Markets continued their upward momentum on Wednesday, with the S&P 500 logging its third consecutive gain as investors embraced signs of easing trade tensions between the US and China. The benchmark index edged higher, adding to the week’s sharp rebound that has now pulled it into positive territory for 2025. Technology stocks led the advance once again, boosted by strong performances from Nvidia and AMD. While the Nasdaq extended its rally, the Dow edged lower as rotation out of cyclicals persisted. Overall, sentiment remained upbeat as the tariff rollback continued to boost risk appetite.

Key Takeaways:

  • S&P 500 Notches Third Straight Gain as Year-to-Date Loss Reversed: The S&P 500 inched up 0.10% to close at 5,892.58, extending this week’s powerful rebound. The index has now turned positive for the year and is up over 21% from its April intraday low. 
  • Nasdaq Rallies as AI Stocks Shine: The Nasdaq Composite gained 0.72% to close at 19,146.81, lifted by a strong performance in chipmakers. Nvidia jumped 4.2% after securing a major order from Saudi Arabia, while AMD rose 4.7% on the back of a $6 billion buyback. 
  • Dow Slips as Rotation Away from Industrials Continues: The Dow Jones Industrial Average fell 89.37 points, or 0.21%, to settle at 42,051.06. Despite the broader market’s resilience, the blue-chip index lagged as weakness in industrial and cyclical names weighed. Still, the Dow remains up nearly 2% for the week.
  • Europe Mixed as Stoxx 600 Snaps Winning Streak: European equities retreated modestly following a four-session winning run. The Stoxx 600 slipped 0.24%, while Germany’s DAX fell 0.5% after a volatile session. France’s CAC 40 dropped 0.47%, while the FTSE 100 declined 0.21%. In contrast, Italy’s FTSE MIB rose 0.70%, supported by strength in domestic stocks. Burberry surged 17% in London after unveiling a turnaround strategy, while France’s Alstom plunged 17% on weak results. Broader sentiment was cautious despite a positive start to the week, with investors balancing trade hopes against mixed corporate updates.
  • Asia Mostly Higher as Trade Hopes Boost Sentiment: Most Asia-Pacific markets closed higher on Wednesday. Hong Kong’s Hang Seng Index climbed 2.3% and mainland China’s CSI 300 added 1.21% as easing tariffs lifted Chinese equities. South Korea’s Kospi rose 1.23%, helped by a drop in unemployment to 2.7%, its lowest since November. Australia’s ASX 200 edged up 0.13%, while Japan’s Nikkei 225 fell 0.14%, snapping a four-day rally. Tencent shares helped raise sentiment after the firm posted a 13% jump in revenue, reflecting strength in its gaming division.
  • Oil Drops after Surprise Crude Stockpile Build: Oil prices retreated after US inventory data signalled potential oversupply. Brent crude fell 54 cents, or 0.81%, to close at $66.09 a barrel, while WTI slipped 52 cents, or 0.82%, to settle at $63.15. The decline followed an unexpected 3.5 million barrel build in US crude inventories last week, according to the EIA. Additional pressure came from API data showing a 4.3 million barrel increase. Net US imports also rose sharply, deepening investor concerns
  • Treasury Yields Climb on CPI Relief and Trade Progress: US Treasury yields edged higher, reflecting improved sentiment. The 10-year yield rose to 4.536%, up 3.7 basis points, while the 2-year climbed to 4.059%, a gain of 4.2 basis points. CPI data on Tuesday showed April inflation rose just 2.3% year-over-year, below expectations. Core inflation held steady at 2.8%, helping alleviate concerns of renewed pricing pressures.

FX Today:

