Tempus AI Inc (NASDAQ: TEM) came crumbling down on Wednesday after Spruce Point announced a short position in the Chicago headquartered health technology company.
Spruce Point cited several reasons, including account irregularities and eroding ties with key clients like AstraZeneca, for its bet against the Nasdaq listed firm.
Tempus AI shares have been on a tear lately, which is why, despite today’s decline, they’re up more than 40% versus their year-to-date low in early April.
Why is Spruce Point short Tempus AI stock in 2025?
According to Spruce Point, the health-tech firm’s top executives, including board members, have a history of creating “disruptive technology companies” that first make bold claims but ultimately fail at delivering on them.
However, they cash out early and make millions, leaving shareholders with lackluster returns, the investment firm’s short report added.
Additionally, Tempus AI management is misleading investors about their use of artificial intelligence.
The company, based out of Chicago, Illinois, rebranded from “Tempus Labs” to “Tempus AI” last year to capitalise on the AI hype.
Still, artificial intelligence contributed only 2.0% to its overall revenue in 2024, indicating TEM’s ability to tap into AI is grossly exaggerated, the short seller argued.
TEM shares look overvalued at current levels
Investors should be cautious with Tempus AI stock this year, even if many of the recent allegations against the company are ultimately unfounded.
The primary concern lies in valuation. Since the rally that began on April 8, TEM shares have surged beyond what current fundamentals justify.
The company has yet to report a profit or generate positive net cash flow, making its current pricing appear stretched relative to its financial performance.
The Nasdaq listed firm lost $1.58 a share on $693.4 million in revenue last year. In comparison, analysts had called for $696.3 million instead.
Wall Street remains bullish on Tempus AI Inc
Despite Spruce Point’s short report, Wall Street remains reasonably bullish on Tempus AI stock for the remainder of this year.
The consensus rating on the artificial intelligence-enabled health firm sits at “overweight” with the mean target of nearly $65, indicating potential upside of more than 20% from current levels.
Part of the reason could be the company’s Q1 earnings. In the first quarter, TEM generated a little over $255 million in revenue and lost 24 cents on a per-share basis.
Consensus was $248 million and 26 cents a share, respectively.
What’s also worth mentioning here is that influential investor Cathie Wood is long this AI stock as well.
In March, her investment management company loaded up on 400,000 shares of Tempus AI across two of its flagship ETFs.
Marvell Technology stock price has come under pressure in the past few months as concerns about its growth and valuation have remained. After peaking at $127.40 in January, it crashed by 62% to a low of $47.29. This crash has led to a $53 billion wipeout as the market cap dropped from $108 billion to $55 billion.
Why the Marvell stock retreated
Marvell Technology is a top technology company that designs and builds semiconductor products like integrated circuits and system-on-a-chip architecture. Its products are used in data centers, enterprise networking solutions, and carrier infrastructure.
The company has become a major supplier to data centers in the US and other countries. Most importantly, it is known for making custom chips for companies like Microsoft, Amazon, and Google.
Marvell’s business has seen higher demand as these clients change their business model. Instead of buying chips from companies like Intel, Amazon, Microsoft, and Google are building custom chips to meet their unique demands.
Apple is one company that has executed this approach well in the past few years. It abandoned Intel chips to focus on M1, M2, and M3 chips that are way much better than those made by Intel.
Marvell’s business has seen higher demand in the past few years, which explains why its annual revenue has jumped from $2.9 billion in 2021 to $5.76 billion in the last financial year.
The MRVL stock price has crashed in the past few months as concerns that the AI bubblewas bursting rose. It also dropped because of export control measures that are expected to hit American companies with billions of dollars. NVIDIA believes that its controls will hit its Q2 revenue by $8 billion.
Marvell Technology stock price crash also mirrored that of other companies like NVIDIA, AMD, and Intel.
MRVL earnings ahead
The next key catalyst for the MRVL stock price will come out on Thursday when the company publishes its financial results.
Analysts expect that Marvell Technology’s earnings will be strong. Its revenue is expected to come in at $1.88 billion, a whopping 61.8% increase from the same period last year.
Its forward guidance for the second quarter will be $1.98 billion, a 55% annualized increase, while its full-year guidance will be $8.19 billion, a 42% annual increase.
Marvell Technology is also expected to turn a profit this year. Its earnings per share estimate is 61 cents, a big increase from last quarter’s $0.24.
