The day's tape carries two big tailwinds and one nagging tension. Nvidia delivered the kind of print that extends the AI bull thesis, and the U.S.-Iran negotiations look closer to resolution than at any point since the war began. The catch is the yen, once again pressing against levels that historically force Tokyo's hand.
A Print That Resets the AI Bar
Nvidia reported Q1 fiscal 2027 revenue of $81.6 billion, comfortably above the roughly $78 billion consensus, and guided Q2 to $91 billion against the average estimate of $86.84 billion. The board authorized $80 billion in fresh buybacks and lifted the quarterly cash dividend to 25 cents from 1 cent. The Q2 guide explicitly excludes any data center compute revenue from China, meaning any easing in licensing lands as pure upside.
The initial after-hours reaction was muted, with shares dipping around 1% before fading higher as the buyback size and guide were digested. By the Asia session, the AI complex was bid hard. SoftBank Group surged nearly 20% on signs of AI's strong momentum after Nvidia's blockbuster earnings, dragging the Nikkei 225 up 3.5% and giving the index a clean catch-up after weeks of underperforming Wall Street.
Iran Talks Enter the Final Stage
President Trump told reporters the administration was in the final stages of negotiations with Iran, language markets read as the closest signal yet of an actual settlement. Wall Street ran with it: Dow, S&P, and Nasdaq all moved convincingly up, while Oil moved the other way for once as WTI closed 5% lower.
Satellite data showing three supertankers passing through the Strait added a tangible signal to the optimism. However, Brent steadied above $105 per barrel on Thursday, telling us the market isn't ready to fully price out the disruption premium. Abu Dhabi National Oil Co.'s CEO said full recovery in Middle Eastern oil flows is unlikely before late 2027, and Persian Gulf shipments take nearly two months to reach end markets. The risk premium compresses gradually, not in one session.
The Yen Won't Cooperate
Japan's exports rose at the fastest pace since January, rising 15% in April, exceeding expectations thanks to a surge in semiconductor shipments. That said, USD/JPY is sitting near 159/160, well within the zone that triggered intervention in late April. Japan's benchmark 10-year government bond yield surged to 2.8%, its highest level since September 1996, which usually argues for a stronger yen. The fact that it isn't materializing tells us how heavy the dollar bid remains while Fed cut expectations stay capped by sticky, oil-driven inflation. Watch for verbal warnings or actual MOF action.
The path of least resistance today is up for equities and down for oil. The two items that can flip that quickly are a breakdown in Iran talks, which would send oil back toward the highs, and intervention risk in JPY, where a sudden Tokyo move could ripple through carry trades.