1. Futures point higher
U.S. stock futures were broadly higher on Monday, suggesting an extension in a rally in the prior session that drove the blue-chip Dow Jones Industrial Average to its first-ever close above the 40,000 level.
By 03:48 ET (07:48 GMT), the Dow futures contract had gained 19 points or 0.1%, S&P 500 futures had risen by 4 points or 0.1%, and Nasdaq 100 futures had advanced by 22 points or 0.1%.
Recent data indicating a possible cooling in the U.S. economy have alleviated some persistent inflation concerns, fueling hopes that the Federal Reserve will start to bring interest rates down from more than two-decade highs as soon as September. Along with the Dow, the benchmark S&P 500 and tech-heavy Nasdaq Composite all touched record marks last week.
The durability of the strength on Wall Street will likely be tested by a fresh batch of corporate results this week, including quarterly returns from artificial intelligence darling Nvidia (see below). Durable goods and consumer sentiment data will also be in focus as markets hunt for more evidence that growth is moderating enough to give the Fed justification for rolling out rate cuts this year.
2. Nvidia earnings ahead this week
Nvidia is set to highlight the earnings calendar this week, with traders keen to see if the maker of AI-specialized graphics processing units will once again post spiking revenues at its all-important data center unit.
Shares in the company have rocketed higher by nearly 92% this year, making it one of the focal points of the AI boom. In February, Nvidia said it expects revenues to jump to $24 billion in the first quarter, with Chief Executive Jensen Huang noting that he believed “accelerated computing and generative AI have hit the tipping point.”
Comments from Huang will also likely be in the spotlight. Nvidia faces competition from rival chipmakers like Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD), as well as supply chain constraints and geopolitical tensions that threaten AI chip exports from the U.S. to China. Meanwhile, major tech players like Google-parent Alphabet (NASDAQ:GOOGL) and e-commerce titan Amazon (NASDAQ:AMZN) are reportedly beginning to build their own AI chips in-house, potentially limiting their need for Nvidia’s chips.
3. Fed speakers, minutes on tap
Several Fed officials are due to deliver speeches on Monday that may provide insight into the path ahead for the central bank’s moentary policy.
Fed board members Christopher Waller, Philip Jefferson and Michael Barr are scheduled to speak at separate events.
Later in the week, the Fed is set to publish the minutes from its April 30-May 1 meeting, when Chair Jerome Powell indicated that rates are likely to remain higher for longer because of lingering inflationary pressures.
However, since then, data has shown that U.S. consumer prices — a key gauge of inflation — increased at a slower than anticipated pace in April, while a crucial labor market report undershot estimates.
The numbers bolstered wagers that the Fed will introduce two 25-basis point cuts to borrowing costs this year. Rates currently stand at a 23-year high of 5.25% to 5.5%.
4. China keeps loan prime rate unchanged
The People’s Bank of China kept its benchmark loan prime rate (LPR) unchanged on Monday as widely expected, even as Beijing continued to roll out other stimulus measures to support the economy.
The PBOC maintained its one-year LPR at 3.45%, while the five-year rate, which is used to determine mortgage rates, was left at 3.95%.
Both rates were kept at record lows, as Beijing sought to shore up economic growth by keeping local monetary conditions as loose as possible.
Elsewhere, Hong Kong-listed shares of mainland Chinese property developers dropped despite Beijing announcing fresh measures last week aimed at supporting the ailing industry. China has unveiled a string of these policies in recent weeks, including a softening of home buying restrictions across several major cities and funds for local governments to buy real estate from developers.
5. Crude gains amid Iran uncertainty
Crude prices edged higher Monday, adding to the previous week’s gains, as uncertainty swirled around the political situation in the Middle East following the reported death of Iranian President Ebrahim Raisi.
By 03:44 ET, the U.S. crude futures (WTI) traded 0.3% higher at $79.81 per barrel, while the Brent contract climbed 0.3% to $84.23 a barrel. Brent had ended the previous week up about 1%, its first weekly gain in three weeks, while WTI rose 2% on improved economic indicators from the U.S. and China, the world’s largest oil consumers.
Iranian state media said Raisi, who was seen a possible successor to Supreme Leader Ayatollah Ali Khamenei, died in a helicopter crash on Sunday in a remote region in the country’s north-west.
Raisi’s death comes amid simmering tensions in the oil-rich Middle East, with Israel and the militant group Hamas at war in Gaza. Israel and Iran also launched strikes against each other earlier this year.
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