Chances are that Marvell’s earnings will come out stronger than expected, as it has done in the past few quarters.
The most recent results showed that Marvell’s revenue rose by 27% in Q4, helped by its data center, one rose by 78% to $1.36 billion.
The daily chart shows that the MRVL share price has crashed from the year-to-date high of $127.30 to the current $64.60. It formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other.
Most recently, the stock has formed a rising wedge pattern, which is comprised of two ascending and converging trendlines. A wedge is one of the most bearish patterns in technical analysis.
Therefore, the stock will likely drop after earnings. If this happens, the next point to watch will be the year-to-date low of $47.50. That would signal a 26% plunge from the current level.
Okta stock price suffered a big reversal this week, making it one of the worst-performing companies. It crashed by over 16% on Wednesday, erasing some of the gains made since April 7. It was trading at $105.23, its lowest level since April 28, and 17% below the highest point this year.
Okta stock price plunges after cautious guidance
Okta is one of the biggest cybersecurity companies in the US with a market capitalization of over $18 billion. It focuses on access solutions that help companies ensure seamless access by customers, employees, and partners.
Okta’s business has grown over the years, and now counts over 20,000 clients, including top names like Peloton, FedEx, Hewlett-Packard Enterprise, and NTT Data.
The company’s annual revenue has jumped in the past few years, moving from $835 million in 2021 to $2.6 billion last year.
Okta stock price crashed this week after the company published strong results, but warned about its guidance. Its revenue rose by 12% in the first quarter to $688 million, with its subscriptions rising to $673 million.
Okta’s results also showed that its gross margin improved marginally to 81.9%, while its operating margin jumped to 26.7%. The free cash flow margin rose to 34.7%.
The challenge, however, is that the management issued a cautious outlook, citing the uncertain economic environment. It now expects that its revenue for the current quarter will be $712 million, up 10% from last year.
It also expects that the operating income will be between $183 million and $185 million, representing a margin of 26%. The cash flow margin will be 19%.
Okta expects that its annual revenue will grow by between 9% and 10% this year, while the free cash flow margin will be 27%. The CEO said:
“We remain focused on driving profitable growth, accelerating innovation, and delivering the only modern, unified identity security platform for our customers.”
Is it safe to buy the Okta dip?
The forward guidance was in line with what Wall Street analysts were expecting. Their estimate for the current quarter is that its revenue will grow by 10% to $711 million, and the annual figure will rise by 9.6% to $2.86 billion.
Therefore, the Okta stock price tumbled since Wall Street investors anticipated more from the company. The caveat is that, like many other software companies, Okta has always been highly conservative when issuing its guidance. This explains why it regularly does better than expected.
Investors also believe that Okta stock is also relatively overvalued as it has a forward PE ratio of 38, higher than the sector median of 22.
However, a closer look shows that it is not all that expensive. It is growing at around 10%, while its operating margin is 26%, giving it a rule-of-40 metric of 36%. While this figure is below 40, there are signs that the company is narrowing the gap.
Okta has already achieved a healthy rule of 40 when factoring the free cash flow margin, which stands at 42%.
The daily chart shows that the Okta share price has crashed in the past few days, moving from a high of $127.5 on May 16 to the current $105. It has dropped below the 38.2% Fibonacci Retracement level at $105.93.
It also forms a candlestick pattern with a big body and a medium-sized upper shadow. That is a sign that the stock will attempt to fill the gap, especially now that the macro factors the management talked about are easing. If this happens, the Okta stock price will likely bounce back and hit $120.
Nvidia Corp (NASDAQ: NVDA) chief executive Jensen Huang says the White House has based its export regulations on the assumption that China is incapable of making its own AI chips.
But recent checks confirm this assumption is fundamentally flawed, he argued on the company’s earnings call last night, adding “the question is not whether China will have AI – it already does.”
Huang’s remarks are significant since they might suggest Beijing is not as dependent on Nvidia as some would have thought. That said, NVDA shares are up 50% versus their year-to-date low at writing.
What’s next for Nvidia as its China business comes to a halt
Jensen Huang has been vocal in his opposition to tightened chip export regulation under the Trump administration, having previously warned they’re hurting US businesses more than they are hurting China.
If it weren’t for export restrictions, Nvidia would have made up to $2.5 billion worth of additional sales in its first financial quarter, he added.
More importantly, the chipmaker last night guided for up to $45 billion in sales for its current fiscal quarter – a number that would have been as much as 18% higher without the US export regulations.
