang and rag & bone, with closing expected by year-end subject to approvals.
Equities on the move
Several companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news.
Positive performers
- Cisco Systems jumped after announcing job cuts and raising its annual revenue outlook.
- Telefónica rose following stronger-than-expected quarterly results and improved margins.
- Starbucks was upgraded to Buy by TD Cowen, which raised its price target to $120 and highlighted improving profitability, margin recovery, cost savings and stronger U.S. same-store sales. The firm also lifted EPS forecasts for 2026–2028.
- SK Hynix gained after Macquarie raised its price target on expectations of prolonged AI-driven memory demand and tight supply conditions.
Stocks facing pressure
- Apple faced cautious commentary from KeyBanc, which said valuation levels appear stretched while spending data signalled weakening U.S. hardware demand. Indexed spending fell 16% month-on-month in April and annual growth turned negative. While near-term revenue forecasts remain above consensus, analysts questioned Apple’s growth outlook, citing slowing upgrades, weaker subsidies and elevated valuation levels.
- Burberry declined following weaker wholesale guidance, dividend suspension, weakness in EMEIA and concerns surrounding its cautious 2027 outlook.
Upcoming economic data
Today’s U.S. data includes the NY Empire State Manufacturing Index, followed by April industrial production, manufacturing output and capacity utilisation figures, plus the NOPA crush report and Baker Hughes rig counts.
Overall activity data covers factory momentum and energy supply indicators. The corporate earnings calendar is quiet, with no major company results scheduled.
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