Key Takeaways
- PDD Holdings (PDD) shares face pressure after a significant Q1 earnings miss, with adjusted earnings per ADS of 9.51 Yuan falling far short of the 16.08 Yuan estimate.
- Russia threatens to suspend oil and gas supplies to Armenia if it continues its EU accession process, a move that could jeopardize 40% of Armenia's trade turnover.
- The IRGC Navy maintains its prohibition on "hostile" vessels in the Strait of Hormuz, though 23 vessels have transited the strategic waterway in recent hours.
- US mortgage applications plummeted 8.5% last week as the 30-year fixed mortgage rate climbed to 6.65%.
- Rumors of a potential Iran-US agreement within weeks have surfaced from Arabic sources, offering a glimmer of hope for regional de-escalation.
Corporate Earnings: PDD Misses While National Bank of Canada Beats
PDD Holdings (PDD) reported disappointing first-quarter results that sent ripples through the e-commerce sector. The company posted revenue of 106.23 billion Yuan, missing the analyst estimate of 108.6 billion Yuan. The bottom line was even more concerning for investors, as adjusted earnings per ADS came in at 9.51 Yuan, significantly below the anticipated 16.08 Yuan.
In contrast, National Bank of Canada (NA) delivered a solid second quarter, reporting adjusted EPS of C$3.23, which beat the C$3.14 estimate. The bank's adjusted revenue reached C$3.918 billion, topping the C$3.81 billion forecast. Despite the beat, the bank's CET1 ratio of 13.5% was slightly lower than the 13.7% analysts had expected.
Geopolitical Volatility: Middle East and Russia-Armenia Tensions
Geopolitical risks remain at the forefront of market concerns. The IRGC Navy reaffirmed that vessels from "hostile countries" are still prohibited from passing through the Strait of Hormuz. While the IRGC noted that 23 vessels have successfully passed in recent hours, the ongoing restrictions continue to threaten global energy supply chains.
Simultaneously, rumors are circulating via Arabic sources that an Iran-US agreement could be possible within a few weeks. This potential diplomatic breakthrough comes as ECB's Santos Pereira warned that the Middle East conflict is expected to have a "significant impact" on price developments, potentially complicating the central bank's inflation fight.
In Eastern Europe, Russia has escalated its pressure on Armenia. Foreign Ministry spokesperson Maria Zakharova stated that Moscow will suspend gas and oil supplies to Armenia if it proceeds with its EU accession process. Such a move would be devastating for Yerevan, as the EU is considered incompatible with the Eurasian Economic Union, and Armenia risks losing nearly 40% of its trade turnover.
Macroeconomic Headwinds: US Housing and Tech Skepticism
The US housing market continues to struggle under the weight of high borrowing costs. MBA Mortgage Applications for the week ending May 22 dropped by 8.5%, a sharp acceleration from the previous week's 2.3% decline. The 30-year mortgage rate rose to 6.65%, further dampening demand for new home purchases and refinancings.
In the technology sector, the initial euphoria surrounding artificial intelligence is facing a reality check. Uber (UBER) is reportedly doubting whether its massive AI investments are yielding significant returns. According to a report by The Verge, the ride-hailing giant is struggling to find a direct link between rising compute costs and tangible improvements in consumer-facing features.
Energy and Finance: Eni Buybacks and Gold Incentives
In the energy sector, Eni (E) announced it will begin the second tranche of its €2.8 billion share buyback program in the coming days. This move underscores the company's commitment to returning capital to shareholders despite the volatile global energy landscape.
Meanwhile, the Hong Kong Exchanges and Clearing (HKEX) is looking to bolster its position in the commodities market. The exchange announced plans to introduce incentive programs for gold futures, aiming to attract more liquidity as investors seek safe-haven assets amidst ongoing global instability. This comes as the IDF reported striking over 150 Hezbollah sites in Southern Lebanon and Beqaa, while several explosive drones hit Israel near the Lebanese border.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.