Nvidia keynote brings light to markets darkened by Iran conflict

Notes/observations

- Middle East leads sentiment as US-Iran tensions escalated despite ongoing ceasefire negotiations. Over the weekend, the US carried out military strikes on Iranian radar sites and drone command-and-control facilities after Iran shot down an American drone, and Iran retaliated with missile and drone attacks that triggered air-raid sirens across Kuwait. Diplomatic track remains messy: it's unclear whether the recent exchanges violate the supposedly "indefinite" ceasefire, and wrangling continues over the MOU language. Trump is reported to have sent revised, harsher terms back to Tehran - pressing for firmer nuclear commitments and unrestricted Strait of Hormuz shipping - while Iran is weighing its own list of amendments. Trump struck a more optimistic tone on Truth Social, saying Iran "really wants to make a deal." Sticking points include the release of frozen Iranian funds and Iran's insistence that any new Hormuz arrangements be permanent rather than temporary (Qatar opposes permanent transit fees but is open to a temporary levy). Israel's ground incursion into Lebanon adds another complication, since Iran wants that conflict ended before any agreement and explicitly says "Israeli attacks on Lebanon prevent deal with US". Polymarket prices just a 30% chance now of a US-Iran permanent peace deal by June 30th, half of where it was a week ago.

- European manufacturing PMIs painted a divided picture. Eurozone dragged down by France, which slid to 49.7 (lowest since November 2025) as Germany scraped just above the line at 50.1. Italy hit a four-year high of 52.9 on improving new orders, and Spain came in at 51.2. UK was a relative bright spot, with final manufacturing PMI at 53.9 a seventh straight month of expansion and the highest since May 2022. On inflation and policy, the data leaned hawkish for the ECB. April consumer expectations survey showed one-year-ahead CPI expectations at 4.0%, and ECB speakers reinforced the tightening narrative: Schnabel called the oil supply shock large and persistent, Pereira and Villeroy pushed for acting "sooner rather than later" (Villeroy also flagging a downgrade to French growth), all consistent with market pricing for a June rate hike.

- Traders circulating ExxonMobil comments from the Bernstein conference last week, where it highlighted that global commercial inventories of crude and refined products (gasoline, diesel, jet) have fallen to extremely low levels — “approaching unheard of inventory levels.” Exxon warned that physical Brent crude cargoes could spike to $150–160 per barrel once inventories hit bottom in the coming weeks, after which demand destruction would bring the market back into balance. TTN Reminder: earlier in May, Tier-1 analysts said that, under the surface, the market is in a much worse position than headline numbers suggest. The continued global crude inventory drawdown is currently providing a cushion and masking underlying tightness (including impacts from the SOH situation). Should the Strait of Hormuz remain closed, at some point chemical feedstock shortages would intensify rapidly and drive prices significantly higher.

- During COMPUTEX keynote, NVIDIA announced that Vera Rubin is now in full production, with a supply chain twice as large as Grace Blackwell and rack assembly time cut from two hours to five minutes, establishing the full multi-rack platform as the blueprint for agentic AI factories. The Vera CPU was highlighted as a major new growth driver and direct attack on x86, delivering 1.8x agentic performance, 40% lower memory latency, 50% faster core-to-core communication, 3x faster SQL, and 6x faster NYSE stream processing.

- On the PC side, NVIDIA confirmed its new PC chip for Windows — RTX Spark — a TSMC 3nm superchip combining a Blackwell RTX GPU with a 20-core Grace CPU, delivering up to 1 petaflop of AI performance and up to 128GB unified memory for personal AI agents; it will be available this fall in laptops and desktops from ASUS, Dell, HP, Lenovo, Microsoft Surface, and others. NVIDIA and Microsoft are collaborating to reinvent the Windows PC with native agent support, while also launching enterprise tools like OpenShell and Nemotron 3 Ultra to expand its AI platform from factories to endpoints. Jensen Huang emphasized that “useful AI has arrived,” with agentic AI driving explosive compute demand, tokens becoming profitable units of production, and NVIDIA strengthening its end-to-end systems moat across data centers, networking, power optimization, and personal PCs.