  • EUR/USD Slides Below 1.1200 as Correction Deepens: EUR/USD finished the session at 1.1168, down 0.14%, continuing its decline from the April peak near 1.1570. After breaking below 1.1200 earlier this week, the pair is now hovering above the 50-day SMA at 1.1092, a key short-term support zone. Momentum remains weak, and price action is beginning to form a bearish flag pattern. A decisive break below 1.1090 would expose further downside toward 1.1000 and 1.0900. Despite the recent retracement, the longer-term trend remains constructive, supported by rising 100-day and 200-day SMAs at 1.0746 and 1.0796, respectively. Bulls must defend the current support area to avoid triggering a deeper correction. A recovery above 1.1200 would be the first step to regaining upside traction.
  • GBP/USD Stalls Below 1.3300 as Bulls Lose Momentum: GBP/USD closed at 1.3260, down 0.33%, as the pair extended its consolidation phase just beneath the April high near 1.3450. Price has repeatedly failed to break through the 1.3350–1.3400 resistance zone, with the current pullback testing early support at 1.3200. The 50-day SMA at 1.3100 remains a key line in the sand. All major SMAs, 50-day, 100-day (1.2788), and 200-day (1.2867), are sloping upward, reinforcing the broader bullish structure. However, the emergence of lower highs in daily price action suggests fading momentum. A break below 1.3100 would expose the pair to deeper losses, while a recovery above 1.3350 is needed to reignite bullish control.
  • USD/CHF Holds Above 0.8400 but Faces Stiff Resistance: USD/CHF ended the session at 0.8432, gaining 0.54% and extending its recovery from April’s multi-month lows near 0.8100. The pair continues to form higher highs and higher lows in the short term, reflecting improving momentum. However, price remains capped by the 50-day SMA at 0.8505, which has consistently rejected upside attempts since early March. The long-term trend remains bearish, with the 100-day and 200-day SMAs, currently at 0.8777 and 0.8717, both trending downward. Immediate support lies at 0.8360 and 0.8300. A confirmed breakout above 0.8500 would mark a key shift in sentiment and potentially trigger a test of the 100-day SMA.
  • USD/CAD Edges Toward 1.4000 as Momentum Builds: USD/CAD settled at 1.3975, up 0.29%, continuing its upward march from the late-April lows around 1.3700. The pair is now approaching significant resistance at the 200-day SMA, located at 1.4010. While price has reclaimed the 1.3900 zone, it still trades below the 50-day SMA at 1.4085 and the 100-day at 1.4261, both of which slope lower and signal that the broader downtrend is intact. The near-term structure has turned more constructive, but a decisive close above 1.4010 is needed to suggest a deeper bullish reversal. Support is seen at 1.3900 and 1.3840, with a move below those levels risking a return to 1.3700.
  • AUD/USD Retreats after Rejection at 200-Day SMA: AUD/USD ended at 0.6428, losing 0.64% after failing to sustain gains above the 200-day SMA at 0.6457. This zone has proven to be a strong resistance cap in recent sessions, halting the pair’s recovery that began in early April. The 50-day SMA at 0.6326 is the next major support, followed by 0.6300 and 0.6260. While the 50- and 100-day SMAs have flattened or turned higher, the 200-day remains firmly downward sloping, keeping pressure on the broader trend. Price is now trapped between converging support and resistance levels, and a breakout from this compression zone will likely determine the next directional move. A push above 0.6500 could signal a more durable shift, while a drop below 0.6300 would confirm a resumption of the downtrend.
  • Gold Retreats Toward 50-Day SMA as Sellers Dominate: Gold (XAU/USD) settled at $3,180, down 2.12%, marking its fifth decline in six sessions. The metal is now directly testing its 50-day moving average near $3,150, which has historically served as dynamic support in the ongoing bull trend. A break below this level would raise the risk of a deeper correction, with $3,000 and $2,950 offering the next major support zones. Despite the sharp pullback from the early May high above $3,450, gold’s broader uptrend remains intact, with the 100-day and 200-day SMAs rising steadily. Bulls need to defend this support area to maintain upward bias. A rebound above $3,250 would be a key signal of stabilisation and renewed buying interest.

Market Movers:

  • Super Micro Computer Extends Rally: The stock surged 15.7%, adding to Tuesday’s 16% gain. Raymond James initiated coverage with an “outperform” rating, citing strong demand for AI hardware infrastructure.
  • Exelixis Pops on Earnings Beat: Shares rose 20.8% after Q1 earnings of 55 cents per share beat estimates. Revenue also topped forecasts, and the company raised full-year guidance, boosting investor confidence.
  • Oklo Rallies on Narrow Loss: Nuclear startup Oklo gained 15.6% after posting a 7-cent per-share loss, beating expectations. The result reaffirmed optimism over its clean energy prospects.
  • Nvidia, AMD Climb on Saudi AI Deal: Nvidia rose 4.2% and AMD gained 4.7% after securing chip deals with Saudi firm Humain. Bank of America raised price targets for both on AI momentum.
  • PVH Upgraded by Jefferies: PVH shares jumped 8.4% after Jefferies upgraded the stock to “buy.” Analysts see recovery potential as the company transforms operations at Tommy Hilfiger and Calvin Klein.
  • Aurora Innovation Drops on Uber News: The stock fell 6.3% after Uber announced a $1 billion convertible note offering tied to Aurora shares. The move raised concerns over dilution and long-term value.
  • American Eagle Outfitters Falls on Cautious Outlook: Shares declined 6.5% after the company withdrew its 2025 guidance. Management cited macro uncertainty and wrote down $75 million in inventory.

Investor optimism continued to build on Wednesday as tariff de-escalation drove a third straight day of gains for the S&P 500 and Nasdaq. While the Dow slipped modestly, strength in technology and AI-linked stocks helped maintain upward momentum. European markets paused after a strong start to the week, while Asian equities mostly advanced on trade relief. Oil gave back recent gains on supply concerns, and gold extended its correction. As sentiment steadies, attention now shifts to whether upcoming policy developments or earnings revisions will sustain the rally or spark renewed volatility.