Semiconductors power markets to new all-time highs

Summary

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Moving Markets – "Semiconductors Power Markets to New All-Time Highs"

Podcast by Julius Baer | Date: May 6, 2026
Host: Helen Frear
Guests: Mike Rauber (Market News), Nenad Dinich (European Earnings)

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Episode Overview

In this episode, Helen Frear is joined first by Mike Rauber for a comprehensive roundup of the latest global market movements, highlighting the explosive rally in semiconductor stocks and pivotal shifts in asset allocation by major tech giants. Later, Nenad Dinich delivers an in-depth update on Europe's Q1 earnings season, examining sector drivers, risks, and where selective investing may pay off amid macro uncertainty. The central theme is the surge in semiconductors powering new market highs, and the contrasting outlooks between the US and Europe.

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Key Discussion Points & Insights

1. Global Market Recap & Semiconductor Surge

(00:33 – 06:31)

• Equity Markets:

  • Global equities rose on the back of strong corporate earnings.
  • Notably, US semiconductor stocks led the market higher:
    • Micron up over 10%
    • Intel up to 14% on Apple talks
    • AMD surged 16% after earnings
  • S&P 500 reached a new all-time high, up 0.8%; Russell 2000 jumped 1.6%.

• European Markets:

  • “European stocks advanced on strong earnings from Anheuser Busch and record profits at Unique Credit. Both stocks were up nearly 10%.” – Mike Rauber (00:46)
  • Euro Stoxx 50 climbed 1.8%.

• Oil & Currencies:

  • Brent crude slipped below $110 but remained above key levels
  • “UK long term borrowing costs jumped to a 28 year high... 30 year gilt yields jumped to 5.78%.” – Mike Rauber (02:25)
  • Pound sterling unexpectedly rose; Swiss inflation ticked up, though still far below Euro area levels.

• US Data and Services:

  • US ISM Services index fell to a five-month low at 53.6; input costs highest since 2022, signaling caution.
  • “New orders softened signaling rising caution among firms and consumers. But on the positive activity still expanded across most services industries...” – Mike Rauber (01:49)

• Tech Giants & USD Diversification:

  • US dollar asset diversification, notably:
    • "Alphabet completed its biggest ever euro bond sale at 9 billion euros and also tapped the Canadian dollar market for the first time." – Mike Rauber (03:55)
    • Marked trend of US tech companies seeking non-dollar funding amid large data center investments.

• Asia & Semiconductors:

  • Positive spillover effect in Asia: South Korea’s Kospi up >6% (record), driven by Samsung’s 15% jump, passing $1 trillion valuation.
  • "Samsung is also seen as a potential supplier for Apple chips like Intel..." – Mike Rauber (04:41)
  • China's sentiment improved; Japan closed for holiday.

• Commodities & FX:

  • Gold up 2% to $4,646/oz; Japanese yen rallies as authorities intervene.

• Upcoming Earnings & Data:

  • Novo Nordisk beat expectations; BMW, Uber, Walt Disney to report.
  • Focus ahead on French industrial production, the US ADP employment report, and US Treasury activity.

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2. European Q1 Earnings Season Analysis

(06:41 – 11:26)

• Headline Numbers:

  • “Earnings growth for the first quarter is currently running at around 6% year on year, which is a clear improvement from the 3% projection at the beginning of the quarter.” – Nenad Dinich (07:06)
  • Only 56% of European companies beat consensus, below both the European average and far less than the US’s 84%.
  • All 11 sectors in the S&P 500 posted positive growth for the first time in four years, showing the US’s broader-based rally.

• Sector Drivers:

  • “Oil and gas alone account for more than one third of the projected EPS growth for the Stoxx 600 this quarter.” – Nenad Dinich (08:18)
  • Excluding oil and gas, earnings growth drops to just 3.8%.
  • Risks tilt toward possible earnings downgrades for Europe, given weaker recent economic indicators and company guidance.

• Macro Risks & Geopolitics:

  • About 25% of firms expect demand hits from the Iran war.
  • Re-emergence of trade risks: possible US tariff hike on European autos (from 15% to 25%). Direct index impact is low (autos = ~1.5% of Stoxx 600) but Germany is especially exposed.

• Investment Opportunities:

  • “We continue to prefer getting exposure to cyclicals via financials rather than through consumer related sectors. European banks delivered very strong first quarter earnings beats, profitability remains structurally higher and also the ROE is still very robust.” – Nenad Dinich (09:59)
  • Bank valuations remain reasonable; room for further re-rating even if rate hikes materialize.
  • “Dispersion remains very elevated in industrials, materials and IT… this creates basically opportunities for active investors and a more selective stock picking approach.” (10:24)
  • Bottom-up stock selection is increasingly important amid top-down uncertainty.