- After nearly three months of idling in the Persian Gulf’s highly aggressive marine environment, FT reports that roughly 1,500 vessels have developed significant biofouling, with barnacles and niche-area growth (sea chests, pipework, propellers) that standard models underestimate. This patchy fouling is driving 27–36% higher shaft power demand, 40–60% reduced cooling-water flow, elevated exhaust temperatures, torque curve distortions, and vibration risks — resulting in 18–35% extra fuel burn and 1–2 knots of sustained speed loss for many ships, especially older tonnage with depleted antifouling coatings. The biological overlay will create asymmetric post-reopening frictions: insurance detentions, cleaning backlogs, biosecurity delays, and capacity stratification that sustain selective freight rate pressure and extend the tail of supply chain recovery well beyond the Strait reopening itself.

- Asia closed mixed with KOSPI outperforming +3.7%. EU indices -0.7% to +0.2%. US futures +0.2-0.3%. Gold -0.9%, DXY +0.1%; Commodity: Brent +3.2%, WTI +3.7%; Crypto: BTC -1.2%, ETH -1.8%.

Asia

- China May PMI data (Govt Official) Manufacturing PMI: 50.0 v 50.0e.

- China May Ratingdog PMI Manufacturing: 51.8 V 51.3e (7th month of expansion).

- China: Rules related to overseas investment are effective from Jul 1st; the date of issue was May 5th, date of publication is Jun 1st.

- South Korea's Prime Minister may offer to step down in June, 2026.

- Japan expected to invest $500M over 5-years in US led project called 'Genesis Mission AI Project' - Nikkei.

- Japan Chief Cabinet Sec Kihara: No specific defense spending amount in mind as of now.

Europe

- ECB Pereira reiterated the ECB to act sooner rather than later.

- EU considers freeze on Russia oil price cap as Middle East war drives energy prices higher.

- Darren Jones considers running for the Labour leadership - UK Times.

- ECB's Schnabel (Germany): Supply shock seen as large and highly persistent; Oil prices expected top stay elevated for some time.

- Russia reportedly requests information from France on seized tanker (Tagor) - Russian press.

Americas

- Nvidia Conf: Vera Rubin is now “in full production,” with the supply chain “twice as large as Grace Blackwell” and rack assembly cut from two hours to five minutes; Confirms new processor for Windows PCs [taking on Intel]; Nvidia PC chip will be available this fall for laptops and desktops.

- Right-wing De La Espriella to face Left-wing Cepeda in presidential runoff on June 21st, 2026.

- USGS: Mag 6.0 earthquake strikes 36km NW of Valparaíso Chile.

Global conflict/tensions

- Pres. Trump: Iran really wants to make a deal, and it will be a good one for the U.S.A. and those that are with us.

- Pres. Trump: Fake News CNN said today, routinely, that my Iran Nuclear Deal doesn’t talk about Nuclear, when actually it states, very clearly, that Iran will not have a Nuclear Weapon - Truth Social post.

- There has been no agreement on an Iran deal over the weekend; Iran media stated Iran would propose certain changes to the draft MOU regarding the US peace agreement [Tasnim].

- Iran reportedly says new Strait of Hormuz arrangements won't be 'temporary' - press.

- US Treasury Sec Bessent said could remove certain sanctions on Iran depending on how the talks develop.

- US Defense Sec Hegseth said US/China relations are 'better than in many years’ – FT.

- Kuwait State News Agency: Sirens sounding across the country; cites responding to missile and drone 'threats'.

Energy/trade

- Japan to start probe on anti-dumping of hot-rolled and cold-rolled steel.

- Qatar to oppose permanent legal fees for the Strait of Hormuz, the country is more open to a temporary levy.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.17% at 624.96, FTSE -0.20% at 10,388.74, DAX +0.06% at 25,128.03, CAC-40 +0.14% at 8,194.51, IBEX-35 -0.09% at 18,352.25, FTSE MIB +0.10% at 50,085.50, SMI -0.77% at 13,438.20, S&P 500 Futures +0.16%].

Market focal points/key themes: European indices opened mixed and took on a negative bias as the session wore on; Cyprus and Greece closed for holidays; lack of progress in opening Strait of Hormuz seen weighing on risk appetite; among sectors managing gains are energy and technology; sectors leading the way lower are communication services and health care; Bluefield Solar receives takeover offer from Frax; EasyJet confirms Castlelake exploring takeover, but has not received formal approach yet; Universal Music rejects offer from Pershing Square; earnings expected in the upcoming US session include Hewlett Packard.

Equities

- Consumer discretionary: EasyJet [EZJ.UK] +9.5% (confirms Castlelake considering offer), ME Group [MEGP>UK] -25.5% (trading update).

