Earnings season winds down with all eyes on NVIDIA

General market commentary

Global financial markets rallied on Tuesday as US President Donald Trump delayed the planned 50% tariffs on European imports until 9th July, easing trade tension fears. This boosted US equities, with the S&P 500 and Nasdaq rising over 2%, led by technology and consumer discretionary sectors, while small cap shares also gained strongly. European shares climbed modestly, supported by improved German consumer confidence, and US Treasury yields fell as investors grew more optimistic about the economic outlook. The US dollar strengthened against major currencies, including the yen and euro, following both trade news and comments from Japanese authorities about bond issuance.

In Europe, equities advanced on the back of positive trade developments and solid economic data, with the defence sector hitting record highs. Investors remain focused on ongoing US-EU trade negotiations, which could cause market fluctuations in the near term. Earnings season in the US is almost complete, with strong results from communication services and healthcare sectors helping lift sentiment. Attention now turns to Nvidia’s earnings, expected to shed light on the impact of export restrictions to China. Overall, markets remain cautiously optimistic as easing trade tensions and resilient economic data support moderate growth prospects for 2025.

Latest market and economic update

Asian equities mostly rose on Wednesday, led by gains in tech shares ahead of Nvidia’s earnings, with Japan, South Korea, and Taiwan seeing the biggest advances in chipmakers and AI-related firms. Chinese markets lagged slightly as weak earnings from PDD and persistent deflation concerns outweighed strong results from Xiaomi, highlighting ongoing pressure on consumer spending.

US equity futures remained steady overnight as investors awaited earnings from chipmaker Nvidia, with particular focus on the impact of export restrictions to China. Attention also turned to major retailers reporting results, while markets looked ahead to the latest FOMC minutes for clues on future monetary policy.

European equity markets closed higher on Tuesday, with the STOXX 50 up 0.6% and the STOXX 600 rising 0.5%, buoyed by easing trade tensions with the US and improved sentiment data from Germany and the Eurozone. Tech shares such as ASML and SAP gained over 1%, while defence names including Airbus, Rheinmetall, BAE Systems, and Leonardo rallied more than 2% following renewed geopolitical tensions.

The US dollar index rose to around 99.7 on Wednesday, supported by improving US consumer confidence and President Trump’s delay of planned tariffs on the EU, which eased trade tensions. Meanwhile, the EUR/USD rate held near 1.1310 as the dollar gained further strength amid concerns over Japanese bond market instability and cautious comments from the Minneapolis Fed.

Oil prices rose in Asian trading this morning amid concerns over potential new sanctions on Russia and stalled U.S.-Iran nuclear talks, which raised fears of supply disruptions. Additional upward pressure came from a U.S. ban on Chevron exporting Venezuelan crude, while markets remained cautious ahead of a key OPEC+ meeting later this week.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Apple will launch a new dedicated gaming app later this year, replacing the underused Game Center and aiming to position its devices as serious gaming platforms. The app will centralise game access, achievements, social features, and actively promote the Apple Arcade subscription service, marking a more open and ambitious push into the $200 billion global gaming industry.

Block Inc plans to integrate bitcoin payments into its Square platform using the Lightning Network, allowing merchants to accept fast, low-cost bitcoin transactions. This rollout, expected from late 2025, supports Block’s wider strategy to promote bitcoin adoption and economic empowerment through products like Bitkey and Proto.

TSMC will open a design centre in Munich in Q3 2025 to support European customers developing high-performance, energy-efficient chips for AI, automotive, and industrial use. The centre complements the €10 billion ESMC chip plant in Dresden, developed with Infineon, NXP, and Bosch, and could aid Europe’s semiconductor and AI ambitions.

Eli Lilly is acquiring SiteOne Therapeutics in a deal worth up to $1 billion, gaining access to STC-004, a Phase 2-ready non-opioid pain drug targeting the Nav1.8 channel, which could offer safer relief for chronic pain without addiction risks. The move expands Lilly’s neuroscience pipeline and supports its strategy to diversify beyond diabetes and cancer into next-generation, non-addictive pain therapies.

Salesforce is set to acquire data management platform Informatica for around $8 billion, aiming to strengthen its AI capabilities and expand its presence in the $150 billion data enterprise market. The deal, Salesforce’s largest since acquiring Slack in 2021, is expected to boost operating margins from the second year and help the company compete more effectively with software rivals.

UniCredit has offered concessions to the EU in an effort to secure antitrust approval for its acquisition of Banco BPM, with the European Commission expected to complete its preliminary review by June 19. However, UniCredit CEO Andrea Orcel warned the deal will not proceed unless the Italian government alters its conditions, which the bank is currently contesting in court.

Chinese e-commerce firm PDD Holdings reported a 47% drop in first-quarter net profit, hit by fierce domestic competition and global trade uncertainty, causing its US-listed shares to fall over 14%. Despite efforts to boost sales with promotions and low prices, slowing domestic consumption and tariff pressures weighed on growth, with revenue missing analyst estimates.

Morgan Stanley analysts say a 25% tariff on iPhones imported into the US is unlikely to prompt Apple to reshore production, as building new assembly plants domestically would take years and cost billions, making US-made iPhones around 35% more expensive than those made overseas. While the tariff could slightly reduce Apple’s FY26 earnings, the bank expects Apple to offset the impact through further US investment

Piper Sandler initiated coverage on SoundHound AI with an Overweight rating and a $12 target, highlighting its edge in voice-AI and growth potential in quick-service restaurants and customer experience. While the shift to subscriptions and the Amelia acquisition should boost margins, challenges remain in the auto segment due to production headwinds and declining sales.

Upcoming data and events

Earnings season continues with major tech firms Nvidia, Salesforce, and Hewlett-Packard set to report, with Nvidia in particular expected to post strong results driven by sustained AI demand. Investors will also watch for the Richmond Fed Manufacturing Index and minutes from the latest FOMC meeting for clues on the U.S. economic outlook and interest rate trajectory.

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