“The $50 billion China market is effectively closed to the US industry. As a result, we are taking multibillion-dollar write off on inventory that can’t be sold or repurposed,” he told investors on the call.
What’s next for China amidst trimmed access to NVDA chips
While new restrictions that disable Nvidia from selling in the world’s second-largest economy sure seem significant for the AI darling, it’s reasonable to believe that China won’t even budge because of them.
Huang has already warned that Beijing is “right behind us” in artificial intelligence. China, he’s convinced, is strongly positioned to “move on’ with or without NVDA chips.
Note that Bernstein analyst Stacy Rasgon also believes that barring Nvidia from selling in China is synonymous to “handing the entire AI market in China over to Huawei.”
On the flip side, however, the US President won deals worth billions for NVDA during his recent visit of the Gulf states. Plus, the AI stock currently pays a dividend as well.
Could Nvidia print a new all-time high in 2025?
Despite the China overhang, Nvidia came in handily above Street estimates in its fiscal Q1.
The company based out of Santa Clara, California earned 96 cents a share on $44.06 billion in revenue in its first financial quarter.
Analysts, in comparison, had called for 93 cents per share and $43.31 billion, respectively.
Financial strength is among the top reasons why NVDA stock remains a favourite among Wall Street analysts.
The mean target on Nvidia shares currently sits at a tad above $163, indicating potential upside of another 15% from current levels.
Anticipation is building in the oil market as the OPEC+ meeting approaches, with a production decision expected over the weekend.
The eight cartel members who previously implemented voluntary production cuts are now contemplating a substantial rollback of these cuts in July.
The eight members of the Organization of Petroleum Exporting Countries and allies, including kingpin Saudi Arabia and Russia, had previously agreed to increase oil production by over 400,000 barrels daily in May and June.
“Markets are currently influenced by headlines, but they are truly awaiting a clear signal from the fundamentals,” Mukesh Sahdev, global head of commodities market, oil at Ryatad Energy, said in an email.
“Even when factoring in potential downside risks, the numbers we’re seeing suggest there’s space for additional OPEC+ output in July,” he added.
This is further noted in the Brent futures curve, which remains in backwardation through October 2025.
Strength in prices
Oil prices have firmed over the last few sessions, albeit thinner trading earlier this week due to public holidays in the US and UK.
“The strength is likely due to relief that the threat of new US tariffs against the EU has been postponed for the time being,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said.
However, many uncertainties remain, especially with regard to (US) sanctions policy.
On the one hand, there are the nuclear negotiations between the US and Iran.
Although these were so far inconclusive, both sides remained optimistic after the fifth round of talks and want to meet again in the near future.
A possible easing of sanctions against Iran therefore remains on the table.
On the other hand, despite a downturn in relations between Russian President Putin and US President Donald Trump, triggered by Moscow’s extensive attacks on Ukraine, Trump has stated he will “absolutely consider” implementing new sanctions against Russia.
Conversely, Russia appears intent on minimising the significance of Trump’s response.
“Chart-wise, crude oil has been in a downtrend ever since prices peaked in March 2022, soon after Russia invaded Ukraine,” said David Morrison, senior market analyst at Trade Nation.
But that doesn’t mean that prices can’t spike sharply in either direction.
Summer demand supports OPEC output increases
According to analysts and experts, oil demand rises sharply during the summer months from May to August.
This presents a suitable opportunity for OPEC+ to increase oil production without flooding the market.
Liquids demand growth this summer is being driven by Europe and the Middle East, rather than Asia or North America.
Supply-side growth is primarily driven by Saudi Arabia, the US, Canada, and Brazil. However, Canada’s output faces wildfire risks, and Brazil’s may see softer demand due to alternative supplies.
Global liquids demand is projected to grow by only 700,000 barrels per day in 2025, according to Rystad Energy’s calculations.
However, fundamentals from May to August are supportive, with demand growth outpacing supply growth by 600,000-700,000 barrels per day, the Norway-based energy intelligence company said.
Source: Rystad Energy
Additionally, crude and condensate demand is projected to exceed supply by over 1 million barrels daily for the indicated timeframe, Rystad noted. This assessment precedes the upcoming OPEC+ meeting this Saturday.
Refinery demand growth and supply
Globally, increased crude demand for refineries is anticipated from Asia, North America, Europe, and Russia.
Russian refinery operations may become especially important as tightening sanctions on its crude exports could lead to an increase in domestic refining.
