| Name | Daily Close | Daily Change | Daily Change (%) |
|---|---|---|---|
| Dow | 42,098.70 | -244.95 | -0.58% |
| S&P 500 | 5,888.55 | -32.99 | -0.56% |
| Nasdaq | 19,100.94 | -98.23 | -0.51% |
| VIX | 18.55 | -0.76 | -3.94% |
| Gold | 3,276.60 | -18.3 | -0.56% |
| Oil | 62.53 | 0.69 | 1.12% |
OVERVIEW OF THE US MARKET
Well, what was that? Talk about a fade. Yesterday after-market US stock futures jumped and the dollar strengthened after Trump’s global tariffs were deemed illegal and blocked by the US trade court as well as a strong result from Nvidia. But during the reality of the trading day, the S&P 500 was little changed. The Nasdaq 100 similarly unchanged. The Dow Jones Industrial Average also unchanged. The yield on 10- year Treasuries fell 5 bps to 4.43%. A dollar gauge lost 0.4%.
On the former, the Trump administration filed a notice that it was appealing the ruling. The US Supreme Court may ultimately have the final say in the high-stakes case that could impact trillions of dollars in global trade. Irrespective of the outcome, there is a general view that the best guess at this stage is that the administration has enough powers to bypass the ruling and implement tariffs on several grounds. To keep it simple, there is a stay on existing tariffs and nothing changes at the moment. More interestingly is who initiated this case – it was small businesses. Because many are facing an existential crisis and are not afraid to take on Trump. Wall street listed entities are in a very different position.
On the latter, upbeat earnings from Nvidia Corp. also boosted investor sentiment. On the one hand, Nvidia Chief Executive Officer Jensen Huang soothed investor fears about a China slowdown by delivering a solid sales forecast, saying that the AI computing market is still poised for “exponential growth.” On the other hand, he may have accentuated fears by warning that Chinese AI rivals are now ‘formidable’. Huang said that Chinese AI rivals are filling the void left by the departure of US companies from that market, and their technology is becoming more powerful. Rather than keeping AI technology out of Chinese hands — the intended purpose — local companies are just finding alternatives. Sounds like MOAT deterioration. Time to switch to the quantum computing darling, D-Wave Quantum??
So what gives? Wall Street traders cheering solid results from Nvidia Corp. had to face the harsh reality of slowing economic data. The S&P 500 pared most of an advance that earlier approached 1%. That’s even as
the world’s largest chipmaker climbed 4%. The US economy shrank at the start of the year, restrained by weaker consumer spending and an even bigger impact from trade than initially reported. Pending sales of previously owned homes last month fell by the most since September 2022, while a rise in recurring jobless claims signalled higher unemployment. All up, negative signals unless you are looking at it from the
perspective of Fed rate cuts.
Updated aggregates continued to show that the US GDP contracted in the first quarter. Not really big news – this was simply a revision to the previously released 1Q25 GDP figure.
Pending sales of previously owned US homes last month fell by the most since September 2022, illustrating a disappointing spring selling season as prospective buyers balk at high asking prices and borrowing costs. An index of contract signings dropped 6.3% in April to 71.3. The decline was steeper than all estimates in a survey of economists. The disappointing figures suggest the resale market will continue to trudge along until prices come off their record levels and mortgage rates settle somewhere closer to 6% than the current 7%.
Recurring applications for US jobless benefits jumped to the highest level since November 2021, possibly presaging a rise in the unemployment rate this month. Continuing claims, a proxy for the number of people receiving benefits, increased by 26,000 to 1.92 million in the week ended May 17. That exceeded the median forecast of 1.89 million in a survey of economists. The period includes the reference week for the government’s employment report for the month of May, which is due June 6. The numbers suggest the combined impact of the Trump administration’s trade policy and government spending initiatives are
starting to take a larger toll on the labour market as those out of work increasingly struggle to find new positions. So far, it’s yet to show up meaningfully in the monthly jobs report — the unemployment rate stood at 4.2% in April, a level it first reached in July 2024.
Investors are also gearing up for the Federal Reserve’s preferred inflation measure, the US personal consumption expenditures (Core PCE) price index excluding food and energy, which will be released Friday. The April reading is forecast to rise 0.1% based on consensus expectations.
As an aside, arguably the most interesting development on the day was the reporter that asked Donald Trump about the ‘TACO’ trade (Trump Always Chickens Out). Ouch. And the reporter was being messaged by Wall Street types not to ask about it (he had not heard the acronym) because it will only encourage him to maintain higher tariffs.
OVERVIEW OF THE AUSTRALIAN MARKET
The Australian sharemarket edged up to a three-month high on Thursday as energy stocks rallied, but largely shrugged off strong gains in US futures spurred by Nvidia. The S&P/ASX 200 Index added 0.2% to close at its highest level since February 20. Seven of 11 sectors were in the green, with oil companies leading gains.
Local investors overlooked the offshore rally that was spurred by Nvidia’s 4.9% jump in extended US trading. Nasdaq futures jumped 2% after the chip-making giant reported a 69% increase in first-quarter sales that was in line with market expectations. Oil prices and the US dollar are also rallying after a US federal trade court ruled President Donald Trump had illegally invoked a law to justify his reciprocal tariffs that upended financial markets last month.
On the ASX, energy stocks tracked the bounce in oil prices. Santos jumped 1.6% and Woodside 2.8%, extending the prior session’s rally after the Albanese government extended the life of its North West Shelf gas development. The mining sector limited gains as iron ore miners retreated with BHP off 0.8% and Rio Tinto down 0.7%. Gold miners fell as traders took profits in the precious metal.
US stock futures jumped and the dollar strengthened after Trump’s global tariffs were deemed illegal and blocked by the US trade court. The Trump administration filed a notice that it was appealing the ruling. The US Supreme Court may ultimately have the final say in the high-stakes case that could impact trillions of dollars in global trade. Irrespective of the outcome, there is a general view that the best guess at this stage is that the administration has enough powers to bypass the ruling and implement tariffs on several grounds.
Upbeat earnings from Nvidia Corp. also boosted investor sentiment. On the one hand, Nvidia Chief Executive Officer Jensen Huang soothed investor fears about a China slowdown by delivering a solid sales forecast, saying that the AI computing market is still poised for “exponential growth.” On the other hand, he may have accentuated fears by warning that Chinese AI rivals are now ‘formidable’. Huang said that Chinese AI rivals are filling the void left by the departure of US companies from that market, and their technology is becoming more powerful. Rather than keeping AI technology out of Chinese hands — the intended purpose — local companies are just finding alternatives.
Contracts for the S&P 500 and Nasdaq 100 gained 1.4% and 1.7% respectively. Shares in Nvidia rose over 5% in post-market trading after the company delivered a solid revenue forecast. Meanwhile, gold extended declines for a fourth day, as markets absorbed news that the US trade court has blocked President Donald Trump’s global tariff agenda. Gold fell as much as 1% on Thursday, adding to a 2% loss in the previous three sessions. The news out of the US could see some significant downside for gold in the sessions ahead as haven trades are pulled. Additionally, strong tech earnings from Nvidia Corp. on Wednesday saw an acceleration of risk appetite returning to Wall Street — also adding to bearish headwinds for gold. The positive results came after US consumer confidence figures published earlier in the week showed a sharp rebound amid optimism about improving US relations with some of its trading partners.
