Morning Wrap: ASX 200 to rise, S&P 500 snaps losing streak, Nvidia beats earnings expectations

In a nutshell:

• Major US benchmarks higher, with the S&P 500 up 1.1%, Nasdaq up 1.5% and Dow reclaiming 50,000 as oil and yields slid on Iran peace hopes

• Trump said US-Iran negotiations are in the "final stages", sending Brent ~5% lower and snapping the bond rout, with US 30-year yields easing from a 19-year high

• Nvidia beat with $81.6bn Q1 FY27 revenue (up 85% year-on-year), guided Q2 to $91bn vs $86bn consensus, raised dividend and added $80bn buyback, shares fell ~1.5% after-hours

Let's dive in.

• Major US benchmarks finished higher and near best levels, with the S&P 500 snapping a three-day losing streak as oil tumbled and Treasury yields eased on Iran deal optimism

• US 30-year yield eased back from Tuesday's 19-year high of 5.19%, the 10-year fell to 4.58% from a 16-month peak of 4.70% as Iran negotiation progress cooled inflation angst

• Solid breadth, with the Equal-weight S&P 500 (+1.10%) performing in-line with its cap-weighted counterpart, though still a very strong showing from AI-linked and momentum-oriented pockets of the market 

• Equities still face a reckoning with rising bond yields even after Wednesday's reprieve, with the global bond rout having driven Japan's 30-year to 4% and UK long gilts to 28-year highs in recent sessions (BBG)

• Speculators in Nasdaq 100 futures built up the largest net short position since the 2023 low ahead of Nvidia's earnings, according to Wolfe Research (CNBC)

• Options markets had priced a ~$355bn swing in Nvidia's market cap on the earnings print, the largest in mega-cap history (RT)

• Wall Street anticipates a surge in tech IPOs following Cerebras's $6.4bn fundraising success (FT)

• Trump said US-Iran negotiations are in the "final stages" but warned of further attacks unless Iran agrees to a deal, sparking the biggest oil drop in a month (RT)

• Iran's IRGC warned of "crushing blows in places you do not expect" throughout the Middle East if the US resumes military action, saying any regional war would "extend beyond the region" (YF)

• Three supertankers crossed the Strait of Hormuz carrying 6 million barrels of Middle East crude bound for Asia, after waiting in the Gulf for more than two months, though traffic remains well below the pre-war 130 ships per day (RT)

• Senate advances war powers resolution blocking further Iran strikes (WP)

• Wood Mackenzie said spot Brent could ease to around US$80/bbl by end-2026 if a quick US-Iran peace deal reopens Hormuz by June (CNBC)

• The premium on front-month Brent over six-month contracts narrowed to ~US$20/bbl from highs above US$35 last month, signalling some easing of supply tightness (RT)

• Nvidia Q1 FY27 revenue up 85% year-on-year to $81.6bn, beat ests by ~3%, Data Center revenue up 92% to record $75.2bn, EPS $2.39 GAAP, guided Q2 to $91bn vs $86bn consensus, added $80bn to buyback, raised dividend to $0.25, shares down ~1.5% after-hours (CNBC)

• Target Q1 2026 net sales up 6.7% to $25.4bn, adjusted EPS up 32% to $1.71 beat ests by ~16%, comparable sales up 5.6% ending four quarters of declines, raised full-year sales growth guide to 4% from 2%, shares down 3.8% (CNBC)

• Lowe's Q1 2026 sales up 10.3% to $23.1bn, adjusted EPS $3.03 beat ests by ~2%, comparable sales up 0.6% marking fourth straight quarter of growth, full-year guidance affirmed, shares up 1.2% (CNBC)

• Cava Group defies restaurant downturn, raising annual sales outlook, expecting same-store sales to increase by 6.5% (BBG)

• Goldman Sachs is set to become lead banker for SpaceX's IPO, overtaking Morgan Stanley's position (WSJ)

• BoE Bailey said food price controls are "not sustainable", pushing back on government intervention as UK inflation eased (BBG)

• New Fed Chair Warsh faces his first FOMC meeting June 16-17 with markets pricing less than a 10% chance of any rate cut this year despite Trump's pressure for cuts (C)

• Fed minutes from 29-Apr meeting show of officials warning rates would likely need to be increased if inflation continued to run persistently above the 2% target (BBG)

• Trump says he will allow Warsh to do what he wants on interest rates (WE)

• UK April CPI slowed to 2.8% year-on-year from 3.3% in March, below the 3.0% consensus and the lowest reading since March 2025, driven by a sharp slowdown in housing and household services inflation after the April 1 energy price cap (CNBC) 

• Japan manufacturer sentiment rises, firms more cautious about near-term outlook amid Iran war uncertainty (RT)

• Arafura expected to green-light construction of Nolans project following confirmation of offtake with the Australian government (AFR)

• Brambles Chairman John Mullen purchases ~14k shares, lifts beneficial ownership to ~96k shares after the transaction (BXB)

• Index CEO Paul House discloses sale of ~464k shares, owns 1.8m shares after the selldown (IMD)

• All the good stuff: Some relief coming through for Aussie equities after a bullish overnight lead (VIX, oil and bond yields down). This drove some broad gains for our overnight ETF watchlist, with pronounced gains for Airlines (Jets ETF up 6.5%) on oil weakness, Homebuilders (NYSE-listed JHX up 10.5%), while copper, silver, nickel, rare earth/strategic metals and gold miner ETFs gained ~3%. All-in-all, some encouraging stuff, but more is needed. While oil and yields experienced a sizeable pullback, they're still trading at uncomfortable levels and remain mostly rangebound.

• Brambles downgraded to Equal-weight from Overweight; target cut to $19 from $28 (Morgan Stanley)

• Guzman Y Gomez upgraded to Outperform from Sector perform; target up to $22 from $20 (RBC)

Stocks trading ex-dividend: 

• Thu 21 May: Orica (ORI) – $0.285

• Fri 22 May: None

• Mon 25 May: Aristocrat Leisure (ALL) – $0.50, Embark Early Education (EVO) – $0.015

• Tue 26 May: Elders (ELD) – $0.18, Newmont (NEM) – $0.254
  

Other ASX corporate actions today:       

• Dividends paid: Myer (MYR)

• IPOs: SkinKandy (SK1) at 12:30 pm

• Earnings: Australian Agricultural Co (AAC)

• AGMs: Karoon Energy (KAR), Nine Entertainment (NEC), Ventia Services (VNT), Viva Energy (VEA)

Economic calendar (AEST):

• 9:00 am: Australia S&P Manufacturing and Services PMI

• 11:30 am: Australia Unemployment Rate

• 6:00 pm: Eurozone S&P Manufacturing and Services PMI

• 6:30 pm: UK S&P Manufacturing and Services PMI