“Overall, oil market uncertainty is likely to prompt many countries to maximize refinery runs and build product inventories, especially as stock levels remain low across regions,” Sahdev said.
Challenges already plague US crude oil production, and the earlier narrative of a significant increase in drilling activity has faded.
With the West Texas Intermediate crude oil, the benchmark price for US oil, hovering around $60 per barrel, producers are unlikely to expand drilling activities, experts said.
Source: Rystad Energy
Output declines elsewhere
From May to August, output reductions are anticipated for Kazakhstan and other OPEC+ participants. This situation will allow the eight OPEC+ nations to reactivate some of their previously offline supply.
To bolster refinery margins, Saudi Arabia might provide crude oil at reduced prices for July.
Strong product margins continue to support high levels of refinery operation.
Furthermore, the recovery of high sulfur fuel oil margins into profitable territory provides an incentive for less complex refineries to also increase their processing rates.
“In this environment, driven by public narratives and differing opinions, OPEC+ has an opportunity to increase supply modestly in July,” Sahdev said.
However, beyond August into September, this window could close, and any further increase would likely depend on supply disruptions elsewhere in the market.
The approval allows the continuation of operations at the significant natural gas facility located off the coast of Western Australia for an additional period, extending its initial planned decommissioning date.
Review process
Woodside Energy, a major Australian petroleum and natural gas company, sought the extension for its flagship North West Shelf project, which has been a key supplier of liquefied natural gas (LNG) to global markets for decades.
The lengthy review process involved rigorous environmental impact assessments and consideration of stakeholder concerns, including those raised by green groups who voiced concerns about the project’s long-term environmental implications and its contribution to greenhouse gas emissions.
Despite these objections, the government ultimately sided with Woodside Energy, paving the way for continued gas production and export from the North West Shelf well into the latter half of the 21st century.
The extension is expected to have significant implications for Australia’s energy sector, LNG exports, and its efforts to meet emissions reduction targets.
Located on Western Australia’s Burrup Peninsula, the North West Shelf facility stands as Australia’s largest and oldest liquefied natural gas plant, playing a crucial role in supplying Asian markets.
Environmental concerns
Environment Minister Murray Watt said in a statement that the approval for the project extension would include stringent conditions, especially concerning the impact of air emission levels.
Following the announcement, Woodside shares experienced a 4% surge in the afternoon, building on gains made throughout the trading day.
The current project approval is scheduled to expire in 2030.
Woodside submitted its extension application in 2018, which became subject to both state and federal reviews. This was due to conflicting priorities concerning energy security and the project’s environmental consequences.
Australia’s leading gas producer, Woodside, is establishing the foundation to connect new gas fields to its LNG plant through this extension. This development is projected to release as much as 4.3 billion metric tons of carbon emissions throughout its operational lifespan.
Government decision and partnerships
The Western Australia state government granted approval for the contentious project in December, a decision reached after an extensive review process that included the consideration of approximately 800 appeals submitted by environmental activists and concerned citizens.
The sheer volume of appeals underscored the significant public interest and debate surrounding the proposed development.
Prior to the federal general election held in May, the federal government exhibited a cautious approach to the project, twice postponing its final decision.
Faced with declining production from its original offshore gas fields in the North West Shelf, a decades-long extension allows Woodside to proceed with the development of its long-dormant Browse offshore project, which will supply gas to the Karratha plant.
The North West Shelf venture is a partnership that includes Woodside and the following companies: BP, Chevron, Shell, Japan’s Mitsui & Co and Mitsubishi Corp, and China’s CNOOC.
Elon Musk has publicly expressed his disapproval of President Donald Trump’s recently passed House tax bill, a sweeping piece of legislation that the billionaire entrepreneur says runs contrary to his own efforts to curtail government spending.
Musk’s critique adds a high-profile voice to the growing chorus of concerns surrounding the bill’s fiscal impact.
In an interview with CBS News, an excerpt of which was released Tuesday night, Musk, who recently announced he is stepping back from his role in the Department of Government Efficiency (DOGE)—a body that quickly became emblematic of the second Trump administration’s cost-cutting vision—did not mince words.
He stated he was “disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing.”
The full interview is scheduled to be broadcast on CBS Sunday Morning this weekend.
The legislation in question, frequently referred to by President Trump as his “big, beautiful bill,” encompasses a wide array of tax cuts.
