- Asian shares drop, 30-year treasuries hold losses
Asian shares fell and Treasuries held Wednesday’s declines as concerns grow over a proposed tax bill that
would enlarge the US deficit. A regional stock gauge dropped for the first time in three days on weaker openings
in Australia, Japan and South Korea. A gauge of the dollar edged down for a fourth consecutive session. US
equity-index futures drifted higher after the S&P 500 index closed down 1.6% on Wednesday, its sharpest slide
in a month. Yield on the 30-year US sovereign bond stayed above the crucial 5% mark. Opposition to President
Donald Trump’s tax-cut plan and the ballooning deficit is showing up in the bond market with Treasuries falling
across the curve Wednesday. Tepid demand for a $16 billion sale of 20-year bonds rekindled fears over US
government borrowing. That sapped sentiment after a sharp rebound in risk assets over the past month and
revealed structural concerns in the debt market. - Dow slides more than 800 points as spiking Treasury yields and deficit fears spur a sell-off
Stocks sold off on Wednesday, pressured by a sharp spike higher in Treasury yields as traders grew worried
that a new U.S. budget bill would put even more stress on the country’s already large deficit. The Dow Jones
Industrial Average lost 816.80 points, or 1.91% to 41,860.44. The S&P 500 shed 1.61% to 5,844.61. The Nasdaq
Composite slid 1.41% to 18,872.64. The 30-year Treasury bond yield last traded around 5.09%, touching the
highest level going back to October 2023. The benchmark 10-year Treasury note yield traded at 4.59%. - Oil prices dip after bearish US government report on crude supplies
Oil prices dipped on Wednesday after the U.S. government released bearish data on crude and fuel supplies
ahead of the start of the summer driving season in the United States, a period of higher demand. Prices had
earlier increased about 1% following reports Israel could be preparing to strike Iranian nuclear facilities raised
fears of a supply disruption in the Middle East. Brent futures fell 47 cents, or 0.72%, to close at $64.91 a barrel.
U.S. West Texas Intermediate crude was down 46 cents, or 0.74%, to settle at $61.57. U.S. crude, gasoline and
distillate inventories all posted surprise builds in the week ended May 16, according to the latest data from the
Energy Information Administration on Wednesday. Crude inventories rose by 1.3 million barrels, while gasoline
stocks rose by about 800,000 barrels and distillate stockpiles added about 600,000 barrels. “The EIA report saw
builds for crude, gasoline and distillate, which market participants didn’t like,” said Giovanni Staunovo, an
analyst at UBS. The data caused oil futures to turn negative after finding support earlier in the session from
news that U.S. intelligence suggests that Israel is preparing to strike Iranian nuclear facilities, CNN reported on
Tuesday, citing multiple U.S. officials. - Weaker dollar, geopolitical uncertainty push gold to one-week high
Gold prices rose for a third straight session on Wednesday and hit a one-week high, helped by a softer dollar
and safe-haven demand amid economic and geopolitical uncertainty. Spot gold was up 0.7% at $3,312.77 an
ounce. U.S. gold futures settled 0.9% higher at $3,313.50. The U.S. dollar fell 0.6% against a range of other
currencies, making gold less expensive to buy for overseas currency holders. Wall Street’s main indexes slipped
and government bond yields rose, as investors closely watched a pivotal debate over U.S. President Donald
Trump’s tax-cut bill that has fanned concerns about the country’s growing debt. “We are kind of paused here
in mid-range between the high and recent low, waiting for a signal of more trade and tariff deals,” said Daniel
Pavilonis, senior market strategist at RJO Futures. The outlook for the U.S. economy remains weak despite a
temporary cooling of the U.S.-China trade war, a Reuters poll of economists showed. - UK inflation surges to 3.5% in April as household bills spike
The U.K.’s annual inflation rate hit 3.5% in April, coming in above analyst expectations, according to data
released by the Office for National Statistics (ONS) on Wednesday. Economists polled by Reuters had
anticipated the consumer price index would reach 3.3% in the twelve months to April. The latest data release
comes against a recent trend of cooling inflation, with the rate of price rises slowing to 2.8% in February and
2.6% in March. Core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, rose by
3.8% in the year to April, up from 3.4% in the twelve months to March. The largest upward contributions to
the monthly change in the inflation rate came from housing and household services, transport, and recreation
and culture. On the other end of the spectrum, the largest — partially offsetting — downward contribution
was from clothing and footwear, the ONS said in a press release. The data highlighted increasing pressures on