- Financials: Wise [WISE.UK] -12.5% (report that Wise is under investigation by prosecutors in Belgium for half a billion euros of suspicious transactions) Wise [WISE.UK] -12.5% (report that Wise is under investigation by prosecutors in Belgium for half a billion euros of suspicious transactions).

- Technology: Datalogic [DAL.IT] +35.5% (offered to be acquired).

- Telecom: Nokia [NOKIA.FI] +4.5% (Nvidia presentation in Taiwan).

Speakers

- ECB Villeroy (Speaking at Bank of France): Will have to cut French growth outlook.

- Fed's Christopher J. Waller [voter] at the Dubrovnik Economic Conference: Discusses the impact of stablecoins on monetary policy.

- ECB's Schnabel (Germany): Supply shock seen as large and highly persistent; Oil prices expected top stay elevated for some time.

- Fed's Kashkari (voter): Reiterates in wait-and-see approach until we get more data - speaks in Seoul, Korea.

- Philippine Central Bank: Will take all necessary action to ensure that inflation returns to it's 3% target; sees May y/y inflation at 7.1-7.9% vs 7.2% in Apr.

Economic data

- (UK) May final Manufacturing PMI: 53.9 V 53.7E (confirms 7th month of expansion, highest since may 2022).

- (EU) Euro Zone Apr Consumer Expectation Survey: 1-year ahead CPI expectations: 4.0% v 4.1%e and 4.0% prior.

- (EU) Euro Zone Apr M3 Money Supply Y/Y: 2.7% v 3.1%e.

- (EU) Eurozone May final PMI Manufacturing: 51.6 V 54.1E.

- (DE) Germany May final Manufacturing PMI: 50.1 V 49.9E.

- (FR) France May final Manufacturing PMI: 49.7 V 48.9E (lowest since Nov 2025); New orders: 46.9 v 53.0 prior.

- (IT) Italy May Manufacturing PMI: 52.9 V 52.0E (4-year high); New orders: 51.2 v 49.1 prior.

- (CH) Swiss May PMI Manufacturing: 57.3 v 53.8e; PMI Services: 56.0 v 54.8 prior.

- (PL) Poland Q1 Final GDP Q/Q: 0.6% v 0.5% prelim; Y/Y: 3.5% v 3.4% prelim.

- (CZ) Czech Republic May PMI Manufacturing: 52.2 v 51.8e.

- (ES) Spain May Manufacturing PMI: 51.2 V 52.0E.

- (HU) Hungary May Manufacturing PMI: 50.2 v 51.1e.

- (PL) Poland May Manufacturing PMI: 49.4 v 48.5e.

- (TR) Turkey May Manufacturing PMI: 49.8 v 45.7 prior.

- (TR) Turkey Q1 GDP Q/Q: 0.1% v 0.4%e; Y/Y: 2.5% v 3.3%e.

- (CH) SWISS Q1 GDP Q/Q: 0.7% V 0.6%E; Y/Y: 0.5% V 0.4%E; Sport Event adjusted GDP Q/Q (final): 0.4% v 0.5% prelim.

- (CH) Swiss Apr Real Retail Sales Y/Y: 1.6% v 1.3% prior.

- (UK) May nationwide house price index M/M: -0.6% V -0.2%E; Y/Y: 1.7% V 2.3%E.

- (DE) Germany Apr Retail Sales M/M: -0.3% V -0.5%E; Y/Y: -2.7% V -1.6%E.

- (RU) Russia May Manufacturing PMI: 48.8 v 48.1 prior.

- (NL) Netherlands May Manufacturing PMI: 55.9 v 54.4 prior (12th month of expansion).

- (IN) India May Final PMI Manufacturing: 55.0 v 54.3 prelim.

- (SE) Sweden Jun SEB Housing-Price Indicator: 44 v 41 prior.

- (PH) Philippines May PMI Manufacturing: 50.8 v 48.3 prior.

- (VN) Vietnam May PMI Manufacturing: 52.8 v 50.5 prior.

- (TW) Taiwan May PMI Manufacturing: 56.1 v 55.3 prior.

- (KR) South Korea May PMI Manufacturing: 54.8 v 53.6 prior.

- (JP) Japan May Final PMI Manufacturing: 54.5 v 54.5 prelim.

- (KR) South Korea May Trade Balance: $26.9B v $24.1Be.

