European Midday Briefing : Markets Rise on Nvidia-Led Rally

MARKET WRAPS

Stocks:

Shares in Europe were higher, with semiconductor companies edging higher after Foxconn reported robust revenue and profit and Trump took a delegation of tech CEOs on his trip to China.

Deutsche Bank said--while there wasn't a single clear catalyst-- that positive sentiment around the tech mega caps was a dominant theme.

Nvidia stock hit a record close on Wednesday after CEO Jensen Huang traveled to China with the U.S. president.

Trump and his Chinese counterpart Xi Jinping are expected to discuss the conflict in the Middle East, but ING said traders could be pinning too much hope on the talks yielding some positive result on Iran.

China purchases about 90% of Iran's exported oil , according to the U.S.-China Economic and Security Review Commission.

Economic Insight

Most economists see the impact of the Iran war on eurozone inflation will be more limited than the aftermath of Russia's 2022 invasion of Ukraine, but

ECB Chief Economist Philip Lane said the global nature of the current shock might increase its effect.

"A global shock means that costs are increasing around the world."

"This creates a compounding effect where the final price of a good reflects not just the direct increase in the local energy price but the cumulated effects of price increases across international suppliers."

U.S. Markets:

Stocks looked set to notch more records as investors bet that Trump's meeting with Xi would help extend the tech rally.

Forex:

Resilience in global equities was helping keep the euro above the key $1.17 level , ING said.

For the euro to break below $1.17 sustainably there needs to be softer global risk sentiment, not just higher oil prices,it added.

Sterling turned slightly weaker on concerns that U.K. Prime Minister Keir Starmer could face a leadership challenge.

"Downside risks for the pound have increased in the near-term in response to heightened political uncertainty in the U.K.," MUFG said.

The currency was little moved after U.K. economic growth data met expectations.

The dollar eased slightly after reaching a near two-week high following higher-than-expected U.S. wholesale inflation data.

Bonds:

Yields on eurozone government bonds fell , tracking moves in Treasurys.

Trade was quiet, with many European investors away due to the Ascension Day holiday.

Treasury yields dropped back from Wednesday's levels when the 10-year yield reached its highest since June last year after strong U.S. producer prices data.

A deeper look at the data suggests it might have limited impact on PCE inflation, which is the Fed's preferred inflation measure, Commerzbank said.

Attention now switches to U.S. retail sales and weekly jobless claims data at 1230 GMT, where any weakness could cause yields to fall further.

Energy:

Oil prices edged higher, with traders in wait-and-see mode ahead of the outcome of the U.S. and China's high-stakes meeting.

Investors were also monitoring the expiry of a U.S. sanctions waiver allowing purchases of Russian oil cargoes through May 16, which could further tighten supply conditions.

Metals:

Gold prices held above $4,700, but remained pressured by expectations of higher-for-longer interest rates following the latest U.S. inflation data.

"Gold extended losses after U.S. wholesale inflation accelerated in April to its fastest pace since 2022, while Treasury yields climbed toward their highest levels since July, weighing on non-yielding assets, " MUFG said.

Silver and platinum were down.

Copper

Copper fell on profit-taking, but market participants remained bullish on prices nonetheless.

ING said recent gains appeared to be driven more by supply concerns than by underlying demand, leaving the metal exposed to a potential pullback if Middle East disruptions ease.

"Higher energy prices and broader macro uncertainty continue to weigh on manufacturing activity and global growth expectations."

Investors were likely to keep a close watch on inventory levels, demand signals from China and the degree to which geopolitical tensions continue to disrupt refined metal supply, it added.

Critical Metals said the market could be exposed to a potential supply deficit over the long term, supporting prices.

China's export restrictions on sulfuric acid and Middle East sulfur supply disruptions could create further tightness in the copper market, it added.

EMEA HEADLINES

Watches of Switzerland Expects Revenue Growth on Strong Demand

Watches of Switzerland said it expects revenue to rise over the next 12 months on strong demand, particularly in the U.S., despite geopolitical and global economic uncertainty.

The luxury-watch retailer forecasts organic revenue growth between 5% and 10% for its fiscal 2027 on a constant-currency basis.

Telefonica Shares Rise After Revenue, Adjusted Earnings Beat Expectations

Shares in Telefonica rose after it reported revenue and adjusted earnings that exceeded expectations for the first-quarter as the group continues to deliver on its transformation plan.

In early morning trading, shares were up 5.1% at 4.01 euros. Year to date, shares have risen slightly above 14%.

Aviva Posts Rise in Insurance Premiums

Aviva reported an increase in its premiums on strong performance momentum, despite global market volatility.

The British insurer and asset manager's quarterly general insurance premiums reached 3.4 billion pounds ($4.60 billion), up 19% compared with a year prior.

GLOBAL NEWS

Xi's Taiwan Warning to Trump Highlights Tensions in Beijing Summit

BEIJING-Chinese leader Xi Jinping warned President Trump that any mishandling of Taiwan could lead to "an extremely dangerous situation," directly raising a point of tension that has loomed over what the U.S. president said at the start could be "the best summit ever."

Xi's statement, while in line with China's longstanding position, threatened to dim the mood of a visit both countries hoped would stabilize ties. The meetings that began Thursday morning at the Great Hall of the People in Beijing were billed as a gathering of superpowers to quell economic and trade disputes.

What CEOs from Tesla, Nvidia and over a dozen other companies hope to gain by joining Trump in China

On his visit to China this week, President Donald Trump is bringing along at least 17 executives from prominent U.S. companies.

Trump said in a social-media post that he'll ask Chinese President Xi Jinping to "open up" China "so that these brilliant people can work their magic, and help bring the People's Republic to an even higher level," adding that it would be his "very first request" to his counterpart.

Pentagon Abruptly Cancels Deployment to Europe as Part of Trump's Drawdown

The Pentagon abruptly canceled the deployment of an armored brigade to Poland, a major step toward President Trump's plan to shrink the U.S. posture in Europe that caught some military officials by surprise.

The move followed a Pentagon announcement this month that it would be removing 5,000 troops from Germany. That decision was made public after Trump objected to German Chancellor Friedrich Merz's criticism of the White House's handling of the U.S. war with Iran.

Military Snipers Are Being Put Out of a Job by Drones

A Ukrainian special-forces sniper claimed a world record in late 2023 with a shot that hit a Russian officer almost 2 1/2 miles away.

These days Vyacheslav Kovalskiy has a new job: supporting drone pilots. He hasn't been out to shoot in more than a year and a half.

Canadian Judge Deals Blow to Alberta's Sovereignty Movement on Referendum

OTTAWA-A Canadian judge on Wednesday dealt a potentially significant blow to efforts to hold a referendum in the oil-rich province of Alberta about becoming a sovereign country within North America.

Justice Shaina Leonard of Alberta's Court of the King's Bench said the Alberta government failed to consult indigenous groups about the potential fallout from holding a vote on the province's future within Canada. Under Canadian law, governments have a duty to consult indigenous groups on conduct that might adversely impact their treaty rights.

Venezuela Launches Effort to Ease Its $170 Billion Debt Load

Venezuela said Wednesday it would begin a process of restructuring its towering government debt, seeking to take advantage of warming relations with the U.S. to normalize ties with creditors and regain access to international financial markets.

With a public debt load estimated as high as $170 billion, Venezuela's restructuring promises to be one of the largest and most complex efforts to renegotiate sovereign debt, economists say.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

05-14-26 0512ET