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Notable Quotes & Memorable Moments

• On the US earnings rally:
  “For the first time in four years, all 11 sectors in the S&P 500 are delivering positive earnings growth. So it’s really a broad-based earnings rally, not only driven by technology.”
  – Nenad Dinich (07:45)

• On European sector concentration:
  “Oil and gas alone account for more than one third of the projected EPS growth for the Stoxx 600 this quarter.”
  – Nenad Dinich (08:18)

• On investment approach:
  “The uncertain macro environment in Europe makes a pure top-down sector allocation more challenging, whereas a bottom-up stock selection approach becomes increasingly more important to generate alpha.”
  – Nenad Dinich (10:54)

• On semiconductors lifting markets:
  “US markets were led by semiconductor stocks… The S&P 500 rose 0.8% on the day, reaching another all time high…”
  – Mike Rauber (00:46 – 01:21)

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Timestamps for Important Segments

• 00:33 – 03:35: Global market and macro update, including equity, oil, and currency moves
• 03:35 – 04:20: US dollar diversification, US tech giant bond issuance
• 04:41 – 05:26: Asia rallies, Samsung milestones, and PMIs
• 06:41 – 07:45: Europe’s Q1 earnings season – headline results and US comparison
• 08:18 – 09:50: Sector drivers, macro concerns, and trade risks in Europe
• 09:59 – 11:26: Sector allocations, opportunities, and the shift to stock picking

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Insights Summary

• Semiconductors are powering global equity rallies, with US and Asian chipmakers leading indexes to fresh highs.
• US tech giants are seeking non-USD funding to finance massive infrastructure investments; Alphabet’s record euro and Canadian dollar bond sales are a key example.
• Europe’s earnings season is stable on the surface, but hides risks and is heavily reliant on oil and gas. The outlook is relatively less optimistic than in the US, with fewer companies beating expectations and persistent macro headwinds.
• For investors, selective stock picking in Europe—especially in financials, industrials, materials, and IT—is emphasized over broad sector bets due to substantial intra-sector performance differences.

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This episode provided a sharp, data-driven look at the global impact of semiconductors on markets and outlined where European earnings diverge from the roaring US performance, with actionable views for investors navigating a complex landscape.

Transcript

[A]

Good morning everyone and welcome to Julia Spare's Moving Markets Podcast. It's Wednesday 6th May and my name is Helen Frear. I'll be speaking first of all this morning to my colleague Mike Rauber, who has a roundup of the latest in financial markets. And then I'll be talking to Nenad Dinich for an update on the earnings season in Europe. So that's coming up, but as usual, let's start with the market news. Good morning, Mike.

[B]

Good morning, Helen.

[A]

Global equities rose yesterday supported by a run of strong corporate earnings while oil prices slipped. Although Brent crude oil did stay above $110 a barrel.

[B]

The US played down Iran's military actions against Dubai, signaling a willingness not to escalate tensions and this definitely helped market mood. European stocks advanced on strong earnings from Anheuser Busch and record profits at Unique Credit. Both stocks were up nearly 10%. The Euro Stoxx 50 advanced 1.8% on the day. In the US markets were led by semiconductor stocks. Micron jumped more than 10%, intel gained up to 14% on reports of talks with Apple and AMD surged over 16% after market following its earnings release. The S&P 500 rose 0.8% on the day, reaching another all time high while the small cap Russell 2000 advanced 1.6%.

[A]

US data yesterday showed the services sector expanding at a slower pace in April order growth cooled and input costs remained high.

[B]

Indeed the ISM Services index fell to a five month low of 53.6 points while prices paid remain elevated at 70.7. That's the highest since 2022. New orders softened signaling rising caution among firms and consumers. But on the positive activity still expanded across most services industries and in the

[A]

UK long term borrowing costs jumped to a 28 year high as worries intensified, local elections there and the impact of soaring energy prices.

[B]

30 year gilt yields jumped to 5.78% now that's the highest since 1998 while 10 year yields moved above 5%. This reflects investor unease over inflation, strained public finances and political pressure on Prime Minister Keir Starmer. UK equities fell, underperforming the rest of Europe sharply but surprisingly at a pound sterling growth on the day and Swiss

[A]

inflation rose to a 16 month high in April with consumer prices up 0.6% year on year and this was driven mainly by higher energy prices.

[B]

The data also showed Swiss core inflation easing to 0.3% pointing to contained underlying price pressures, a pattern seen in many other countries. While the central bank expects Q2, inflation at 0.5%. Economists do not anticipate a rate hike before 2028, even though markets price in a possible move by year end. One also needs to keep in mind Swiss inflation remains well below the euro's area's 3% rate.

[A]

All right now US dollar asset diversification is a key theme in financial markets at the moment. We also see it in the increase in non US dollar bonds. Issue the large US tech companies that need to tap the non US dollar bond market for their massive data center investments.

[B]

Yeah, and that also led Alphabet to complete its biggest to date euro bond sale at 9 billion euros yesterday. And it also tapped the Canadian dollar market for the first time raising 8.5 billion Canadian dollars. Now the transactions highlight how Alphabet has shifted funding more decisively away from the US by than other US hyperscalers.

[A]

And this morning then, Asian stocks are up 1.8%, a new record high. Brent crude is down to $108 a barrel after President Trump said the US would pause project Freedom. That's its effort to help ships exit the Strait of Hormuz. And he cited great progress towards a final agreement.

