By Anna Szymanski
June 5 (Reuters) –
Everything Mike Dolan and the ROI team are excited to read, watch and listen to over the weekend.
From the Editor
Hello Morning Bid readers!
Markets entered this week riding high as traders held out hopes for both an end to the three-month-old Iran conflict and an unabated AI boom. But they were disappointed on both fronts.
While the AI frenzy helped boost global stocks for much of the week, extending the S&P 500’s winning streak to nine consecutive sessions, the market stumbled following a slight earnings miss from tech powerhouse Broadcom on Wednesday – a sign that the bar for impressing investors has risen incredibly high.
The chipmaker – which saw a 55% share price rise in the quarter through Wednesday – raked in over $22 billion in sales last quarter, but this was below expectations, sending its shares slumping more than 12% on Thursday. This wiped out around $300 billion of market value, dragging down the Nasdaq.
The S&P 500 ultimately found its footing on Thursday and ended the day up, but Asian shares dropped on Friday and Wall Street futures were trading lower before the bell.
Despite this hiccup, tech enthusiasm remains palpable – and this week offered plenty more news to chew on:
• Nvidia on Monday unveiled a new chip integrating AI capabilities directly into personal computers, which industry experts said could overhaul engagement with AI.
• Anthropic filed for an IPO, adding to an already-packed lineup of planned listings, including SpaceX’s $75 billion offering – the biggest ever.
• Google’s parent Alphabet announced on Monday that it will pursue an $80 billion equity offering, with $10 billion being scooped up by Berkshire Hathaway.
• Chip designer Marvell Technology surged more than 25% on Tuesday after Nvidia CEO Jensen Huang suggested it could be the “next trillion-dollar company”.
• And Microsoft announced a new, AI-designed quantum computing chip on Tuesday, saying it believes it will have commercially useful quantum machines by 2029.
Away from equities, FX markets garnered some attention as the yen crept back toward the all-important 160-per-dollar mark – a level that has previously prompted the government to intervene to prop up the currency. Given that authorities reportedly spent more than $73 billion only a few weeks ago in yen-buying efforts, is that strategy failing? Not necessarily.
Over in commodities, the focus remains, of course, on the stop-and-start peace negotiations between the U.S. and Iran.
Oil closed up more than 4% on Monday following Iranian reports that peace talks had been halted, though the U.S. later disputed this claim. Brent crude otherwise remained rangebound below $100 per barrel, moving with the headlines as military strikes continued in the Gulf.
The latest ceasefire between Israel and Lebanon also appeared on shaky ground, after Hezbollah – the Iranian-backed militant group that Israel is actually fighting – said on Thursday that it would not abide by the terms.
Markets remained relatively unfazed by the flare-ups, even as the risk of a major energy crunch intensified amid rapid drawdowns of global inventories. On that front, U.S. gasoline stockpiles have fallen at a near-record pace just as summer demand is set to rise.
On the other hand, China continues to serve as a balancing force in the global energy market. Its seaborne imports of crude oil slumped to the lowest in almost 10 years in May, helping Asia adjust to the loss of at least 10 million barrels per day of crude from the blockades of the Strait of Hormuz. But the question is: how long can that last?
Amid all this, though, more oil appears to be quietly making its way out of the embattled strait, with indications that a growing number of ships are transiting the waterway “under the radar” of satellite tracking systems.
But far from signalling a slow return to normalcy, these stealth flows could be a preview of the opaque energy market the Iran war is likely to leave in its wake.
Back stateside, this was a big week for U.S. employment data.
Tuesday’s JOLTS report showed that job openings rose by the most in five years in April, while private-sector payrolls on Wednesday posted a forecast-beating rise of 122,000 for May.
However, initial weekly jobless claims unexpectedly rose 6.1%, and layoffs announced by U.S. corporations jumped 11% in May, according to a report from Challenger, Gray & Christmas, with almost 40% of those layoffs attributed to AI.
The spotlight is now on the May nonfarm payrolls report due out on Friday. A forecast net increase of 85,000 jobs there would be a bumper result compared with the more pessimistic scenarios predicted earlier in the year.
This mixed picture could create headaches for new Federal Reserve Chair Kevin Warsh ahead of the central bank’s meeting later this month. The path he takes may not be the one many had previously assumed – particularly given the ongoing inflation pressures.
And it’s not only the Iran-driven energy squeeze that threatens to push up prices globally. While AI may prove disinflationary over time, the capex blitz currently appears primed to put upward pressure on inflation in the short term.
It could be a hot summer in more ways than one.
For more data-driven insights on markets and commodities, check out Reuters Open Interest. You can learn:
• Why might good news cause a spike in volatility on Wall Street this summer?
• How long can small caps remain AI’s big winners?
• Why might copper bulls be disappointed by the AI-driven demand boost?
• Why might Trump’s push to save coal backfire?
• Which region is poised to become the global oil market’s new swing producer?
• Which North Asian countries could enjoy an AI-fuelled economic renaissance?
• Is gold’s muted recent performance a sign of more weakness to come?
• How long can average Americans stay afloat as savings rates fall – and when might they force the issue at the ballot box?
• Could love of baseball be a positive economic indicator?
I’d love to hear from you, so please reach out to me at .
This weekend, we’re reading…
MIKE DOLAN, ROI Finance & Markets Columnist: We are in the fourth wave of nationalisations in a century, according to Cornell Professor Nicholas Mulder – the first since the 1970s. His IMF article charts the history of these waves, noting that governments worldwide have taken over up to half a trillion dollars of industry assets since the pandemic in 2020.
ANDY HOME, ROI Metals Columnist: This in-depth Reuters analysis explores the human expertise behind China’s dominance in rare earths, including an ecosystem of 40 specialist laboratories and 11 universities enrolling more than 500 students each year to study these esoteric metals.
JAMIE MCGEEVER, ROI Markets Columnist: In an IMF op-ed, U.S. Trade Representative Jamieson Greer takes a swipe at the economics profession for its groupthink and assumptions about how global trade works, calling for new models that capture “how trade actually works.”
GAVIN MAGUIRE, ROI Global Energy Transition Columnist: This piece by Hong Kong-based consultancy The Lantau Group pushes back on The Economist’s characterisation of China’s solar sector as being in turmoil, arguing that the industry is undergoing a structured transition rather than a crisis.
CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist: This explainer by respected oil analyst Rory Johnston walks through what will happen if the Strait of Hormuz reopens – covering the key challenges and how long the disruption could last.
We’re listening to…
JAMIE MCGEEVER, ROI Markets Columnist: Stock market veteran and famed bubble-spotter Jeremy Grantham discusses market bubbles with Reuters Breakingviews Global Editor Peter Thal Larsen. On the question of whether AI is in a bubble, his answer may not surprise you, but his detailed reasoning is compelling.
And we’re watching…
RON BOUSSO, ROI Energy Columnist: Ian Bremmer, the president of political consultancy Eurasia Group, joins this Ezra Klein Show episode to discuss the incoherence of America’s foreign policy, using Iran and China as a lens to assess the risks the U.S. now poses to the world.
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Opinions expressed are those of the authors. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
(By Anna Szymanski)
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