Having narrowly passed the US House of Representatives last week, it now heads to the Senate for further deliberation.
Musk, the prominent chief executive officer of Tesla Inc. and SpaceX, appeared to align his concerns with those of some Republican lawmakers in both the House and Senate.
These legislators argue that the bill’s price tag is too high and are demanding more significant reductions in government spending to offset its cost.
Echoes of fiscal conservatism and legislative hurdles
The sentiment expressed by Musk mirrors the fiscal conservatism voiced by certain Republican factions.
Senator Ron Johnson, a Republican from Wisconsin, highlighted the considerable distance yet to be covered before the bill might find acceptance in the upper chamber.
When asked about a timeline for the Senate’s work, Johnson remarked, “We are so far away from an acceptable bill, it’s hard to say.”
However, the legislative path forward is complicated not only by calls for further cuts but also by opposition from other Republicans to existing provisions within the House version.
Some object to measures such as restrictions on Medicaid benefits and the proposed swift elimination of clean-energy tax incentives, indicating a challenging road ahead for the bill in the Senate.
Musk, offering his personal take on the ambitious legislation during the CBS interview, quipped, “I think a bill can be big or it can be beautiful, but I don’t know if it can be both. My personal opinion.”
This pithy remark encapsulates the tension between the bill’s expansive scope and its potential fiscal consequences.
A fresh wave of volatility in Japan’s government bond market is unsettling investors worldwide, amid signs of weakening demand for long-dated debt and growing concern over the broader implications for global financial markets.
For decades, Japan’s $7.8 trillion bond market was viewed as one of the most stable in the world.
But that status is now in question. In recent weeks, auctions for 20- and 40-year Japanese government bonds have recorded some of their weakest demand in years.
The rout has intensified since US President Donald Trump reintroduced tariffs under his “Liberation Day” plan in April, adding pressure to already fragile global bond markets.
Yields on 40-year government bonds hit an all-time high of 3.689% last week and were last seen at 3.318%, nearly 70 basis points higher since the start of the year.
Similarly, 30-year yields have jumped more than 60 basis points to 2.914%, while 20-year notes are up over 50 basis points.
Why is demand for Japanese government bonds falling?
Much of the anxiety stems from the Bank of Japan’s ongoing efforts to reduce its outsized presence in the domestic bond market.
Japan’s central bank has long played a dominant role in the domestic bond market, amassing vast holdings of government debt as part of its fight against persistent deflation — a battle that began in the 1990s during what became known as the “Lost Decades.”
But with Japan now gradually emerging from deflation, the BOJ is shifting course.
No longer focused solely on economic stimulus, the central bank is moving to scale back its massive balance sheet.
After its holdings of government debt hit a record high in November 2023, the BOJ has since pared back by ¥21 trillion ($146 billion) and has been reducing its quarterly bond purchases by ¥400 billion.
The central bank scaling back its bond purchases has prompted a key question: who will step in to buy if not the BOJ?
A disappointing 20-year bond auction on May 20, followed by weak demand for 40-year bonds on May 28, have underscored the risks.
Japan’s Finance Ministry is now said to be seeking feedback from market participants on whether to adjust the issuance of longer-maturity debt, highlighting rising concerns within government circles.
Investors are increasingly nervous that Japan’s bond market woes could set off a global ripple effect, particularly through the channel of capital flows.
Rising yields spark fears of Japan offloading US bonds
The sharp uptick in Japanese yields threatens to undermine the popular yen carry trade, in which investors borrow in low-yielding yen to invest in higher-returning foreign assets, often in the US.
Deutsche Bank AG has warned that rising Japanese yields would make bonds more attractive to local buyers and, as a result, could cause investors to pull out money from US debt.
According to Macquarie analysts, a “trigger point” may emerge where the yield gap closes enough to make domestic bonds more attractive than US assets.
Societe Generale strategist Albert Edwards warned in a CNBC report that such a development could spark a “global financial market Armageddon,” particularly if it hits US technology stocks, which have benefited from strong Japanese investor inflows.
The strengthening yen — up more than 8% this year — would only accelerate the shift.
“Tightening global liquidity will reduce world growth to 1% and by raising long term rates it will tighten financial conditions and extend the bear market in most assets,” he said.
This repatriation of funds to Japan is synonymous with the “end of US exceptionalism” and is mirrored elsewhere in Europe & China,” Roche added.
Strategists fear repeat of August’s carry trade unwind
The last major unwind in yen carry trades occurred in August 2024, when the BOJ surprised markets by raising interest rates.
