Market Daily

Equity Market Updates

Hewlett Packard Enterprise (HPE US)

Shares of HPE surged more than 29% during after-market hours on Monday as it provided an annual sales outlook that topped market estimates, citing massive growth in AI-fuelled demand for its servers and networking. Revenue is specifically expected to increase by about 31% in the current fiscal year. In terms of FY2Q results, the company’s top- and bottom-line also exceeded Wall Street expectations.

MARKET CONSENSUS: 13 BUYS, 10 HOLDS, AVERAGE TP USD30.33

Alphabet (GOOGL US)

Alphabet announced on Monday that it is selling USD80bln in shares to “fund investments in its world-class AI infrastructure.” The fundraising bid includes USD30bln in underwritten public offerings, a USD40bln at-the-market offering, as well as a USD10bln investment by Berkshire Hathaway via a private placement.

MARKET CONSENSUS: 67 BUYS, 8 HOLDS, AVERAGE TP USD431.81

Nvidia (NVDA US)

Nvidia announced on Monday during the Computex event that it has expanded its partnership with TSMC to integrate AI into production facilities to improve semiconductor design and manufacturing. Under the deal, TSMC will use Nvidia technologies throughout the chip design and manufacturing lifecycle to accelerate AI-driven optimization into fabrication facilities.

MARKET CONSENSUS: 77 BUYS, 3 HOLDS, 1 SELL, AVERAGE TP USD301.11

EasyJet (EZJ LN)

Shares of EasyJet surged +10% on Monday after the airline said that it would consider a Castlelake takeover proposal, calling it “highly opportunistic.” Castlelake said on Friday it was in the early stages of considering a possible bid for EasyJet, although no approach has been made to its board.

MARKET CONSENSUS: 7 BUYS, 7 HOLDS, 3 SELLS, AVERAGE TP GBp408.67

Earnings Announcements

Global Indices Changes (%)

Fixed Income Market Updates

European Bank Coco (AT1)

European bank Coco bonds had a weaker day. Investors remained cautious due to a heavy supply of new bond issuance which dampened investors’ enthusiasm. We expect Coco bonds to remain under pressure unless new buyers step in to stabilize the market, especially as recent issues continue to face selling.

Asia Investment Grade (IG)

Asia’s investment-grade bonds had a strong day, with Chinese bonds leading the way as global investors joined the buying. Longer-dated bonds, especially those maturing in 10 to 30 years, performed exceptionally well, while shorter-dated bonds saw moderate gains. We anticipate this positive momentum to continue, particularly in high-quality names, as demand from real-money investors remains robust.

Asia High Yield (HY)

Asia’s high-yield bonds had a stable day, with limited new money flowing into the market. While some Indian and Southeast Asian bonds saw some profit taking, China’s property and gaming sectors outperformed. We expect the market to remain selective, with investors focusing on higher-quality names while waiting for clearer signals before committing more capital.

Forex Market Updates

USD

The US Dollar Index climbed 0.24% to close at 99.18 on Monday, supported by stronger-than-expected US manufacturing data. The ISM manufacturing PMI rose to 54.0 in May from 52.7, beating forecasts of 53.0, whilst the employment index rose to 48.6, signaling resilient economic conditions. Investors also watched Middle East developments closely after hostilities between Israel and Hezbollah caused a pause in talks from Iran and the US. Nonetheless, market concerns were somewhat eased after President Trump said that there would be “no shooting” involved between Israel and Hezbollah and that talks were still in place. Looking ahead, investors turn to the JOLTS openings later today, ADP employment data and Friday’s Nonfarm Payrolls report.

The Dollar Index should remain supported above 98.50 in the near term.

EUR

The Euro slipped 0.27% to close at 1.1632 on Monday as strong US economic data put pressure on the Euro. Nonetheless, hawkish reasoning from the ECB may keep the euro supported with ECB Board member Isabel Schnabel stating that the ECB could “no longer look through this shock,” and warned that the “risk of de-anchoring inflation expectations is rising,” pointing to a bias towards further hikes from here onwards. Her remarks echoed recent comments from ECB President Lagarde, who stressed that “credibility” is “earned through action.” Markets have fully priced in two ECB hikes and see nearly a 50% chance of a third hike by next year. Next, attention turns to Eurozone inflation data which is due later today where CPI is expected to show an acceleration to 3.2% from 3.0%. 

The common currency may be range bound in the short term, trading between 1.1600 - 1.1782. 

AUD

The Australian Dollar weakened 0.32% and closed at 0.7161 as broader US Dollar strength and cautious market sentiment weighed on the Aussie. Recent domestic data paints a mixed picture, with PMI’s in May showing a slight slowdown to 50.7 from 51.3 and with Services PMI contracting to 47.7 from 50.7. On a brighter note, GDP numbers remained expansionary with the latest numbers showing 0.8% rise q-o-q and 2.6% increase y-o-y. The RBA last raised the official cash rate by 25bp to 4.35% in May whilst warning that inflation would likely remain above target to 2027-2028. Governor Bullock noted that rates were in restrictive territory and provided room to “sit and see”, suggesting a more patient approach going forward. Markets are expecting no change in the RBA’s June 11^th meeting and has priced in another 28bp of tightening for the rest of the year.

The Aussie seems supported above the 0.7140 handle for now though it may face some downside pressure.   

XAU

Gold pared down by 1.23% to close at 4,485 on Monday, as upbeat US ISM manufacturing report supported US Dollar inflows.  US-Iran negotiations also seemed to be back on track with President Trump saying that talks with Iran were “continuing” at a “rapid pace” and that a deal with Iran could even “happen over the next week”. Analysts have noted that gold’s recent price action seemed less tied to fundamentals and more to shifting geopolitical narratives, with inconsistent reactions to both easing and escalating tensions. Nevertheless, gold remains structurally sound with strong central bank demand and persistent geopolitical risks. Data shows that China imported 86.7 tons of gold in April, up sharply from 49.7 tonnes in March.

With little clarity over a US-Iran peace deal, gold prices should continue to consolidate between $4,400 and $4,800 for the time being.

Please read carefully the disclaimer here:

Asia Disclaimer: 
https://wealthmanagement.bnpparibas/asia/en/disclaimer1.html

Europe Disclaimer: 
https://wealthmanagement.bnpparibas/ch/en/disclaimer.html