- (JP) JAPAN Q1 CAPITAL SPENDING Y/Y: 0.0% V 4.0%E; Capital Spending (ex-software) Y/Y: -1.4% v 5.4%e; Company Sales Y/Y: 1.1% v 0.7% prior; Company Profits Y/Y: 14.6% v 5.3%e.

- (AU) Australia May Final PMI Manufacturing: 50.7 v 50.2 prelim.

Fixed income issuance

- Norway sells NOK2.0B vs. NOK2.0B indicated in 6-month Bills; Avg Yield: 4.53% v 4.36% prior; Bid-to-cover: 4.23x v 3.08x prior.

- Philippines sells total PHP40B in 3-month, 6-month and 12-month bills.

- South Korea MOF sells KRW2.7T in 2-year Bonds (3%): Avg Yield: 3.690%; bid-to-cover: 2.75x.

Looking ahead

- 05:30 (DE) Germany to sell combined €5.0B in 3-month and 9-month BuBills.

- 05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month bills.

- 06:00 (NO) Norway announcement on upcoming bond issuance (held on Wed).

- 06:00 (PT) Portugal Apr Industrial Production M/M: No est v 3.2% prior; Y/Y: No est v 3.2% prior.

- 06:00 (PT) Portugal Apr Retail Sales M/M: No est v 2.1% prior; Y/Y: No est v 5.3% prior.

- 06:30 (IN) India Apr Industrial Production Y/Y: 3.5%e v 4.1% prior.

- 07:00 (IL) Israel to sell combined ILS2.8B in 2031, 2034, 2035, 2037 and 2052 bonds.

- 07:25 (BR) Brazil Central Bank Weekly Economists Survey.

- 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.

- 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).

- 08:00 (CZ) Czech May Budget Balance (CZK): No est v -106.1B prior.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:30 (CL) Chile Apr Economic Activity Index (Monthly GDP) M/M: No est v 0.3% prior; Y/Y: No est v -0.1% prior.

- 09:00 (FR) France Debt Agency (AFT) to sell €6.4-8.0B in 3-month, 6-month and 12-month bills.

- 09:30 (CA) Canada May Manufacturing PMI: No est v 53.3 prior.

- 09:45 (US) May Final S&P Manufacturing PMI: 55.3e v 55.3 prelim.

- 10:00 (US) May ISM Manufacturing: 53.2e v 52.7 prior.

- 10:00 (US) Apr Construction Spending M/M: 0.1%e v 0.6% prior.

- 11:00 (PE) Peru May CPI M/M: No est v 0.5% prior; Y/Y: No est v 4.0% prior.

- 11:00 (MX) Mexico Central Bank Economist Survey.

- 11:00 (MX) Mexico Apr Total Remittances: No est v $5.4B prior.

- 11:00 (CO) Colombia May PMI Manufacturing: No est v 50.8 prior.

- 11:30 (US) Treasury to sell 13-Week and 26-Week Bills.

- 12:00 (IT) Italy May New Car Registrations Y/Y: No est v 11.6% prior.

- 14:00 (MX) Mexico May IMEF Manufacturing Index: No est v 49 prior; IMEF Non-Manufacturing Index: No est v 48.9 prior.

- 16:00 (US) Weekly Crop Progress Report.

- 19:00 (KR) South Korea May CPI M/M: 0.2%e v 0.5% prior; Y/Y: 2.9%e v 2.6% prior; CPI (ex-food/energy) Y/Y: 2.2%e v 2.2% prior.

- 19:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 66.1 prior.

- 19:50 (JP) Japan May Monetary Base End of Period: No est v ¥590.9T prior.

- 20:01 (IE) Ireland May PMI Manufacturing: No est v 54.9 prior.

- 20:30 (ID) Indonesia May PMI Manufacturing: No est v 49.1 prior.

- 20:30 (MY) Malaysia May PMI Manufacturing: No est v 51.6 prior.

- 20:30 (TH) Thailand May PMI Manufacturing: No est v 52.7 prior.

- 21:30 (AU) Australia Q1 Current Account Balance (A$): -23.4Be v -21.1B prior.

- 21:30 (AU) Australia Q1 Company Operating Profit Q/Q: 0.5%e v 5.8% prior; Net Exports of GDP: -0.5%e v -0.1 prior; Inventories Q/Q: 00%e v -0.1% prior.

- 21:30 (AU) Australia Apr Building Approvals M/M: -1.6%e v -10.5% prior; Private Sector Houses M/M: No est v 0.9% prior.\\