Global financial markets entered this week in a cautious mood as investors awaited Nvidia’s highly anticipated second quarter earnings report. U.S. stock futures traded largely flat after a positive session, when the Dow Jones, S&P 500, and Nasdaq all closed higher. Gains in technology and health care, led by Nvidia and Eli Lilly, helped offset uncertainty stemming from political pressure on the Federal Reserve’s policy stance.
Nvidia remains at the center of attention. The chipmaker, now viewed as the benchmark for the artificial intelligence boom, is expected to reveal results that could either sustain confidence in the AI rally or spark a broader correction if growth appears to be slowing. Many traders are holding back from increasing exposure to AI linked stocks until the company’s figures are known, highlighting the market’s dependence on a handful of leading tech names.
Beyond Nvidia, momentum was seen across several sectors. Tesla climbed past a key technical threshold, fuelling optimism that growth stocks could regain strength. Aerospace and defence companies, including RTX, Boeing, General Dynamics, and Elbit Systems, are edging closer to breakout levels, reflecting a shift in investor appetite toward defence-related industries. Meanwhile, after
hours trading brought sharp gains for Okta and MongoDB, both of which delivered strong earnings results and signalled resilience in cybersecurity and cloud software.
Commodities and bonds added further layers to the picture. Oil prices fell by more than two percent, while the 10-year U.S. Treasury yield eased to around 4.26 percent, providing some relief to equity markets after weeks of yield-driven pressure. However, analysts warn that the broader risk environment remains precarious. Valuations across U.S. equities are nearing extremes last witnessed during the dot com bubble and even the late 1920s. With the 30-year Treasury yield approaching 4.9 percent, bonds are becoming increasingly attractive compared with stocks, raising the possibility of capital shifting away from equities in the months ahead.
Currency markets also reflected the cautious mood. The euro remained under pressure, with the EUR/USD pair slipping below 1.1600, its weakest level in three weeks, as bearish momentum continued to weigh on the single currency. The Australian dollar, by contrast, found support after stronger than expected inflation data lifted expectations of tighter monetary policy, pushing the AUD higher in early trading. The U.S. dollar also strengthened against the yen, with USD/JPY moving closer to the 148 mark as traders positioned themselves ahead of upcoming U.S. economic releases.
Market sentiment now rests on a delicate balance. Nvidia’s results will likely set the tone for technology and AI related equities, while key U.S. economic data due later this week particularly GDP and PCE inflation figures could determine the next big moves in currency markets. With valuations stretched, yields climbing, and investors cautious, both stock and forex markets appear to be bracing for heightened volatility in the days ahead.
