Oil rises on OPEC+ supply hike
OPEC and its allies agreed on Saturday to add 411’000 barrels a day of supply in July
- Voting was mixed within OPEC+ as Saudi Arabia pushed for the increase whilst countries such as Russia, Oman and Algeria expressed doubts on the markets’ ability to absorb further supply
- Oil prices rose on the news as markets were expecting a greater increase in production
- The unwinding of many speculative short positions in Brent fueled the upward movement as these were the highest since October prior to the meeting
- Other factors also contributed to the spike; Ukraine’s strikes on Russian air bases, Iran’s criticism of a report on its enriched uranium stockpiles and wildfires in Canada
Strong earnings results again in the US
With 98% of S&P 500 companies having reported, companies are having the best quarter in terms of earnings surprise since 3Q21
- Almost 78% of S&P 500 companies beat 1Q earnings and 52% beat revenue estimates
- The aggregate surprise on EPS has been 7.6% (vs 4.1% avg 4Qs), projecting EPS growth of 12.5% YoY
- As it relates to the Mag7, earnings surprise was well ahead of the S&P 493 (14% vs 4.2%)
Magnificent 7 drive Wall Street’s rally
All but one of the magnificent 7 recorded gains over the past month
- Apple lagged its peers and delivered its weakest relative performance against the S&P 500 Index since 2018
- In contrast, Nvidia posted a staggering 23% monthly jump — its best performance since May 2024 — after delivering better-than-expected quarterly earnings
- Despite facing export restrictions on its chips to China, Nvidia’s revenue resilience confirmed that artificial intelligence demand remains healthy
- Overall revenue reached $44.1 billion in Q1, up 69% from a year ago
- “Countries around the world are recognizing AI as essential infrastructure — just like electricity and the internet”, CEO Jensen Huang said.
Political trouble in the Netherlands
Far-right lawmaker Geert Wilders pulled his Freedom Party out of ruling coalition collapsing the government
- Prime Minister Dick Schoof said he would resign while continue in a caretaker government
- Move will likely trigger a new ballot, which otherwise would have been held in 2027
- The remaining coalition parties will explore whether they can continue together in some other form
- Decision by Wilders was due to refusal of his coalition partners to agree to his plans to curb migration – including closing borders to asylum seekers, halting family reunifications and returning asylum seekers to Syria
- Markets were little moved by the news
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