Mixed start for European equities this morning but London and Frankfurt are still on for weekly gains of about 2%. The FTSE 100 is flat this morning with oil majors lower in the wake of Sunak’s windfall tax. US stock markets are also set to snap am 7/8-week losing streak, with the Dow up 4.4% and S&P 500 up 4% this week after notching solid gains on Thursday following some hot retail numbers from Dollar Tree and Dollar General.  Futures are steady on Wall Street so we wait to see which way it breaks on the PCE numbers later. Oil is bid, stacking up a 2-month high: only way for it to go given the unleashing of demand into a super-tight market IMHO. Crypto is weaker, counter to the broader moves in risk, which is a worry for bulls, with Bitcoin under $29k this morning.

Nvidia – after dipping hard in the pre-market following light guidance, rallied 5% over the normal session as investors reassessed the numbers and maybe thought this stock had fallen enough. This could be a signal for bulls that there is further to run in the current bounce in the broader market. Selling momentum in semis (SMH) has started to slow and we can now maybe look for tactical rally. 

The S&P 500 remains within last week’s range but the move is clear and has the kind of sellers’ exhaustion bear-market rally look about it. Oversold stocks and 7-straight down weeks for the S&P 500 create conditions for dip-buying and short-covering pops. Vix grinds lower suggesting relief and Treasury yields continue to ebb lower, easing pressure on higher multiple stocks. We should also watch for month-end rebalancing going into the holiday weekend (Memorial Day in the US on Monday sees the NYSE shut).  

Elon Musk is being sued by Twitter investors for delaying disclosure of his stake in the company. The claim says Musk saved himself $156m by not disclosing the investment earlier. I don’t think this is really very material but it does show that the SEC is doing absolutely NOTHING about Musk, who seems to make his own rules. 

Dollar weakness is another factor that can support risk. DXY is back under 102 and looking at the 50% retracement of the run-up since the end of March. GBPUSD is breaking out of the neckline of the inverted head and shoulders and EURUSD has made a fresh one-month high above 1.07, stumbling a bit this morning at the 50-day SMA. PCE inflation data today – core seen falling to 4.9% from 5.2% last month – this could be a big moment if the numbers indicate a peak in inflation.