The yen surged, and global markets slumped as investors rushed to close out positions.
Now, some strategists fear a repeat.
Natixis economist Alicia García-Herrero said the coming unwind may be even worse.
However, others suggest that the carry trade this time is on shakier ground to begin with.
Guy Stear at Amundi points out that the yield differential between Japanese and US 2-year bonds has narrowed from 450 basis points last year to around 320 basis points now, making the incentive for shorting the yen less compelling.
“Big carry positions typically build up when there is a strong FX trend, or very low FX volatility, and [when] there is a big short term interest rate differential,” said Guy Stear, head of developed markets research at Amundi.
Riccardo Rebonato, professor of finance at EDHEC Business School told CNBC he saw a “progressive erosion” over a long period of time rather than an implosion.
US asset exposure still favours equities
Despite rising fears of a capital pullback, some analysts believe Japan’s large holdings of US Treasuries — long seen as a stabilizing force — are unlikely to be dumped en masse.
Masahiko Loo of State Street Global Advisors said these holdings are “structural” and part of the broader US-Japan alliance.
Data from State Street also show that Japan’s exposure to US assets is heavily tilted toward equities, with nearly $18.5 trillion in stocks compared to $7.2 trillion in Treasuries.
According to Apollo’s chief economist Torsten Slok, any capital flight would likely begin with equities, then move to corporate bonds — not Treasuries.
Still, concerns about Japan’s ballooning debt remain.
Prime Minister Shigeru Ishiba recently compared the country’s fiscal position to that of Greece, sparking renewed scrutiny over whether the government can sustain rising borrowing costs.
All eyes on the BoJ to turn things around
In a sign of growing pressure, major life insurers and pension funds have asked the Bank of Japan to take stronger action to stabilize the bond market.
The BOJ is set to review its bond purchase plans in June, and Governor Kazuo Ueda has pledged to monitor market developments closely.
Meanwhile, the Finance Ministry’s move to consult market participants on super-long bond issuance signals that authorities are grappling with how to restore balance to a market once defined by stability.
With the prospect of capital flight, strained foreign exchange markets, and rising global yields, Japan’s bond market has transformed from a haven of calm into a potential source of global disruption.
Investors will be watching closely to see whether the world’s most indebted developed economy can weather the storm — or whether the fuse has already been lit.
European stock markets exhibited a cautious and mixed start to Wednesday’s trading session, with the pan-European Stoxx 600 index hovering near flat territory as investors braced for a significant influx of economic data from across the continent.
Currency markets saw both the British pound and the euro soften against the US dollar, while global attention turned towards upcoming US Federal Reserve meeting minutes and highly anticipated earnings from chip giant Nvidia.
Shortly after the opening bell, the pan-European Stoxx 600 was trading flat, reflecting a general lack of strong directional conviction among investors.
National bourses showed slight variations: London’s FTSE 100 and the French CAC 40 were marginally higher, indicating a touch of resilience.
Germany’s DAX, which had impressively scaled a record high in Tuesday’s session, was trading around 0.1% higher, suggesting it was holding onto its recent strong gains.
This tentative market mood comes as participants anticipate a swathe of economic indicators due for release throughout the day.
Key data points include German import prices, final French gross domestic product (GDP) figures, employment data from both France and Germany, and an update on Turkish economic confidence.
These releases will provide further insights into the health and trajectory of the European economy.
Currency watch: pound and euro dip against dollar
In foreign exchange markets, the British pound was trading 0.2% lower against the US dollar on Wednesday morning.
This movement put sterling on track for its second consecutive day of losses versus the greenback, though it’s important to note that the pound has still appreciated by a significant 7.7% against the dollar year-to-date.
Similarly, the euro was also trading 0.2% lower against the US currency, potentially extending its losses for a second day.
Despite this recent dip, the euro has recorded a gain of more than 9% against the US dollar since the beginning of the year.
Global focus: Fed minutes and Nvidia’s numbers awaited
Global investors are keenly awaiting the release of minutes from the US Federal Reserve’s May meeting, which are due later on Wednesday.
These minutes will be scrutinized for any fresh clues regarding the central bank’s thinking on inflation, interest rates, and the overall economic outlook.
While no major corporate earnings were expected out of Europe on Wednesday, market participants on both sides of the Atlantic are closely monitoring the upcoming earnings report from US chipmaking behemoth Nvidia.
