U.S. Markets React Positively to April Inflation Data
Nasdaq Leads the Charge with Tech Stocks at the Forefront
U.S. equity markets closed mixed on Tuesday, reflecting investor reactions to April’s Consumer Price Index (CPI) report, which showed a softer-than-expected rise in inflation. The Nasdaq Composite surged by 1.6%, led by a 5.6% jump in Nvidia’s stock following a major AI collaboration announcement. The S&P 500 added 0.7%, while the Dow Jones Industrial Average declined by 0.6%, weighed down by a sharp 18% drop in UnitedHealth Group after the company suspended its full-year outlook and announced leadership changes.
Inflation Trends Hint at Possible Rate Cuts
Inflation growth moderated in April, with headline CPI rising just 0.2% month-over-month and 2.3% year-over-year, the lowest annual increase since February 2021. Core inflation also decelerated, bolstering expectations for Federal Reserve rate cuts later this year. Although recent tariffs have yet to influence prices significantly, economists anticipate lagged effects in the coming months.
Meanwhile, bond yields ticked slightly higher, with the 10-year U.S. Treasury yield edging up to 4.48%, indicating cautious optimism in fixed income markets.
Global Market Overview
Asia Remains Mixed Amid BOJ Speculation and Trade Optimism
Asian equities presented a mixed picture on Wednesday. Gains in Hong Kong and South Korea were fuelled by enthusiasm around tech developments and a cooling of U.S.-China trade friction. Japan, however, saw losses as the yen strengthened, amid growing speculation that the Bank of Japan might tighten policy. Chinese stocks remained flat, with reduced trade tensions dampening hopes for additional stimulus, and other regional markets stayed largely subdued.
European Equities Edge Higher
European stock markets advanced modestly on Tuesday, with the STOXX 50 up by 0.4% and the broader STOXX 600 marginally higher, buoyed by easing geopolitical tensions. Automakers including Volkswagen, BMW, and Stellantis posted strong gains of 3% to 4.5%, while Munich Re dropped 4.5% after underwhelming Q1 results.
Commodities and Currency Movements
Oil Retreats After Inventory Surprise
Oil prices slipped during Asian trading hours, ending a four-day winning streak. Investors digested a surprise rise in U.S. crude inventories, while geopolitical developments such as President Trump’s Middle East tour, renewed Iran sanctions, and his pledge to lift sanctions on Syria contributed to supply concerns.
Dollar Weakens on Easing Inflation
The U.S. Dollar Index hovered near 100.9 following a near 1% decline, attributed to weaker inflation readings and limited tariff impact. The EUR/USD pair climbed to 1.1197, reflecting shifting expectations for monetary policy as inflation cools and trade tensions ease.
Key Corporate Developments
AI Partnerships and Strategic Deals Take Centre Stage
Nvidia, AMD, and Qualcomm unveiled large-scale AI infrastructure partnerships in Saudi Arabia during President Trump’s Gulf tour, forming part of a $600 billion investment commitment. These deals are being spearheaded by Humain, a Saudi-backed AI initiative aiming for global AI leadership.
Robinhood is entering the Canadian market through a C$250 million acquisition of WonderFi Technologies, gaining regulated crypto platforms Bitbuy and Coinsquare. The deal unlocks a potential $250 million in annual revenue and enhances Robinhood’s presence with strategic licences and crypto capabilities.
eToro priced its IPO yesterday and will list on the NASDAQ under the ticker “ETOR”, aiming to raise up to $500 million by offering 10 million shares. The IPO was 10 times oversubscribed, with an equal split between the company and selling shareholders. BlackRock committed to purchase up to $100 million worth of shares.
Company Earnings and Strategy Shifts
Sony expects a 0.3% rise in operating profit to 1.28 trillion yen, despite a 100 billion yen hit from U.S. trade tensions, and plans to spin off its financial division in October to focus on entertainment. Last year’s 16% profit jump was driven by strong PlayStation 5 sales, with further growth expected from new titles like Ghost of Yotei.
UnitedHealth has suspended its financial forecast due to surging medical costs and CEO Andrew Witty’s resignation. Former CEO Stephen Hemsley will return as the company navigates operational and Medicare-related cost challenges. UnitedHealth anticipates resuming growth in 2026.
JBS reported a 78% increase in Q1 net profit, with net revenue rising 28% to 114.1 billion reais, driven by strong poultry and pork sales in Brazil and the U.S. Despite global trade concerns, the company saw minimal impact, reporting record-high EBITDA margins in its Seara and Pilgrim’s Pride divisions, although U.S. beef market challenges persisted.
Softbank reported stronger-than-expected annual net income of 1.15 trillion yen, supported by AI-driven tech valuations. It also posted 517 billion yen in net profit for the March quarter, bolstered by telecom divisions and investment gains, though partially offset by Vision Fund losses.
Airbnb rolled out Airbnb Services, Airbnb Experiences, and a newly designed app to enhance travel with hotel-style features and local activity offerings. Shares rose nearly 3% on the announcement.
Peloton was upgraded by Macquarie to Outperform, with a raised price target of $10 following $624 million in Q3 revenue and better-than-expected subscriber growth. The firm cited improved EBITDA, free cash flow, and a stronger customer base.
Caterpillar was upgraded by Baird to Outperform, with a $395 price target, supported by improving fundamentals and easing trade tensions. Despite a projected 18% earnings drop this year, analysts see a recovery in late 2025 driven by stabilising dealer sales and lower inventories.
United Airlines, American Airlines, and Delta Air Lines were all upgraded by Bernstein, citing robust Q1 earnings, strong demand for premium and international travel, and improved capacity management.
Raymond James initiated coverage on Super Micro Computer with an Outperform rating and a $41 price target, citing its role in AI infrastructure and domestic manufacturing. Despite concerns about margins and valuation, the firm sees a bullish case with fair value at $88.
Barclays downgraded Schneider Electric to Equal Weight, lowering its price target to €235 due to increasing medium-voltage market supply and unclear demand outlook. EBITA forecasts for 2026 and 2027 were also reduced.
Under Armour plans to raise product prices and diversify its supply chain to offset potential U.S. tariffs. After reporting a smaller-than-expected revenue drop, the company continues its turnaround strategy by focusing on full-price sales, cutting discounts, and reducing inventories. A 4% to 5% decline in Q1 revenue is still expected.
Daimler Truck cut its 2025 operating profit forecast, now expecting adjusted EBIT growth of -5% to 5%, down from the prior 5%–15% guidance, citing macroeconomic pressures and U.S. trade war disruptions.
Kering reported a substantial drop in U.S. demand for its luxury brands, with CEO Francois-Henri Pinault noting the decline was “quite strong.” Gucci’s Q1 sales fell by 25%, contributing to overall weakness.
China lifted its ban on Boeing deliveries, following a temporary tariff suspension agreed between the U.S. and China. This marks a major win for Boeing after Chinese carriers had paused deliveries.
Looking Ahead – Events to Watch
Markets await today’s EIA Crude Oil Inventories report and Federal Reserve speeches, which could provide insight into upcoming monetary policy changes. Earnings reports from Cisco Systems and Dynatrace are also expected.
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