Pre-Market Report – Thursday 21 May: US markets rally on peace hopes | Yields and oil drop

SPI Futures up 104 points. ASX to open higher. US Futures lower on Nvidia.

Wall St bounced sharply as oil fell and bond yields retreated from multi-year highs on hopes the Iran war is nearing resolution. S&P 500 up 1.1%. Dow Jones up 645 points (+1.3%), closing back above 50,000. Nasdaq up 1.5%. Volume above average. Every sector higher except Energy, down 2.6% on the oil drop. Consumer Discretionary the standout, up 2.5%. Semis roared back - Philadelphia Semiconductor Index up 4.5%.

Trump reports US-Iran negotiations are in their "final stages", which triggered a sharp drop in oil. WTI down 9.3% to $101.7. Brent down 5.1% to $105.4. Two Chinese oil tankers exited the Strait of Hormuz. Iran is enforcing a multi-tier approval process for passage involving vetting and sometimes fees, so the strait is not fully open, but traffic is improving. The pattern of the last two months holds - hope, then reality. Bond markets took the Iran comments at face value. US 10Y down 8.2bp to 4.59%, US 2Y down 6.3bp. 30Y pulling back from its highest since 2007. Dollar index down 0.2%.

Nvidia delivered Q2 revenue guidance of $91bn beating the $87bn consensus. Below the highest of estimates of $96bn. Stock down after hours on comments that competition is rising. The AI infrastructure demand story remains intact and data centre revenue continued to accelerate. Nvidia also announced an $80bn buyback and raised its quarterly dividend. The market broadly got the reassurance it needed, if not the blowout some had hoped for. Nvidia rose 1.3% in the regular session. Peers AMD up 8.1%, ASML up 6.2%, Intel up 7.4%.

Oil down - Yields fall - Gold up

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