The good news concerning US-EU trade talks caught up to US stocks yesterday following Monday’s market closure. The EU agreeing to fast-track trade negotiations was a welcome development for all involved and markets on both sides of the Atlantic reacted accordingly. All three major US indices enjoyed strong rallies; the Dow rising 1.8%, the S&P 500 gaining 2% and the Nasdaq closing the day 2.5% higher. European stocks also partook in the celebrations, with the German DAX in particular hitting a record high yesterday. It is fair to say that markets in general have settled down over the past two days. Cash flows have pivoted back towards the Dollar while gold has been dragged back below $3,300 early this morning. Crypto remains muted.
Markets are patiently awaiting a couple of events later today. The first is the publication of the latest FOMC minutes, the second is the release of Nvidia’s first quarter fiscal results. The only question people will want an answer to with regards to the Fed is whether or not some board members are beginning to change their tune about the threat of inflation. There have been minor murmurings of dissent recently, as some members argue the impact of new duties will be limited and short-lasting. With that said, few are expecting a rate cut at the next meeting in June or indeed the one after.
As for Nvidia, the chipmaker is certainly one of the heavy hitters on the earnings calendar and the latest results will no doubt trigger a few ripples, although the report will only hit the newswires after the closing bell. The company has been on the receiving end of both import tariffs and export bans as a result of the ongoing trade antics. One point of interest is the impact of the recent export restrictions to the Chinese market, which currently accounts for 14% of Nvidia’s revenue.
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