British households, as prices of electricity, gas and other fuels rose by 6.7% in the year to April. The prices of
water and sewerage rose by 26.1% in the month to April, marking the largest monthly hike since at least
February 1988, the ONS said. - Cigna announces new deal for copay caps on Eli Lilly and Novo Nordisk weight loss drugs
Cigna’s Evernorth unit said a new coverage deal with Eli Lilly and Novo Nordisk will bring lower copays for
insured patients. The company hopes the new discount, which caps monthly out-of-pocket costs at $200 for
Wegovy and Zepbound, will convince more employers to offer coverage of the drugs. Cigna’s announcement
follows CVS Caremark designating Wegovy as its preferred weight loss drug last month. - Bitcoin jumps to new all-time high, surpassing prior record in January
Bitcoin rose to a new all-time high on Wednesday, breaking its January record. The price of the flagship
cryptocurrency was last higher by 2% at $108,955.10, according to Coin Metrics. Earlier, it rose as high as
$109,500. “Bitcoin’s new high has been concocted by an array of favorable ingredients in the macro cauldron,
namely softer U.S. inflation numbers, a de-escalation in the U.S.-China trade war and the Moody’s downgrade
of U.S. sovereign debt, which has put the spotlight on alternative stores of value like bitcoin,” said Antoni
Trenchev, cofounder of crypto exchange Nexo. - Alphabet shares gained 2.8% after the company said it will offer “AI mode” in search to all US users,
showing its commitment to redesigning its core business to keep pace with new rivals in the artificial
intelligence age
Alphabet analysts are positive on the Google parent in the wake of its developer conference event which
focused on artificial intelligence. Bloomberg Intelligence: Google Overview’s 10% growth in search query
volume and 65% expansion in Google Lens visual search “suggest minimal cannibalization of traditional search
from the rollout of its LLM-based search and Gemini app,” and “its advantage with personalization features
from Search, Gmail, Chrome and YouTube user histories could help bring more agentic capabilities to Chrome,
Search and Gemini.” JPMorgan (overweight, PT $195): “While there is a long, competitive road ahead, we come
away more confident that Google can successfully navigate the shift to AI Search.” The company “is leading in
many areas of AI with Gemini at the top of foundational model leaderboards, AI Mode bringing Gemini into
Search and incorporating agentic capabilities from Astra, Mariner, & Deep Research, and Gemini becoming
widely available across numerous platforms (iOS & Android) & device types (smartphones, wearables, & auto)”.
Baird (outperform, PT $190): The event “showcased a number of important advancements for Google that
should help protect Search leadership, pave the way to a universal assistant (the next killer app), and keeps
Google in the race towards AGI”. “It’s a tough and competitive landscape, but Google’s global scale,
infrastructure and suite of apps are meaningful competitive advantages,” and “there are more commercial
(revenue) opportunities to unlock with AI Mode and Agent Mode as users spend more time on Google surfaces
and overall query volume growth expands”. - UnitedHealth shares fell 5.8% after the Guardian newspaper reported that the health insurer secretly paid
nursing homes to reduce hospital transfers for ailing resident
Nursing home residents who needed immediate hospital care under the program failed to receive it, after
interventions from UnitedHealth staffers, the Guardian reported. In the report, UnitedHealth told the Guardian
that the suggestion that its employees have prevented hospital transfers “is verifiably false” and that its bonus
payments to nursing homes help prevent unnecessary hospitalizations. TD Cowen analyst Ryan Langston says
the report is “yet another item lending to uncertainty surrounding UNH”. “We see elevated negative headline
risk in the near term as well”. - Target shares fell 5.2% as Wall Street analysts say that Wednesday’s fiscal year guidance cut may not be
the last, given impact from tariffs and pricing needs
RBC (outperform): With ~50% of Target’s products sourced internationally (RBC estimates ~25% from China),
the company is in a “challenging position,” analyst Steven Shemesh writes. Target will likely need to boost
prices meaningfully, which could result in further market share losses as price gaps vs. peers widen. Notes that
Target’s product assortment skews more discretionary; as such, traffic has been an issue in between key
seasonal events, with a more cautious consumer. Looking to hear additional details about what management
expects to achieve with the new enterprise acceleration office, but at this point, Shemesh is not 100%
convinced that the revised guidance “completely embeds risk”.Bernstein (underperform): “Target delivered a
messy 1Q as the company struggles to engage with shoppers in store,” analyst Zhihan Ma writes. 1Q comp.
