Morning Wrap: ASX 200 to rise, S&P 500 slips, Nvidia rallies on Q1 earnings beat

ASX 200 futures are up 13pts (+0.15%) as of 8:30 am AEST.

In a nutshell:

• Major US benchmarks finished broadly lower amid lacklustre US-EU trade talks and weak demand for Japan 40-year bonds

• US futures up ~0.5% after Nvidia's Q1 earnings beat market expectations

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, closed at worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks finished broadly lower and near worst levels

• Breadth was relatively weak, with all sectors lower and the Equal-weight S&P 500 underperforming the official benchmark by 29 bps

• Relatively uneventful pullback after the S&P 500 rallied 2.05% in the previous session

• No major directional drivers, though the EU flagged a bleak picture of negotiations with the US and weak 40-year JGB auction pushed bond yields broadly higher overnight

• Nvidia shares rallied ~4% after hours on solid quarterly earnings, S&P 500 and Nasdaq futures currently up 0.36% and 0.65% respectively

• Weak 40-year JGB auction pressures Japan to reduce long-bond supply (BBG)

• Markets betting that worst of Trump's trade war is over, but valuations being questioned amid the uncertainty (WSJ)

NVIDIA EARNINGS

• Nvidia reported its March quarter (Q1) earnings after market close

• Revenue up 69.2% to $44.0bn vs. $43.3bn ests (1.7% beat), Data centre venue up 73.3% to $39.1bn vs. $39.2bn ests (0.3% miss), Gross margin down 769 bps to 71.3% vs. 70.2% ests (108 bp beat), Earnings per share up 56.9% to $0.96 vs. $0.93 ests (2.7% beat)

• 2Q26 revenue guidance of 49.8% growth to $45bn vs. $45.5bn ests (1.1% miss), 2Q26 gross margin guidance of 72.0% vs. 71.7% ests (26 bp beat)

• Overall, it was a messy result from mis-matched analyst estimates due to China inventory write-off, stock is currently up ~4% after hours

• "AI workloads have transitioned strongly to inference, and AI factory build-outs are driving significant revenue. Our customer's commitments are firm" – Nvidia CFO

• "On average, major hyperscalers are each deploying nearly 1,000 NVL72 racks, or 72,000 Blackwell GPUs, per week, and are on track to further ramp output this quarter.” – Nvidia CFO

• "We are witnessing a sharp jump in inference demand. OpenAI, Microsoft, and Google are seeing a step-function leap in token generation. Microsoft processed over 100 trillion tokens in Q1, a 5X increase on a year-on-year basis.” – Nvidia CFO

STOCKS

• Apple to debut iOS26, macOS 26 in major rebrand to market software redesigns (BBG)

• LVMH warns Chinese are curtailing travel and overseas spending (BBG)

• Exxon to keep investing in oil production growth even at US$50 a barrel (BBG)

CENTRAL BANKS

• May FOMC minutes indicate participants continue to express a cautious approach to rate cuts, well-positioned to wait for more clarity on outlooks for inflation and economy (FED)

• BOJ Governor Ueda vowed to watch the impact of rising yields on super-long bonds (BBG)

• RBNZ cuts interest rates for a sixth straight meeting, lowering rates by 25 bps to 3.25% and forecasting another cut (BBG)

TARIFFS

• EU discussing steel, chip, plane deals with US, trade chief says (RT)

• EU negotiators flag they are likely to overturn Trump's reciprocal tariffs, may need to force bloc to accept higher US duties for long-term (FT)

• US and EU trade deal seen unlikely in 2025 given political and public resistance in Europe (PT)

• Over 70% of US small and mid-sized businesses report increased costs from tariffs but remain optimistic about global growth (AX)

• Japan offered to buy billions of dollars of US chips during last round of trade talks (RT)

• UK pushes for further tariff relief as Trump holds firm on 10% baseline for UK exports (PT)

• India has offered US deep tariff cuts, but not to zero and seeking to retain higher levies on sensitive agricultural products (FT)

ECONOMY

• Euro-area inflation expectations rose to 3.1% in April, the highest since Feb-24 (BBG)

• French consumer spending rose 0.3% in April, below expectations, following weak household demand (BBG)

• Australian's monthly CPI stayed at 2.4% in April, above the 2.3% expected, but rate cut expectations remain intact (BBG)

ASX TODAY

• ARN Media holder Spheria Asset Management lifts holding to 11.53% from 9.13% (A1N)

• Champion Iron reports FY25 adjusted net income of C$142m vs. C$166m consensus, AISC up 4% to C$94.9 a tonne, final dividend of 10 cents per share (CIA)

• IKE Group reports 48% growth of FY25 annual subscription revenue exit run rate, revenues up 19% to NZ$25.2m, received unsolicited approach at NZ$1 per share (IKE)

• Resolute Mining has not received formal confirmation or communication from Guinea relating to a large number of exploration permits being revoked (RSG)

WHAT TO WATCH TODAY

• Pullback dynamics: Overnight markets were relatively weak, while the ASX 200 faded the entirety of yesterday's 0.54% gain to close slightly lower. No major directional drivers but an uptick in yields, VIX and US dollar could see some weakness in today's session.

• Nvidia read through: Nvidia's earnings could place upward pressure on tech stocks, or tech sub-sectors. CFO commentary continues to reiterate strong AI-related capex, which could drive some positive flows for names like NextDC, Goodman Group and Digico.

BROKER MOVES

• ALQ downgraded to Neutral from Buy; target cut to $17.70 from $17.80 (GS)

• Genesis Minerals upgraded to Outperform from Neutral; target up to $5.10 from $4.20 (MQG)

• Web Travel Group upgraded to Outperform from Neutral; target up to $6.19 from $4.83 (MQG)

Stocks trading ex-dividend: 

• Thu 29 May: 360 Capital Mortgage REIT (TCF) – $0.06, Otto Energy (OEL) – $0.001, Technology One (TNE) – $0.066

• Fri 30 May: MA Credit Income Trust (MA1) – $0.015, Metrics Master Income Trust (MXT) – $0.014, Metrics Income Opportunities Trust (MOT) – $0.017, Metrics Real Estate (MRE) – $0.009, Pengana International Equities (PIA) – $0.014

Other ASX corporate actions today: 

• Dividends paid: Acrow (ACF), Autosports Group (ASG), Clime Investment Management (CIW) 

• Earnings: Champion Iron (CIA), Select Harvests (SHV)

• IPOs: None

• AGMs: None

Economic calendar (AEST):

• 10:30 pm: US GDP (Q1)