Nvidia supply warning keeps AI demand in focus

Summary

Nvidia remained in focus after CEO Jensen Huang said the company still faces supply constraints despite having enough capacity for very strong AI-driven growth. US stock futures edged lower as investors monitored the fragile US-Iran ceasefire, while the S&P 500 posted modest gains on Monday. Oil prices eased after recent conflict-driven gains, with Brent crude pulling back as diplomatic efforts continued. Asian markets were volatile, with sharp swings in South Korean equities and steadier trading in Hong Kong and mainland China.

Equities

The FTSE 100 started June on a weaker footing on Monday, closing 0.68% lower, while the FTSE 250 fell 0.77%. Investors weighed the economic impact of continuing tensions in the Middle East, although takeover activity and corporate dealmaking provided support for selected shares.

EasyJet surged 10% after US investment firm Castlelake confirmed it was considering a possible takeover offer for the budget airline. The move made EasyJet one of the strongest performers in the FTSE 250 and renewed speculation about consolidation in the European aviation sector.

Bluefield Solar Income Fund jumped 16% after power producer Drax agreed to acquire the renewable energy investment company in a deal valued at approximately £561 million. Drax shares also moved higher, gaining 1.8% following the announcement.

Energy stocks performed strongly as oil prices advanced. BP and Shell both rose more than 2% on Monday after reports that Iran had halted message exchanges with the United States and discussions emerged around potential disruption to shipping through the Strait of Hormuz.

Not all UK shares shared in those gains. ME Group International plunged 27% to its lowest level in more than three years after cutting its full-year 2026 profit forecast. The company said changing consumer spending patterns linked to the Middle East conflict had affected revenue during April.

Wise also came under pressure, falling 8% after reports that Belgian prosecutors are investigating approximately €500 million of potentially suspicious transactions involving the money transfer group.

In the United States, Wall Street closed higher, with the S&P 500 and Nasdaq reaching fresh record closing highs. The S&P 500 gained 0.26%, the Nasdaq rose 0.42% and the Dow Jones Industrial Average edged 0.09% higher.

Nvidia climbed 6.3% after unveiling a new chip designed to bring artificial intelligence capabilities directly to personal computers. Chief Executive Jensen Huang said the product was the result of a three-year partnership with Microsoft aimed at reshaping the personal computer market for the AI era. Microsoft shares added 2.3%.

Micron Technology rose 6.6% and traded above $1,000 for the first time. The Philadelphia Semiconductor Index gained 1.1%, although performance across the sector was mixed. Qualcomm fell 8.8% and Intel declined 4.7%.

Software stocks staged a strong recovery. ServiceNow advanced 9.2%, IBM gained 7.6% and Cadence Design Systems jumped 10.5% after launching a new Nvidia-powered artificial intelligence agent for chip design. Investors also looked ahead to Broadcom’s results later this week following recent signs of continued demand for AI-related server infrastructure.

Forex & Commodities

The US dollar was little changed early on Tuesday as investors awaited further developments in Middle East negotiations. The dollar index traded around 99.19, while the euro edged higher to $1.163 and sterling strengthened to $1.346. Market participants remained cautious following reports of a partial ceasefire between Hezbollah and Israel, although uncertainty persisted after Iranian state media reported that Tehran had halted indirect talks with the United States.

The Japanese yen weakened to ¥159.7 per dollar, remaining close to the widely watched ¥160 level that has previously prompted intervention from Japanese authorities. Japan’s Finance Minister said officials remained prepared to act in currency markets if necessary, while investors looked ahead to comments from Bank of Japan Governor Kazuo Ueda for clues on whether policymakers are preparing to raise interest rates at next week’s meeting.

Gold prices moved higher early on Tuesday, supported by lower US Treasury yields and continuing uncertainty surrounding the Middle East. Spot gold rose to $4,518 per ounce, while investors monitored conflicting reports on the status of US-Iran negotiations. Silver climbed to $76.41 per ounce, platinum reached $1,959 and palladium advanced to $1,382.

Oil prices surged late on Monday after reports that Iran had halted indirect discussions with the United States and was considering measures that could further disrupt shipping routes in the region. Brent crude settled at $94.98 per barrel, while US crude closed at $92.16. Prices had risen even further during trading before easing back after comments from President Donald Trump suggested negotiations with Iran remained active.