sales were “meaningfully below” sell-side consensus, but “slightly better” than what bears had feared on the
buyside. - Snowflake gave a strong outlook for quarterly sales after launching a slew of new products over the last
year
Product revenue, which makes up the bulk of the software company’s business, will increase about 25% to as
much as $1.04 billion in the quarter ending in July, the company said. Analysts, on average, estimated $1.03
billion. The company also raised its full-year forecast for product revenue to about $4.33 billion from $4.28
billion. That bump, coming despite an uncertain economic environment, “illustrates management’s confidence
in the durability of near-term demand,” wrote Kirk Materne, an analyst at Evercore ISI. Shares are up 7.4% in
afterhours trading. Fiscal first-quarter product revenue increased 26% to $996.8 million, compared with the
average estimate of $966 million. Remaining performance obligations — another key benchmark of growth —
were $6.7 billion in the period ended April 30, topping the average estimate of about $6.57 billion. - Baidu earnings beat by ¥4.70, revenue topped estimates
Baidu (NASDAQ: BIDU) reported first quarter EPS of ¥18.54, ¥4.70 better than the analyst estimate of ¥13.84.
Revenue for the quarter came in at ¥32.45B versus the consensus estimate of ¥31B. Baidu’s stock price closed
at ¥89.34. It is down -2.13% in the last 3 months and down -12.76% in the last 12 months. Baidu saw 6 positive
EPS revisions and 2 negative EPS revisions in the last 90 days. - XPeng Shares Soar After Q1 Revenue Surges 142% on Record Deliveries
Shares of XPeng (NYSE:XPEV) jumped about 12% on Wednesday after the electric vehicle maker posted
stronger-than-expected first-quarter results. Revenue rose 141.5% year-over-year to RMB15.81 billion ($2.19
billion), topping the RMB15.69 billion consensus estimate. The surge was supported by record deliveries of
94,008 vehicles in the quarter, a 331% increase from the same period last year. Adjusted diluted net loss per
American depository share narrowed to RMB0.45, down from RMB1.49 a year earlier and below the projected
RMB1.51 loss. Gross margin improved to 15.6% from 12.9% a year ago. The company ended the quarter with
RMB45.28 billion in cash, short-term investments, and deposits, up from RMB41.96 billion at the end of 2024.
XPeng’s CEO, Xiaopeng He, said the company hit a new quarterly delivery record despite seasonal trends,
adding that more high-volume models are on the way as part of its long-term strategy. For the second quarter,
XPeng expects to deliver between 102,000 and 108,000 vehicles, with revenue seen rising 116% to 131% year
over-year to RMB17.5 billionRMB18.7 billion. - Zoom Communications Reports Financial Results for the First Quarter of Fiscal Year 2026
First quarter total revenue of $1,174.7 million, up 2.9% year over year as reported and 3.4% in constant
currency. First quarter Enterprise revenue of $704.7 million, up 5.9% year over year. First quarter GAAP
operating margin of 20.6% and non-GAAP operating margin of 39.8%. First quarter GAAP EPS of $0.81,
up 18.7% year over year, and non-GAAP EPS of $1.43, up 6.0% year over year. Number of customers
contributing more than $100,000 in trailing 12 months revenue up 8.0% year over year. Repurchased
approximately 5.6 million shares of common stock in Q1, up from 4.3 million shares in Q4.