[B]

Strong US semiconductor gains are also having a very positive impact on Asian markets. South Korea's Kospi is up more than 6%, a record high. The rise is driven by a 15% surge in Samsung Electronics which has reached $1 trillion valuation, only the second Asian company to do so. Samsung is also seen as a potential supplier for Apple chips like intel that I mentioned at the start. And overall in Asia, China's onshore CSI is up 1.6% after a long weekend while Japan is closed for a holiday and reopens tomorrow. Separately, PMI data shows sentiment improved in China and India in April despite rising price pressures.

[A]

Okay, so sentiment is risk on in Asia then and this is helping gold to advance 2% to $4,646 an ounce. And the US dollar is a little bit weaker.

[B]

Most of the US dollar decline is against the Japanese yen actually with the yen up as much as 1.4% to 1. Extending gains after Japanese authorities intervened on 30th of April when USDJPY breached 160.

[A]

And over to today we have Novo Nordisk. They've come out with earnings this morning and they've reported better than expected first quarter profit.

[B]

Indeed, the market is taking it well. Just looking, I see that the shares are expected to open about 3% higher. Other companies reporting today include BMW, Uber and Walt Disney, to name just a few. On the economic data front, the focus is on French industrial production and in the US it's the ADP employment report and the US Treasury's quarterly refunding. That's all from me.

[A]

Very good. Thank you very much, Mike. Great to speak to you again today.

[B]

Thank you very much for having me, Helen.

[A]

Now let's move on to you. Nenad, good morning and welcome.

[C]

Good morning, Helen.

[A]

And you have an update for us on the Q1 earnings season in Europe this morning. So we're almost halfway through now and investors have been closely watching whether companies can still deliver resilient results despite the weaker macro backdrop. What are your takeaways overall from the reporting season so far?

[C]

Nerad so the headline numbers in Europe are actually holding up quite well so far. Earnings growth for the first quarter is currently running at around 6% year on year, which is a clear improvement from the 3% projection at the beginning of the quarter. But once you go below the surface, the momentum is clearly weaker, especially compared to the US so only 56% of European companies beat consensus earnings estimates, which is slightly below the long term European average and also well below the US where 84% of companies are beating estimates. And importantly, the strength in the US is much broader. So for the first time in four years, all 11 sectors in the S&P 500 are delivering positive earnings growth. So it's really a broad based earnings rally, not only driven by technology. Europe simply cannot keep up with these figures at the moment.

[A]

Which sectors have been driving earnings growth in Europe so far and do you see the outlook for the broad index improving over the rest of the year?

[C]

The earnings profile in Europe is currently quite concentrated, so oil and gas alone account for more than one third of the projected EPS growth for the Stoxx 600 this quarter. And if you exclude the oil and gas sector, first quarter earnings growth drops from around 6% to just 3.8% year on year. Looking ahead, we believe the risks to earnings expectations are tilted more towards downgrades rather than upgrades, especially since over the past few weeks activity indicators and sentiment data in the Eurozone have weakened notably and also companies themselves have become more cautious on the outlook based on the earnings transcripts, which basically can give you a rough guidance of how management is looking at the economy. Roughly one quarter of the European firms are now expecting some hit to demand because of the Iran war. And also trade risks have also reemerged after the discussions over the weekend around the potential increase in US tariffs on European autos from 15% to 25%. The direct impact on the index level is relatively low because autos only represent around 1 1/2% of the Stoxx 600. But the second round effects could still matter, especially for Germany which accounts for roughly 60% of European auto exports to the US.

[A]

Given the more challenging macro and earnings backdrop in Europe, where do you currently see opportunities investors?

[C]

From a sector allocation perspective, we continue to prefer getting exposure to cyclicals via financials rather than through consumer related sectors. European banks delivered very strong first quarter earnings speeds, profitability remains structurally higher and also the ROE is still very robust despite the strong performance. Also in banks. We we also have seen that valuations remain reasonable and we also believe that there's room for further RE rating across the sector into 2026, even if we would see a potential rate hike from the ecb, even though this is not our base case. Then Also at a single stock level we also see that dispersion remains very elevated in industrials, materials and it. So in these three sectors, company specific factors have influenced the stock performance more strongly than the broader macro environment or the general sector trend. So this means that this creates basically opportunities for active investors and a more selective stock picking approach. Or in other words, the uncertain macro environment in Europe makes a pure top down sector allocation more challenging, whereas a bottom up stock selection approach becomes increasingly more important to generate alpha okay, wonderful.

[A]

Thank you very much Leonard for the interesting update. Great to have you back on the show again.

[C]

Yes, thanks for having me, Helen.

[A]

So that's it for today. Thanks again to today's guests and to you, our listeners, for tuning in. I hope you enjoyed the show. If you did and you haven't subscribed yet, then don't forget to do that. And please join us again tomorrow when I'll be back with more colleagues and I'll be getting their latest thoughts on what's moving market. So have a great day everyone and bye for now. The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.