Markets between Nvidia and diplomacy: the week ends better than it began.

Asia is weak as markets await AI's verdict.

The second half of the week began with a cautious signal from Asia. The MSCI Asia-Pacific ex-Japan index fell 0.7% on Wednesday, marking its fourth consecutive session of decline, while the Japanese Nikkei fell 1.5% , its fifth straight decline. The message was clear: ahead of Nvidia's results, the market was reluctant to overexpose itself. The problem wasn't just technological, but also macroeconomic: US yields had rebounded sharply, oil remained sensitive to news about the Strait of Hormuz, and the dollar was hovering near its highest level in over a month.

The wait for Nvidia had become the real test of the week. Analysts were looking at revenue expectations of around $78.8 billion , already a huge level, nearly 80% above the previous year. But the group did even better: in its fiscal first quarter, it reported record revenue of $81.6 billion , up 20% from the previous quarter and 85% year-over-year. The Data Center segment hit $75.2 billion , a 92% increase year-over-year. Nvidia also announced a new $80 billion buyback plan and a quarterly dividend increased from $ 0.01 to $0.25 per share.

Wall Street recovers: the rally remains strong

After the initial period of uncertainty, Wall Street closed the week on a decidedly more constructive note. On Friday, the S&P 500 rose 0.37% to 7,473.47 points , the Dow Jones Industrial Average rose 0.58% to 50,579.70 , while the Nasdaq gained 0.19% to 26,343.97 . The Russell 2000, more sensitive to US domestic growth, outperformed the major indices with a gain of 0.9% . On a weekly basis, the S&P 500 marked its eighth consecutive week of gains, with a gain of 0.9% , while the Dow gained 2.1% and the Nasdaq 0.5% .

Interestingly, the market wasn't just buying technology. The rally was also supported by the decline in yields after the tensions at the start of the week: the 10-year US Treasury fell to 4.558% , after having reached its highest levels since January 2025 in the previous days. The 30-year, however, had reached 5.201% during the week, its highest level since 2007. This explains why the market remained highly sensitive to every move in bonds: with yields this high, even strong earnings and an AI narrative aren't always enough to prevent profit-taking.

Europe supported by technology and diplomacy

In Europe, the picture was more orderly. The STOXX 600 closed Friday up 0.73% at 625.12 points , its highest level in over a month and its best week in the last seven . Here, too, the driving force was twofold: on the one hand, the boost from semiconductors following Nvidia, and on the other, the hope that negotiations between the United States and Iran could reduce the risk premium on oil, inflation, and trade routes. The European technology sector rose by around 3.2% , benefiting names like ASML, Infineon, and STMicroelectronics.

The difference compared to Asia is that Europe has reacted better to geopolitical news. This doesn't mean that risk has disappeared, but that investors are starting to distinguish between an escalation scenario and a negotiation scenario. The week, in fact, wasn't driven solely by balance sheets: it was a constant oscillation between fears of energy inflation and hopes for a truce.

Iran-US: The market buys rumors, but Tehran holds back.

On the geopolitical front, several media outlets have reported a draft agreement between the United States and Iran and a possible imminent announcement. The news has boosted risk assets, but should be interpreted with caution: according to Reuters, a Qatari negotiating delegation has arrived in Tehran to contribute to a potential agreement, while the Guardian reported that the goal is a memorandum on the Strait of Hormuz, capable of opening a 30-day phase of further negotiations. However, Iran has downplayed the idea of an immediate breakthrough, and Washington has spoken only of "some progress," with differences still profound.

This is a key point for the markets. If Hormuz remains unstable, oil could continue to inflate transportation, energy, and industrial goods. If diplomacy advances, however, yields can rebound and indices can recover multiples. It's no coincidence that WTI closed Friday at $96.60 a barrel and Brent at $ 103.54 , still high levels, but far from the worst-case scenarios priced in at times of peak tension.

Japan, the dollar, and commodities: inflation under control, but not resolved

A seemingly reassuring figure came from Japan. Core inflation in April fell to 1.4% , a four-year low, from 1.8% and below expectations of 1.7% . The Bank of Japan's inflation index, excluding fresh food and energy, also slowed to 1.9% . The reading confirms more controlled inflation, aided by government subsidies and the decline in school spending, but the energy risk remains open should oil prices rise.

On the currency front, the dollar remained strong: the Dollar Index rose to 99.24 , the euro fell to $ 1.1611 , and the dollar/yen exchange rate moved to $159.13 . Gold, however, lost 0.78% to $4,506.47 an ounce, a sign that part of the market reduced hedging demand at the end of the week.

Conclusion: Rally alive, but more dependent on macro

The second half of the week revealed a still-strong market, but less easy to understand. Nvidia confirmed that AI remains the cornerstone of global profits, Wall Street continued its rally, and Europe found support in technology. But beneath the surface, three crucial variables remain: high bond yields, Brent crude oil above the $100 mark, and US-Iran diplomacy still unconfirmed.

In short, the market isn't ignoring the risks: it's discounting them day by day. And for now, it continues to believe that profits, AI, and negotiations can offset energy inflation and geopolitical tensions. But if a truce doesn't actually arrive, the story of the week could quickly change.