The company’s results, due after Wall Street’s closing bell, are widely seen as a key barometer for the tech sector and broader market sentiment.
Asia-Pacific recap and US market cues
The trading backdrop from the Asia-Pacific region was mixed on Wednesday.
Japan’s Nikkei 225 was last seen trading 0.3% higher, while South Korea’s Kospi added a more substantial 1.8%.
However, Australia’s S&P/ASX 200 shed 0.2% after the country reported a higher-than-expected rise in inflation.
Hong Kong’s Hang Seng index was also down 0.4%.
On Wall Street, stock futures were flat ahead of Wednesday’s trading session.
This followed broad gains on Tuesday, as investors reacted positively to US President Donald Trump’s decision to pause the implementation of 50% tariffs on European Union imports, a development that markets absorbed as they reopened after the Memorial Day holiday.
German import prices show unexpected contraction
Adding to the day’s economic narrative, fresh data from Germany revealed an unexpected development in import prices.
Figures from the Federal Statistical Office showed that German import prices fell by 0.4% year-on-year in April.
This was a surprise, as analysts polled by LSEG data had been anticipating an annual rise of 0.2%.
The previous month, March, had seen import prices in Germany rise by 2.1%, making the April contraction particularly noteworthy.
The national water regulator Ofwat has imposed a record £122.7 million penalty on Thames Water following two separate investigations into the company’s operations and dividend practices.
The fine, which is the largest ever issued by the regulator, includes £104.5 million for serious failings in the company’s wastewater management and a further £18.2 million for breaching rules around dividend payments.
Ofwat said the penalties were a response to “unacceptable” damage caused to the environment and customers, marking the first time it has fined a company over paying dividends regardless of performance.
Thames Water found guilty of failures in wastewater ops, and improper dividend payouts
The most serious penalty, amounting to £104.5 million, relates to multiple breaches connected to Thames Water’s wastewater operations.
The regulator found the company failed to properly build, maintain, and operate essential infrastructure, which led to repeated pollution incidents and service failures.
In addition, Ofwat imposed an £18.2 million fine for improper dividend payments made in October 2023 and March 2024.
The watchdog ruled that £37.5 million in interim dividends and a further £131.3 million paid to Thames Water Utilities Holdings Limited were in violation of regulatory guidelines.
The regulator highlighted that these payments were made despite the company being in significant financial difficulty, with Ofwat now placing Thames Water in a “cash lock up,” prohibiting further dividends without regulatory approval.
Significance of the penalty
Ofwat’s chief executive, David Black, strongly criticised the company’s conduct. “This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment,” he said.
Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.
Black added that Thames Water failed to propose any adequate redress package to address the environmental harm caused, leaving Ofwat no option but to impose significant financial penalties.
In response, a spokesperson for Thames Water stated the company “takes its responsibility towards the environment very seriously,” and noted that efforts are already underway to address storm overflow issues highlighted in the investigations.
They also defended the dividend payments, citing a review of the firm’s legal and regulatory obligations.
Environment secretary Steve Reed the government has launched the toughest crackdown on water companies in history.
“Last week we announced a record 81 criminal investigations have been launched into water companies. Today Ofwat announce the largest fine ever handed to a water company in history,” he said.
The era of profiting from failure is over. The Government is cleaning up our rivers, lakes and seas for good.
Mounting debt and risk of nationalisation continue to loom
The fines come as Thames Water struggles to remain solvent amid soaring debt, operational issues, and growing public scrutiny.
The company, which serves 16 million people across London and southern England, narrowly avoided de facto nationalisation earlier this year after securing a £3 billion emergency loan in February.
That deal allowed the company to continue operating for at least another year, giving it time to restructure its nearly £20 billion in debt.
However, the newly announced fines were not included in its financial planning for the next regulatory period, casting fresh doubt on its financial future.
The firm, which employs around 8,000 people and is responsible for supplying water to about a quarter of the UK’s population, had been forecast to run out of funds by March.
The emergency loan staved off immediate collapse, but some lenders opposed its terms, while critics, including Liberal Democrat MP Charlie Maynard, argued the loan was not in the public interest.
Customers are set to face a 31% rise in water bills from April.
Ofwat has clarified that the penalties announced this week will not impact customer bills.
As pressure mounts to clean up its operations and win back public trust, Thames Water must now balance financial survival with an urgent need to fix long-standing infrastructure issues and avoid further environmental damage.
