Update Equities: Markets not bothered by geopolitical turmoil
While there is turmoil in the Eastern Europe and the Middle East, with the Strait of Hormuz still closed, the stock markets are setting records.
They are fuelled by the boom in artificial intelligence (AI) and strong earnings results. The S&P reached an all-time high on 2 June, while the Stoxx Europe 600 set its high on 26 May, but declined by 1.5% after that. The dominant themes this week are the AI chip trade, buoyed by Nvidia's product launch and Veeva's strong results, but tempered by Broadcom's guidance miss, and M&A activity, most visibly the collapse of the AkzoNobel takeover and Greg Abel's early dealmaking at Berkshire.
Veeva reported fiscal first-quarter results after the close on Tuesday, beating expectations across the board. The company raised its fiscal year 2027 adjusted guidance and lifted its revenue outlook, both above consensus. Its share-price weakness was likely driven by profit-taking following a strong pre-earnings run, as well as by the absence of specific top-20 pharma customer-relationship-management partnership details in prepared remarks.
Broadcom reported higher revenue, driven by accelerating AI chip demand, but its guidance fell short of elevated investor expectations. Shares slid by approximately 12% in after-hours trading Wednesday. The stock had climbed by 38% year-to-date through Wednesday's close.
Berkshire Hathaway’s new CEO Greg Abel made a strong early impression, completing multiple deals in a single weekend in late May. The moves gave shareholders reason to believe Berkshire retains its opportunistic dealmaking culture under new leadership, following a period of stock underperformance since Abel succeeded Warren Buffett.
Comcast pledged to invest over GBP 5 billion (USD 6.7 billion) to develop Universal's first European theme park in Bedfordshire, UK, with an additional GBP 1 billion in capital investment expected over the first decade of operation following an estimated five-year construction period.
Medtronic posted fiscal fourth-quarter net sales, up by 9.9% year-over-year, with net profit also rising strongly. This surpassed analyst expectations. The shares gained 7%.
On Monday, Nvidia unveiled the RTX Spark, described by the company as "the most efficient PC chip ever built." The announcement lifted Nvidia shares and drove gains across the AI ecosystem.
SpaceX's anticipated initial public offering (IPO), expected to raise more than twice the amount of any prior US IPO, is already prompting index providers to rewrite benchmark entry rules and forcing passive investment firms to reorganize around the offering. The IPO is expected to take place on 12 June. The company is seeking USD 75 billion, setting the market value at USD 1.77 trillion. Elon Musk will retain 84.4% voting power.