Nvidia crowned as world's most valuable company

Good morning. Here's what happened overnight and what you need to know today.

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1.

Nvidia on top: Nvidia has overtaken Apple and Microsoft to become the world's most valuable company, fuelled by an AI frenzy and following a recent back-and-forth jostling among the three tech giants. Nvidia's shares rose as much as 4% on Tuesday, US time, bringing its market capitalisation over USD3.3 trillion ($4.9 trillion). The semiconductor giant’s stock has surged by two fifths in the past month and over 160% this year, driven by high demand for its AI chips, which are essential for data centres and complex computing tasks. “This is animal spirits now, it’s human emotion taking over,” Ted Mortonson, a tech strategist at Baird, told the Financial Times. “Nvidia is a fantastic company, don’t get me wrong. There are lots of drivers [for the stock]... but 40 per cent in a month, that’s not normal.” In recent weeks, Nvidia briefly surpassed Apple in market value for the first time since 2002. The two companies have since traded places, with Apple briefly reclaiming the top spot last week. Analysts are now predicting a race to the USD4 trillion market capitalisation between Nvidia, Apple, and Microsoft. (Bloomberg) (Financial Times)

2.

Yields rally: US Treasuries rallied as traders increased the odds of two Federal Reserve rate cuts this year, following weaker-than-expected May retail sales data indicating cooling consumer demand. The US Census Bureau reported retail sales, excluding vehicles, decreased by 0.1%, against economists' forecast of a 0.2% rise. Yields, which move in the opposite direction to bond prices, declined across the maturity spectrum after the release. Two-year Treasury yields fell by nearly 0.08 percentage points to below 4.69%, and the yield on the 10-year Treasury dropped by 0.06 percentage points to 4.22%. “Even a modest slowdown in consumption growth, and consequently GDP growth too, could be enough to tip a finely balanced [Federal Reserve] in favour of a rate cut in September,” Paul Ashworth from Capital Economics told Bloomberg. Market-implied odds of a quarter-point rate cut at the September meeting edged up to 68%, with a rate cut fully priced in for November and a total of 0.48 percentage points of easing anticipated by year-end. (Bloomberg)

3.

Border balance: US President Joe Biden announced new protections for around 500,000 undocumented immigrants who are married to US citizens. The program will shield these spouses from deportation, provide a pathway to citizenship, and allow them to work legally in the US. The policy aims to showcase Biden's commitment to a more humane immigration system while balancing the stricter border measures recently announced to curb asylum claims. It contrasts sharply with presidential rival Donald Trump’s promises of mass deportations. Biden's announcement coincides with the 12th anniversary of DACA, which protects those who arrived in the US as children, from deportation. The new policy will apply to spouses married to US citizens as of June 17 and who have lived in the country for at least 10 years, without a criminal record. (New York Times)

4.

Trump 2.0?: Robert O'Brien, the last national security adviser of the Trump administration, detailed potential foreign policies for a second term in an article calling for the US to cut economic ties with China completely, resume live nuclear weapons testing, and consider moving the entire US Marine Corps to Asia. Outlined in an upcoming Foreign Affairs piece, the proposals reflect a stark escalation from O’Brien’s previous public stance toward China during Donald Trump's presidency. While the policies are not yet endorsed by the former president, Bloomberg reports that O'Brien remains in regular contact with him. The 5,000-word article, titled “The Return of Peace Through Strength: Making the Case for Trump’s Foreign Policy,” was shared with the Trump campaign. It argues that the 60% tariffs on China that Trump has floated should be only the first step, followed by tougher export controls “on any technology that might be of use to China” and other measures. (Bloomberg)

5.

B(ye)NPL: Apple has discontinued its buy now, pay later (BNPL) service just months after its launch in the US, marking a setback in its ambitions to become a major provider of traditional financial services. Instead, the tech giant is introducing a new instalment loan service through third-party credit and debit card providers. Available since October 2023, Apple Pay Later was the tech giant’s major foray into traditional banking services, making interest-free short-term loans through a subsidiary of its own instead of partnering with a bank. However, since Apple first announced its BNPL product in 2022, the industry has faced intense pressure from rapidly rising interest rates, eroding value for most providers. Apple’s new loan service will be rolled out in the US in partnership with Citi and Synchrony, in the UK via HSBC and Monzo, in Australia via ANZ, and in Spain through CaixaBank. Apple Pay customers will also have access to BNPL provider Affirm loans. (Financial Times) (9to5Mac)

6.

Ocean sinks: Fisker Inc, an EV startup aiming to replicate Tesla's success, has filed for bankruptcy just a year after launching its first model, the Ocean SUV. It is the second automotive venture by luxury car designer Henrik Fisker to collapse, following Fisker Automotive's bankruptcy in 2013. Fisker Inc went public in 2020 through an Apollo-sponsored SPAC, raising approximately USD1 billion ($1.5 billion). Despite a promising start and a manufacturing deal with Magna International, the Ocean SUV faced significant software issues, delaying production and reducing delivery forecasts. The company struggled with cash flow, defaulted on debt, and missed financial reporting deadlines. After selling less than half of the over 10,000 vehicles it produced, Fisker’s cash reserves dwindled and the New York Stock Exchange delisted it. Its woes come amid broader struggles for EV makers, with declining sales and other startups like Charge Enterprises, Lordstown Motors, Proterra and Electric Last Miles Solutions also failing. (Wall Street Journal) (Bloomberg)

7.

Hargreaves hooked: The board of Hargreaves Lansdown, the UK’s largest investment site, has unanimously agreed to recommend a £5.4 billion ($10.3 billion) takeover offer from a group of private equity firms led by CVC Capital Partners. The consortium, including Nordic Capital and Platinum Ivy, has increased its offer to £11.40 per share after previous approaches were rejected. The company has requested an extension to the offer deadline, initially set for Wednesday, under UK takeover rules. Co-founder Peter Hargreaves, the largest shareholder, told Bloomberg that a turnaround of the investment platform, whose shares have fallen from a 2019 peak of £24 to as low as £7 earlier this year, was likely better done in private hands. The Bristol-based company oversees £150 billion in assets for 1.8 million customers. (Financial Times) (Bloomberg)

8.

Thai pride: Thailand's Senate has passed a marriage equality bill that positions the country to become the first in Southeast Asia to legalise same-sex marriage. The legislation amends Thailand's Civil and Commercial Code to define marriage as a partnership between two people regardless of gender, granting LGBTQ+ couples equal rights in adoption, tax allowances, inheritance, and medical consent. The bill, approved by 130 votes to 4, follows its earlier passage in the House of Representatives. It now awaits review by a Senate committee, the Constitutional Court and royal assent, all of which are expected to be granted. Prime Minister Srettha Thavisin praised the achievement, while activists celebrated the milestone as a significant victory after more than 20 years of advocacy. Thailand’s progression towards marriage equality contrasts with some other countries in the region that still criminalise gay sex. Thailand would be the third nation in Asia to enact marriage equality legislation, after Nepal and Taiwan. The new law will come into effect 120 days after royal approval. (Reuters) (New York Times)